Defining Green Brand Leadership

“We will not be measured by our aspirations.  We will be measured by our actions”                   

– Wal-Mart CEO Lee Scott in making sustainability part of his core strategy

Great brands today understand that return on investment (ROI) using hard dollars is not sufficient to assess the overall impact of environmental initiatives.  Today, social norms regarding the environment are changing and consumers are increasingly holding brands accountable for what they do (and don’t do) rather than just what they say.  As a result, more and more companies are making investment decisions that incorporate brand impact and brand risk into their equations. 

Wikipedia defines brand as the “embodiment of all information connected to [a] product and serves to create associations and expectations around it.”  Though intangible, a brand may generate significant value for a company based on its ability to create differentiated experiences for consumers – and enable the company to generate and sustain future cash flows as a result. 

One way to view a brand is that it can enable companies to charge a premium for what may ordinarily be perceived as a commodity product.  Take for example Coca-Cola, the #1 brand based on the 2007 BusinessWeek/Interbrand survey.  According to the Brand Finance 250 annual report, Coca-Cola has the highest brand value – over $43 billion or nearly 40% of its total $110 billion enterprise value – in a highly competitive beverage market.   

While taste is indeed an important differentiator, Coca-Cola is able to charge a premium for its products – and generate significant brand value – primarily due to the strong brand loyalty of its customers. 

Increasingly, leading brand companies are recognizing that environmental issues have the potential to impact brand value – positively or negatively – and are taking action.  Coca-Cola clearly understands this and is aggressively responding with bold initiatives that are intent on shoring up its green credentials. 

For example, consumers today are less willing to accept that a plastic bottle will take 1,000 years to decompose in a landfill.  By proactively redesigning its bottle to reduce material use and pledging to recycle 100% of bottles sold in the US, Coca-Cola is clearly taking action to stay ahead of consumer brand expectations – and by doing so, defending (or perhaps enhancing) its brand value.

Does reduced material use lower production costs for Coca-Cola?  Absolutely.  Does committing to recycling 100% of its bottles help attract new customers?  Not necessarily.  Regardless, recycling bottles impacts its brand value – and ability to continue to sustain future cash flows – by strengthening connections with existing customers and mitigating potential risk to its corporate reputation as a result of negative PR.

Today, many leading brands like Coca-Cola are responding to consumer concerns about the environment by making investments that strengthen or shore up brand value.  Marketing Green believes that there are five actions that define green brand leaders. These five actions need to be considered by companies looking to green their brands: 

Be accountable.  Companies should acknowledge that environmental issues such as climate change are real and that, despite good intentions, they are part of the problem (and can be part of the solution). At this point, businesses are likely to alienate few consumers with such a statement and can begin to attract the growing group of consumers looking for green brand leadership.    

Additionally, businesses should audit their own operations and the lifecycle of their products – including sourcing, use and disposal – to determine their environmental impact and track these metrics over time. Indeed accountability, now considered one of the top pillars of successful marketing communications, cannot be underestimated when it comes to the environmental space.

Consumers are becoming increasingly savvy and increasingly demanding when it comes to the environment.  Companies should not be shy in setting high goals for themselves when it comes to the environment; if there’s any time to admit the future needs to be different than the past, it’s now.  

Be transparent.  More and more, leading brands are providing public disclosures of their environmental and social impact.  Today, in fact, 43 of the top 100 brands – including 12 of the top 15 – make public disclosures based on sustainability guidelines set by the Global Reporting Initiative. 

This reporting framework – first proposed by Boston-based non-profit CERES, endorsed by the United Nations Environmental Programme and supported by a consortium of leading brands including Alcan, BP, Ford, GM, Microsoft, RBC Financial and Shell – has become the de facto standard for environmental and social reporting globally.  Currently, more than 1,250 companies in over 60 countries are making disclosures using this framework. 

Another way that companies are demonstrating transparency is through partnerships with non-governmental organizations (NGOs) such as the National Resource Defense Council and Environmental Defense (ED).  NGOs provide credibility for a company because consumers view them as industry watch dogs. 

