The Brand and The Citizen

Monday, May 12, 2014

18:00 - 20:30

Is it the duty of brands to tackle unsustainable consumption? And what are the early stage solutions that point to a future where this is possible? Surveys tell us that around 70% of citizens see it as important that we combat the key societal challenges – climate change, youth unemployment etc – but only 15% of consumers seek out products and services that actively address these issues.

That gap of 55% sends signals right through supply chains, and leaves us with big questions. Is it is possible for brands to lead on closing this gap? And it is right that they should seek to become more valuable in doing so?

If so, it may be possible to change the motivation of the system. To help us answer this conundrum, we had some of the pioneering minds in this space;

  • Thomas Kolster, the author of Goodvertising and founder of collaboration platform WhereGoodGrows
  • Joanna Yarrow, Sustainability Director for IKEA UK and Ireland, on the thinking behind the environmental messaging in IKEA’s The Wonderful Everyday” marketing campaign”
  • Gareth Dunsmore, Marketing Communications Head for Nissan Europe, on building a new market for EV’s.
  • Gerry Hopkinson, Co-Founder of Unity PR, whose campaigns include The Age of Stupid and M&S’s Shwopping

We built a crowd of marketing, sustainability and communications experts – what could shared expertise achieve?

Speakers

Gareth Dunsmore Nissan

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Gerry Hopkinson Unity

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Joanna Yarrow IKEA UK & Ireland

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Thomas Kolster Goodvertising Agency

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Round Tables

“The Brand & Society” - panel digest

This table will digest what was discussed in the panel discussion. Is it the duty of business to lead consumers toward more sustainable consumption? It is possible to find a win-win? What are the best examples of closing the gap?

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Obstacles
- Shareholder value means companies are driven to meet targets for each quarter. Family owned business are able to take a longer term view by taking short term hits on margin for a more sustainable model.
- The population is increasing and therefore the expectation is that sales will increase particularly in the developing countries. In Africa, the rich are high consumers.
- Big brands are slow to develop because of ‘brand risk’ but are being challenged by small start-ups.
- One planet living- there will be restrictions on the amount that can be manufactured by the limited resources of the planet. Perth has already run out of water.
- A Customer’s expectation is that when a brand promotes sustainable practices, they should be 100% sustainable. However, in reality this is impossible and therefore a shift in culture is required to support a step by step approach.
- The move to sustainable consumption may require generational shift, e.g. young people mostly living in cities use phones or gadgets as a means of identity rather than cars. Recycling rates tend to higher amongst young people.

Solutions
- To have a longer term vision for more sustainable profits in the future. To push back on the general ethos that the best way to make more money is to ‘sell more’ but to have a 1 to 2 year vision.
- To come up with a different way of thinking with different types of business models and products. Example: The aim of deodorants is to stop people smelling and therefore, do you impregnate clothing? It is about selling smarter.
- New business models for transport around towns which include less cars, car-pooling schemes, bike schemes and use of public transport.
- There will never be more cars sold than in 2006/2007 but profits do not need to fall. Cars are now becoming media through the internet and therefore new revenue streams are open such as advertising.
- To assess supply chains to completely redesign products.
- Technology innovation to provide solutions. BMW have set up I Ventures, a venture capital company to buy innovation. Nissan spends more money on R&D than advertising.
- Megatrends combined with environmental regulation will have the effect of nudging consumers to more sustainable practices.

Examples of technology or business model shifts:
- Nissan has changed their business strategy to follow EVs. The CEO had the vision and understanding that they can make money in this new direction. It has given them an incremental sustainable advantage whilst being radical.
- Unilever have brought out their ‘compressed aerosols’ which went against their business model by charging more for less but it has worked very well.

Concluding remarks:
Companies need to:
- Communicate what they are doing
- See sustainability as an opportunity
- Make sustainability attractive but profitable (loyalty/ stickiness/ Shareholder profits)

The citizen, recycling & the circular economy

The citizen needs to participate for the circular economy to work. This table will consider what motivates people to engage in sustainable choices, new business models, reuse, repair and recycling. Is it a moral responsibility? How do we drive value from the circular economy? How can business seek to find attractive commercial returns?

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How can businesses drive value using the circular economy?
• Identify hot-spots of impact e.g. Coca Cola – packaging accounts for 45-59% of impact of full value chain → invested in a PET reprocessing plant.
• E.g. glass company → capturing glass from waste streams (1 tonne of recycled glass replaces 1.2 tonnes of virgin glass & reduces energy use by 10%).
• E.g. Unilever - sachets in Asia → Re-extracting value from the waste & collecting in exchange for money/health vouchers.
• Challenges = concentrations of resource & quality of recycled material.
• Collective action by businesses needed?

