Friday, 2 September 2011

CSR & Sustainability - Interview with Master Marketer David Whiting

I am delighted to be able to post this e-interview from David Whiting, on one of marketing's really current 'hot topics',
 CSR & Sustainability.

David gained extensive marketing and business experience from working for a number of large companies, including Boots, NestlĂ©, CPC (now Unilever) and Duracell.  He became Duracell UK Marketing Director, followed by an international marketing development role for Duracell Inc.  Whilst working for these companies, he was responsible for the profitable development of a number of major brands in a wide range of markets.

He subsequently moved into marketing and business consulting and training.  He worked initially for Saatchi & Saatchi Marketing, followed by three years as a Director of Added Value, before establishing his own consultancy.  David is also a Course Director for the Chartered Institute of Marketing and has run a wide range of training programmes in Europe and Asia.  He has a particular interest in the integration of sustainability into business and marketing strategy.

David holds a BA Honours degree in Industrial Economics from Nottingham University and an MA degree in Marketing from Lancaster University.  He is a Member of the Chartered Institute of Marketing, a Chartered Marketer, a Member of the Marketing Society, a Member of the Institute of Consulting and a Certified Management Consultant.  

Question 1: Many companies today are making lots of noise about ‘Corporate Social Responsibility’. Why do you think this is? And what are they trying to achieve?

Companies are under growing pressure from a number of stakeholder groups, such as customers, investors, employees, the government, NGOs and the community, to become more societally conscious and sustainable and to demonstrate that progress.  Initially, companies embarking on CSR programmes were driven primarily by the need for compliance and risk management and some are still stuck at this ‘minimum’ stage.  However, most companies now recognise the advantage of looking more strategically at the issue and can see how more proactive CSR programmes can deliver tangible benefits in areas such as corporate reputation, employee retention and community relationships.  These programmes will typically include philanthropic elements, and CSR functions will prepare reports on their performance, but they frequently tend to be fairly tactical and short-term in focus.  Michael Porter has disparaged these types of programme by referring to them too often being:

“…a hodgepodge of uncoordinated CSR and philanthropic activities disconnected from the 
company's strategy that neither make any meaningful social impact nor strengthen the firm's long-term competitiveness”

Confusingly, however, whilst many organizations see CSR being concerned primarily with issues related broadly to its ‘social’ responsibilities towards communities it is involved with down the supply chain, others (often referring instead to ‘Corporate Responsibility’) see it as a much more ambitious concept.  To these companies, CSR/CR is a discipline that also encompasses environmental and economic issues, and which is more frequently referred to these days as ‘sustainability’.

Question 2: Where does sustainability and ‘green marketing’ fit in with CSR?

Sustainability as a modern concept has its origins in the Brundtland Report of 1987, the outcome of a commission set up by the UN.  It declared that:

“Sustainable development seeks to meet the needs and aspirations of the present without compromising the ability to meet those of the future”. 

This established the important notion that future generations should be treated as an important stakeholder by organizations.  Assisted by John Elkington’s framework of the Triple Bottom Line – the need to recognise the importance of environmental and social factors as well as economic – leading companies began to develop a transformative concept.

Major companies such as GE, Unilever, Procter & Gamble, Interfaceflor, Marks & Spencer, Pepsico and Nike are using sustainability to drive their entire business strategies, setting out ambitious plans and targets for themselves (e.g. zero carbon emissions) to secure stakeholder belief in their integrity. 
Whereas CSR, in its traditional role, is primarily a senior but advisory function, sustainability requires every part of the organization building it into its planning and operations.  Thus, in time, there ceases to be a sustainability strategy since the whole organization is sustainable.
  Jeff Immelt, CEO of GE, has said:

“Sustainability is the business strategy.  It’s our roadmap for how we operate
and how we innovate”.

Sustainability is seen by these leading companies not as a drag on earnings, or a peripheral activity, but the biggest driver of earnings in the future – because they have understood what the future is likely to look like.  Whilst they are busy creating new sources of competitive advantage, driving new source of innovation, building trust in their brands, developing new sources of revenue and working with legislators to influence new legislation, the gap between them and their competitors will grow ever wider.

Green marketing has its origins in the 1980s, but much of it was cynical and opportunistic and was a manifestation of the short-term focus that has sometimes made this marketer despair of his profession.  Too little of it was based upon securing insights on to which to build viable propositions, rather than ‘greenwash’ or the product of optimistic worthiness.  Most brands created in that era failed to survive.  Cause-related marketing followed, but this was largely tactical, short-term and peripheral in nature.  However, in the last few years, particularly since the growing understanding of the impacts of climate change, there has been a revival of a 
more considered kind of green marketing as part of the larger sustainability trend.

Question 3: To what extent should these sorts of approach be imbedded in the overall marketing plan?

Marketing has been slow to recognise the seismic importance of sustainability due to a variety of factors, including the ongoing economic downturn, the obfuscation created by the less strategic nature of much CSR activity, its ownership by separate central CSR functions and marketing’s increasing concentration on short-term communications activity at the expense of strategic brand building.  Yet marketing has a critical, indeed pivotal, role to play in embedding sustainability into an organization’s business strategy, particularly since all the leading companies in this space see brands as the best place to ‘anchor’ sustainability. 
Marketers are not only the brand guardians but possess the best insight into consumers, they lead communications activity and are naturally challenging and creative by nature.  They also understand planning concepts such as segmentation and positioning, critical to strategy development, as well as a wide range of executional tools and media.