Certainly, one of the best partnership examples is the one forged between Wal-Mart and ED to make Wal-Mart’s operations and supply chain more sustainable.  In effect, Wal-Mart – not ranked in the BusinessWeek/Interbrand survey because it operates internationally under different brand names – has turned to a respected NGO to endorse its environmental efforts. 

This partnership hold such promise that ED announced last year that it was adding a staff position in Bentonville, AR in order to coordinate ongoing work with the retail giant.

Be credible.  Today, consumers are skeptical; too many companies have tried to green wash hollow environmental efforts.  As such, companies must work hard to build credibility and earn consumer trust over time.   

One way for a company to do so is to first green its internal operations, followed by its products and services, and then its marketing communications.  This way, companies ensure that they take responsibility for their own actions before encouraging consumers to do so with their products or through their messaging. 

But this is not the only way to gain credibility with consumers.  Companies like Toyota (# 6 ranked brand) started by greening its products (eg, hybrids) first.  The risk for a company, however, is that over time its own product enthusiasts are likely to challenge how the product is made.  In the case of Toyota, hybrid owners are now pressuring it to green its operations and manufacturing facilities and Toyota is taking action, according to Marjorie Schussel, National Manager of Corporate Communications, at the recent Green Conference sponsored by Ad Age. 

In contrast, Dell (#31 ranked brand, in contrast to #3 IBM and Dell archrival #12 ranked HP) started with its marketing communications first, declaring that it was going to be the greenest IT company on earth.  In doing so, it essentially admitted that its operations and products were not green yet but that it had every intention to make them green over time.  To help facilitate this transformation, Dell created a site called IdeaStorm to solicit input from its customers on ways by which it could go green. 

Be an enabler.  Leading brands should recognize that consumer expectations have changed.  It is not enough for a company to green its products; consumers expect the products that they purchase to help reduce the environmental impact in their own lives too. 

Recent research by Umbria, a marketing intelligence company, supports this.  Averill Doering, a consumer research analyst with Umbria, made the following observation: “[Consumers] see the [environmental] problem. They want to do something about it.  And, they want the companies they buy from to help them do it.” 

Such consumer expectations raise the bar and imply that consumers may hold companies responsible for the environmental impact of the products that they buy – across the entire lifecycle.  Consumers may increasingly care not just about product sourcing, but about its use and disposal too.  The emergence of eco-labels may serve to reinforce these consumer expectations as they will provide consumers with the necessary information to make greener choices by comparison shopping.  

Leading brands only need to witness the growth in hybrid sales – 49% during the first seven months of 2007 over the same period in 2006 – to recognize that consumers are actively seeking products that enable them to be greener.  Today, every major automobile company is following suit and is accelerating development and commercialization of greener automobiles. 

Be visionary. Visionaries are willing to make bold decisions that redefine their strategy or reshape industry dynamics.  Today, there are many emerging green visionaries.  Among them is Wal-Mart. 

In June of 2004, a pivotal meeting took place between CEO Lee Scott, Rob Walton, Board member and son of the late founder, and Peter Seligmann, Co-founder and CEO of Conservation International.  Walton and Seligmann were friends and had often discussed the potential impact that Wal-Mart could have as the largest global retailer if it were to change the way it did business.   

The pitch to Scott: Wal-Mart had long been criticized for its labor practices, employee health benefits and environmental record.  Given its buying power as the world’s largest retailer, Wal-Mart was in a unique position to affect change in the retail space and do so in a way that would greatly reduce its impact on the environment while saving money, growing revenue and positively impacting its brand image. 

Over time, Scott has essentially turned this pitch into Wal-Mart’s modus operandi.  Not only did Scott set ambitious goals regarding sustainability – 100% renewable energy, zero waste, products that sustain our resources and environment – but he has made it a central component of his strategy and brand positioning.   