Circular economy & behaviour change
• Systems of recycling are working & have a good trajectory but require good citizen behaviour.
• Need all aspects to align: infrastructure, behaviour, technology etc. Only takes one weak link to reduce confidence e.g. in recycling.
• Changing consumer behaviour remains harder than altering the sustainability of production e.g. Tesco – 1/3 of food waste caused by consumers but how to communicate responsibility (without Daily Mail headlines)?

How to motivate behaviour change?
• Need to employ the same techniques as were used to promote consumption to close the intention-action gap:
o Must be easy & convenient
o Simple messages → big difference e.g. changing freezing recommendations
o Choice editing: e.g. removing 2for1 salads (only acceptable with societal consensus?)
o Consumers need to understand that they can make a difference → role for brands in showing what recycled material becomes
o Build into design (esp. simplicity of materials & easy end of life disassembly)
• E.g. Unilever’s 5 Levers of Change (derived from classic marketing techniques): 1) Awareness 2) Ease 3) Desirability 4) Habit 5) Rewarding
• Can’t stereotype the ‘consumer’ → targeted
• Target groups of consumers?
• Gamification is a promising means to achieve this behaviour change

Sharing economy
• We are seeing a wave of change driven by technology towards collaborative consumption
o Only possible if you have large assets as a business – not as applicable to FMCGs
o Different in developing countries where experience of basic consumer goods is new
• Relies on the consumer to move to the service model but are there the same barriers in terms of behaviour change?
• We live in a service economy & hyper-consumption has only occurred within the last generation – not revolutionary
• Comes naturally to young generation
o Is this by default e.g. no loft in rented accommodation → less consumption? Do they still aspire to the same consumption?
o Or is this actually a new wave of ‘post-consumerism’
• How can we use the young generation to change older mindsets?

Product transparency

Why do we need to know that it takes 2,400 litres of water to create a hamburger? This table will discuss the value of determining the natural capital cost – water, carbon, waste and pollution – of products. Is the consumer interested, or is it a lens for companies to identify natural capital risks and opportunities in their supply chains?

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Obstacles
• It is not just about product transparency in terms of sourcing and supply chain decisions, but also about lifetime of products. E.g. if IKEA furniture is responsibly sourced but only lasts for a few years, one has to purchase more on a regular basis, which if not communicated is not transparency.
• Companies get caught out by making unsubstantiated product claims and become a lot more careful as a result, therefore the quality of their product disclosure improves.
• On the issue of product lifetime: products are rarely designed with an expiry date in mind; product lifetime is often rather determined by the length of time a company decides to supply parts for and also by consumer taste. It would be wasteful to design high quality products if people are not prepared to keep using them for a long time.


Red Flags (warnings)
• Rather than hypothesising whether consumers care about green products one must first ask if they understand what a green product is.
• The EC recently published a study on green communications and branding and found that most product environmental claims are unsubstantiated and even misleading.
• Many trade-offs exist, for example one product may perform well against GHG reduction but have high water impact. We need a way to reconciliate these impacts and natural capital accounting is one such way.


Solutions
• Product transparency is important for consumers to make better decisions, and for regulators to make informed choices about the impacts on the world in terms of policy and environmental impacts.
• Product transparency is important for companies who need to understand the whole lifecycle and understand where action is most needed; therefore it doesn’t always revolve around the consumer but has an important role to play internally.
• Life cycle analyses (LCA) are a classic tool to determine product environmental impacts. The challenge is to find the balance between LCA’s extensive and granular data requirements and practicality.
• Another tool is materiality assessment/ product environmental profit and loss accounting; e.g. in Puma’s case, this allowed them to identify that their biggest supply chain impact came from cattle ranching in Brazil so they could focus on that. This approach is well-suited for high-level business needs.
• Product transparency is essential for companies who need to know their operations better than anyone and be able to answer /account to key stakeholders thoroughly, not superficially.



Energy & “customer stickiness”

Whilst many elements of a corporate energy strategy are of limited interest to consumers or society, this table will evaluate energy investments that connect a business with its stakeholders. Decentralised energy, wind turbines, solar panels and more. How should these benefits be factored into decision-making?