As companies follow the current leaders in recognising how sustainability needs to become the driver for developing business strategy, and therefore brand strategy, sustainability will need to become embedded in marketing strategy and planning.  Marketers have traditionally been concerned with only a part of the product life cycle, but in future will need to become conversant with every stage, including sourcing and disposal.  Acquaintance with the supply chain and with concepts such as carbon and water footprinting will become a necessary part of the brand manager’s responsibilities.  Unilever has undertaken an examination of its 1,600 brands, using its Brand Imprint tools that combine lifecycle analysis with marketing processes, to understand their social, environmental and economic impacts.

Question 4: How can these ideas allow companies to build sustainable competitive advantage?

Companies have taken a variety of approaches to capitalizing on their sustainability/CSR efforts.  For some it is enough for now to have embarked on a journey, partly because it is simply the right thing to do, enabling them to get to grips with the issues, develop their future strategies and reassure investors.  H&M, for instance, have taken a long time to begin to communicate to customers their impressive sustainability track record.  For others, such as Nike, driven by the necessity to act caused by the scandal of conditions for workers in its developing world suppliers, transparency has been a driving motivation.

Whilst fear of being accused of ‘greenwashing’ has held some companies back there is a growing realisation that customers and consumers are willing to accept that the ideal cannot be attained overnight, if ever.  So long as organizations are seen to be honest and transparent about their intentions, and have set out a vision and goals about which they communicate regularly, they have the opportunity to build an enhanced level of trust in their brands and hence brand equity.  This perceived integrity is a precious long-term asset, driving loyalty, growth and revenue, which brands such as Dove, Marks & Spencer, John Lewis, Timberland and Innocent have placed at the centre of their brand strategies.

Choices have to be made about whether to use a corporate brand, product/service brands, or both, as the vehicle for sustainability/CSR claims.  It is no coincidence that companies such as Unilever and Procter & Gamble have been developing their corporate umbrella names as consumer brands for the first time in recent years.  Other decisions have to be made as to whether the strategy will include developing a brand halo; providing a ‘nudge’ to consumers, e.g. via product labelling (as Tesco are doing); instigating an educational programme; or offering a more explicit competitive advantage.  In this last case the claimed benefit may be indirect, such as with Fairtrade or Levi’s Water>Less jeans, where the story is the benefit, or of direct advantage to the customer, such as the Michelin Energy Saver tyre.

This often-complex strategic decision-making needs the skills of marketers to bring together the insights from the marketplace together with the sustainability drivers internally.  In particular, the potential sustainability claims have to be carefully balanced against other motivators, which may need to be more predominant components of the brand proposition.  For instance, organic milk could have been promoted primarily on its environmental benefits, but the most compelling story for consumers was the health platform.  Sustainability is at the end of the day the desired outcome, not necessarily the communications strategy.

Question 5: What advice would you give for organisations wishing to start out on this journey? Can you suggest a roadmap?

Make a start!  Be a Unilever, not an Exxon.  However small the organization, the market is likely to reward the prime movers and punish the laggards in due course.

Legal compliance and risk management are hygiene factors that must be covered off, but consideration should also be given to achieving the requirements of voluntary codes such the Greenhouse Gas Protocol, ISO standards, PAS2050 (for carbon footprinting), FSC (Forestry Stewardship Council), etc.  Working towards one of more of these certifications will furnish vital information, engage the whole organization, require target setting and throw up potential new opportunities.  In any case, as with the development of a sound marketing strategy, a sustainability/CSR strategy should commence with a comprehensive audit, encompassing not only key data (relating to social and environmental impacts) on the company operations and supply chain, but also ongoing trends, competitors’ progress and customer/consumer expectations and aspirations.

Strategy development can progress in stages, depending upon priorities, resources, market conditions, etc.  For instance, compliance with a code will improve business practices and may provide an opportunity for accessing new customers and markets; this could be followed by the gradual development of a more sustainable supply chain, facilitating new working partnerships, cutting costs and generating efficiencies and an enhanced story to tell.  In turn, greater understanding of what is physically possible and developing market potentialities could lead to new products and services, or completely new market models.

Setting up and reporting KPIs (Key Performance Indicators) will not only provide focus for the sustainability/CSR strategy but facilitate reporting on progress to all the key stakeholders. Reporting on progress, and the achievement of goals, provides a growing reassurance to customers, employees, investors and business partners that this is a company that deserves their trust and loyalty and that inspires their higher aspirations.

It is worth bearing in mind that (according to the CEO of Aviva Investors in February 2011) less than 20% of 20,000 publicly listed companies reported the previous year on even a single piece of quantitative data on environmental, social or governance issues – yet the vast majority of Fortune 500 companies measure, manage and publicly disclose their carbon emissions, in part because of a greater legal onus to do so.  This is both a reminder of the gap between the top companies and the rest, but also the opportunity to stand out, particularly because most companies’ targets are weak and short-term.

Be honest, rather than perfect!

Web sites and Resources: - further details on interviewee background and services.  Refer to article ‘Why is Marketing missing from the sustainability agenda’ (originally published in ‘Market Leader’) under Applications heading for more on topic. - Sustainable Life Media: US-based information site concerned with development of sustainable brands, which also produces regular e-newsletters for members. - Guardian Sustainable Business: UK-based information site concerned with wide range of business sustainability issues.  Produces regular e-newsletters and holds regular events for members. - Forum for the Future: UK-based NGO which works with businesses and governments to develop pioneering thinking on sustainability.  Publishes quarterly magazine ‘Green Futures’ - World Business Council for Sustainable Development: international body, based in Geneva, which brings together 200 global companies to progress thinking on sustainable development.  Produces papers and e-newsletters. - Ethical Corporation: reports on wide range of sustainability issues.

Thank you David!

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