Wal-Mart first demonstrated the demand for more sustainable products when it began selling organic cotton yoga outfits through Sam’s Club: 190K sold in less than 10 weeks. This year, Wal-Mart challenged itself to sell 100MM compact fluorescent light bulbs (CFLs) and has already surpassed that goal.  To do so, it combined its marketing muscle to heavily advertise the CFLs in its stores, and purchasing clout to be able to drive down the cost substantially over just one year ago. 

Moreover, Wal-Mart is intent on making its suppliers more sustainable.  Earlier this year, Wal-Mart launched Sustainability 360º, a program intended to enlist its employees, suppliers, customers and local communities to help reduce environmental impact.  This month Scott hosted a Sustainability Summit to connect Wal-Mart suppliers with vendors that could help them become more sustainable.  

Finally, Wal-Mart has expanded its brand positioning to include not just its long time low cost promise, but also “affordable, sustainable products that help [customers] live better every day.”  “Save Money. Live Better” is now the Wal-Mart tag line.    

Increasingly, companies recognize that environmental issues can impact brand value.  In response, leading brands are increasingly incorporating brand metrics into their evaluation criteria for green investments; they are also taking action to green their operations, products and marketing communications.   

Smart brand marketers should think twice about simply focusing on near-term green revenue and cost savings opportunities; the path for sustaining growth needs to also start with greening the brand.

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40 Responses to Defining Green Brand Leadership

  1. JYC says:

    As a student studying communication at the University of Southern California, I found your post outlining the steps to becoming a green brand leader illuminating. I especially appreciate your explanation of the importance in brand consistency and accountability, and I agree that companies cannot simply market themselves as green without substantial demonstration. As you mention in your entry, “consumers are becoming increasingly savvy…when it comes to the environment.” However, it seems possible for companies looking to exploit the trendiness of being green to lure those eager to prove their environmental awareness. Your comment that “consumers are actively seeking products that enable them to be greener” brings to mind the release of Anya Hindmarch’s “I am not a plastic bag” designer shopping bags over summer, highly publicized, highly sought after (and fought over) and were retailed for much more than eco-friendly alternatives. The bags were created with good intention, with profits going to environmental group We Are What We Do, but it is also worrying that the message may have been lost in the process; the materials used weren’t organic, cheap labor from China were employed, and in some countries the bags were sold wrapped in plastic bags. In other words, it didn’t represent what being green embodies. Thus, whilst it is admirable that many companies listed in your post are making strides towards sustainability, it is also disturbing that many companies are treating going green as a fad and creating “green washed hollow environmental efforts,” mitigating the significance form the real environmental problems at hand.

  2. Sara says:

    Great info…I worry that newbies to the green movement like me won’t have enough info to dig through greenwashing vs. real green initiative. Thanks for helping clear away some of the confusion.
    Sara
    http://www.mamagoesgreen.blogspot.com

  3. Luke Tipping says:

    This is really interesting.

    Even more interesting however, is that there is no green leader at the moment. If we think back to the last green wave in the late 1980′s when in the UK, The Green Party fot 36 parlimentary seats, the clear leader then was Body Shop with commercial, green and social objectives.

    Where are they now though? Any guesses on who will be the next leader?Check:

    http://greenonthecommon.blogspot.com/ for more!

  4. David says:

    Bravo! We need a cal to real action, vs. the greenwashing we saw on NBC a few weeks ago. We need a set of global standards that companies and people can live up to. The green movement is too subjective for real progress at the moment.

    David

  5. [...] their brands with more socially reponsible and eco-friendly activites and attributes. (See “Defining Green Brand Leadership”, Marketing Green, October 29, [...]

  6. thanks for the GREAT post! Very useful…

  7. [...] suggestions come from David Wigden’s thoughtful post on Defining Green Brand Leadership. He recommends, among other things, that companies be accountable, transparent and visionary in [...]

  8. [...] suggestions come from David Wigden’s thoughtful post onDefining Green Brand Leadership. He recommends, among other things, that companies be accountable, transparent and visionary in [...]

  9. Wanda says:

    I have heard of the walmart thing before. I know they are trying to be very eco-friendly.

  10. Susan says:

    If a company has the right approach and are willing to a certain extent to take a little less profit they can easily become a green brand, consumers are requiring awarness but are not willing to take the higher prices that some of the more greedy brands insist are necessary to be greener, if uou want to survive (full stop) you need to be aware of what you are doing, buying and discarding.

    • Narayan Bond says:

      Buying and discarding and online publish the real experience of a product . This is not old evil-science millanium . It is balanced science millanium. Words of world is useless as science alone is useless to run this environ right .

      Awareness and knowledge and experience report of every individual is possible now online . Why not consumers are doing it because they are unconciouse about their need and about this planets need .

      I have processed and produce organic produce of natural dyed and organic material textile that is herbal health rich . In the 33 years only a dozen buyers tried and they are unconciouse . The truth is left at that , masses run behind the illusion to celebrate some imagined extra ordinary , not ordinary that our ancestors have left . We produce replica of old world denim jeans . See it at http://www.transindexports.net . The best things in this world is free. Organic cotton natural indigo dyed denim jeans what we produce will last for 100 years if due organic soap wash is given .Large corporation buying in-charge are not ready to test they just want to serve fair trade , and imagined extraordinary to make public propaganda of green wash innovation . So, large corporation are good at inventing not at acute perceiving what is real fiber and true color and Ethnic. They are content customers are not ready for reality and virtue based fashion which the true organic produce gives . Organisation and structure change need is never being attempted in any of the leading brand in the past 3 decades. So our experience is it is 100 years plan , do not rush !

  11. Pedro says:

    The grass-roots movement is moving to BIG business, and I couldn’t be happier.

    I’m looking forward to learning more, and asking questions, of their Sr. International Sustainability Chief, Beth Keck at Sustainable Brands International in Miami Dec 9-11.

    http://www.sustainablebrandsinternational.com/speakers

  12. Many big campaigns promoting Eco Green for Walmart, home depot, Canadian Tire and many more. They are all following the eco friendly bandwagon because really they see dollars signs now

  13. Solar Book says:

    There are many genuinely green companies out there who are really struggling at the moment. A few years back, a lot of money was being invested in green start-ups as they tried to get a slice of the action and get in at the ground floor. These companies have struggled to make money.

    Now the floodgates are opening, larger companies are moving into the space. They’re often not green at all – just look at some of the energy companies in Europe. One in particular is very active in France and the UK. They are the largest users of coal in Europe, have a huge carbon footprint and invest virtually nothing into genuinely green renewable energy production, yet who promote themselves as being a green energy supplier.

    These companies are using the green marketing message as a greenwash to keep customers with little or no genuine substance behind the message.

    This is creating a confusing message for consumers. Some consumers who only have a passing interest in being green thereby stay put with their current suppliers, assuming that as a result they are doing ‘their bit’. Other consumers who genuinely want to choose a low carbon option are then being greenwashed and given confusing information that actively stops them from choosing the right solution.

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  15. N.J.Bond says:

    A can give a near perfect example for green washing is taking place in every bodys life every day use goods . New millanium Organic Era is already 10 years passed . Till day no big company in Denim Jeans in USA has done anything concrete to go green or Organic . They are using Eco Friendly, Low Impact dyes not natural herbal dyes .When one wears herbal dyed garments round the year every one can have better health like our ancestors once lived.Nano science study is proving it at every step these days.
    There are many natural organic cotton production is in the global market ,not a single pair of jeans in 1000s of brands to day selling in US.
    This is very sad to think. This is near perfect example for green washing consumers to know .

    Please visit a site to know the the truth :
    http://www.transindiaexports.net

    It is not only Organic era it is age of Miracle cure . For masses it can be era for freedom from expensive medical care.

  16. Catmark says:

    Manage your Online Brand through cost effective promotions, marketing, and seo consulting solutions.

  17. N.J.Bond says:

    WE ARE SUCCEDING TO FAIL IN HOLLOW ENVIRON MENTAL EFFORTS IN THE LAST ONE DECADE.

    What has happened in the last 150 yearsof green garments. Homeopaths were shouting all along not to invent Syntheitc Dyes in place of Natural dyes. It was invented in 1840 around and they kept on pushing it ,the vested industrialist for dollar. In 100 years it became popular ,but all these years it was resisted. To day all those Homeopaths dead. Now we have in herited nuron chemical affected 39 differnet mental disorders out of 1000 diseases recorded. They warned us about mental nuron level transmitted diseases. Similary other dyes in food and other items are affecting us daily.

    Psycho nurotic disease the Scizoparania and Alzimeres now can not be cured with out the change in the chemicals daily 23,000 times loaded with prana and aura impurified. Now siver and gold is nano particuled is radioactive. When elders given us substitute like Natural Gold ,silver and natural dyes and organic fibres why we do we neglet it.Think of this nano particuled is ECO FRIEND AND LOW IMPACT DYES . Another set of Dinocer at jet set speed .

    In the known circle of Homeopaths the warning agin we are not listening. Since the speed of Nano particuled is flash speed damages causing it should be immediately stopped with green policing. Where ever substitutes avaialbe given by our ancestors we should not allow the nano.Holding tails no use get to basic truths . Truth is in the dark but we search conveniently in well lighted areas for simplified solutions only . That was 2 nd millanium habbit dies hard.
    Now we are in 3 rd millanium ,changes for change sake is no good it must be creatively applied . Conciouse circle must control the brains of power seated ones so that it does not affect us all, we ar all are afected when one does mistakes .We are now in globalised problems not in the oppturnities.For oppturnities availed by from inward by using talents of people which is source resourceble is under heavy abuse. Days of Michael Jakson ended why do we not help his followers not to go paranoid about self images.They are still sufering from body parts defects which is natural but defictive only in society and community view .

    The cases here are for 100 years recoded in the psychiatry books are still not reviewd. Simple solutions is not always avaialble easily and simply. In the new millanium the way we seek solutions to be changed. Fashion designers are befooling women for decades showing unnatural regenerated bamboo as bamboo fibres and Poisonous drug synthetic Indigo as Indigo beauty. Natural Indigo is 1000 complex medical powered natural chemical contining 4 colurs in one . Synthetic Indigo is one chemical stripped out of it and one colour violet that turns eyesoaring grey in few washes. 100 years durable Organic and natural denim jeans is reduced by short product cycle concepts for 3/4 years .It’s chemical nuron impact on human brain is impacting daily 23,000 times since last 50 years .When brain go corrupt mind takes decision to act.As I said science can not dig here as it is dark subconciouse matter. But conciouse souls warning is everywhere.

    When sould body is created to control it is worth , otherwise we will repeat the old mistakes .
    Sustainable green consumer demand is base ,no use holding the tails.At the root stores should be restrained what to sell what not to sell.

  18. I am Nerdbotatron My fiance is a member of these blogs, so I decided it was time for me to join. There seems to be a wealth of information on here, I look forward to assimilating it xD Hmmm, a little but about myself….later

  19. you could be a resource person to me on my Post Graduate Research on Consumer Education, Environmental Governance and green sticker encapsulated in this title “Kick starting a Neo Environmental governance and
    Consumer Environmental Education in Nigeria using the power of Green Sticker.”
    I am a student of Environmental management student in Nigeria and i realized that environmental education and governance is almost zero if not non-existence in the country; i want to use my work to kick start consumer environmental awareness and a new perspective to environmental management in Nigeria- God helping me, i would like to prepare a bill out of my work to our National Assembly where i expect an Act on Green Sticker to evolve.
    All i need from you is e-Literature and resources that would help me in better understanding of the ideal of Green Sticker from the time immemorial till date, what it can achieve for a nation and what it had achieved for a nation as far environmental management is concerned

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