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What is customer stickiness?
• An engaged customer and partner;
• Transparency and trust;
• Community ownership and a relationship with the brand;
• Loyalty;
Are customers and stakeholders connected with businesses?
• Stakeholders/customers/businesses are driven by price;
• General census that customers do not trust energy companies, e.g.
o If customers do not switch energy deals at the end of their term, they can automatically be put on a high tariff;
o The media can influence customers, e.g. British gas received recent negative press which resulted in a loss in customer and revenue;
o Customers choose to pre-pay their energy as they want to protect themselves against fluctuations in the energy market. Is this a sign they do not trust utility companies?
• Energy companies face a challenge as customers can switch energy providers every 28 days;
• Research has shown that customers switch 5 times more than their broadband providers;
• Future smart metering is an enabler for customers to monitor energy consumption and compare providers. Due to this, there may be big changes in the future and we may no longer see the “big 6”.
Discussion: The future of energy
• New tools for managing home energy are becoming popular to customers and businesses. E.g. Google nest;
• Storage solution for renewable energy is emerging. Good for the local grid;
• Energy security and demand will be a key feature to businesses. E.g. customer experiencing regular blackouts will be a factor for switching;
• Providing customers with a share in local energy production could help investments in renewable energy. Additionally, this may also reduce local objection to renewable infrastructure. E.g. windfarms and NIMBY;
• Companies are offering additional services to customers. E.g. Installing free meters and providing energy saving advice;
• The cost of finance is a barrier to renewable energy investments, in particular for smaller businesses and the public. Can the new crowd funding sites help overcome this?
• Bioregional’s sustainable development in Brighton offers cost effective and renewable energy. So far, no-one has left or switched from this. Good example of trust and being able to provide energy at cost (not marked up by utility provider);
• Government can help with feed-in tariffs;
• Customer engagement should be a priority;
• Companies need to work hard to show benefits to customers. E.g. Customer perceives that supermarkets compete for their loyalty (TV ads etc), therefore they feel valued and may choose to stick to one brand. Can utility companies learn from this?
• Social housing providers have greater trust from their customers/tennants as programmes such as ‘The Green Deal’ offer cost savings through renewable energy and improving home efficiency.

How crowds solve sustainability challenges

Stakeholder engagement is seen by many as a route to building the partnerships needed to solve complex sustainability challenges. This round table will look at the value of using stakeholder engagement to help define, prioritise and embed approaches to sustainability, and the most effective ways of doing so.

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The table began by introducing themselves and each giving a short suggestion on the subject
• Communications
• Get the young involved
• Behavior change
• Sharing knowledge + skills
• Back to basics
• Creation of role models
• Breaking down complexity and removing technical language barriers

The discussion then broke into the importance of getting influence, answers & knowledge from a crowd
• National Student Surveys are a good way of showing what students want, not only a good method of crowd sourcing from a specific demographic, but recent surveys have shown that interestingly students want to learn about sustainability.
• There can be limit to the sustainability knowledge within the walls of an organization, using crowds can identify these gaps and generate a collective vision at the same time.
• Move sustainability away from just the sustainability team and branch out to crowds. This allows the idea of sustainability to reach other areas of expertise and subsequently drive more thinking. E.g. Mathematicians, Architects, Designers.
• We must arm people with the knowledge to think about sustainability
• It is important to “let go and loose control”, the experts will only get it right 60% of the time. The crowd’s collective ideas and knowledge will get it tight 90% of the time.
• Allowing crowds to be heard not only drives their thinking, but their inspiration also; in turn creating passion.
• The crowd is often the consumer, and their opinion matters most. The crowds feedback is used in sales and marketing so why not sustainability?
• Let the crowd define what drives the sustainability within the business. An example of Barts hospital was used, asking the nurses where they value sustainability within the business. It came last on the list of four, the challenge is then to make it first WITHOUT disrupting the rest of the order. Don’t simply try and blindly enforce it, learn form the crowd first.
• There often needs to be a hook (such as profit), learn what this is form the crowd to boost their engagement.
• Transient crowds, such as students, can have advantages and disadvantages. The ever-changing audience keeps campaigns feeling fresh, whilst it also means a limited time is given to embed campaigns.
• Making the crowd feel more apart of the sector will allow them to feel connected with the sustainability journey (e.g. Banks, students, etc.)
• Can we engage the crowd within the specific sectors to overcome previous negative attitudes toward them? This would create a feeling of being more ethical and therefore more sustainable. Credibility is so important and many companies have lost theirs, should they look at returning tot heir roots (roots that would have stemmed form the ideals of the crowd) e.g Barclays.
• Businesses need an organization the ‘gets it’ culturally to help them become more sustainable
• It is important to focus on stakeholders and their views, learn what they think you have achieved and what direction you are going in. This will help shape your plan in a direction they are expecting you to go in.
• The crowd often has shared values, but we don’t actually work from these values. Address the crowd to get the building blocks to move forward form. If they are important to the crowd then they are important to a business. It is important tot find common ground.
• Everything must be carried out with integrity otherwise the crowd will loose trust.
• Charities are in a unique position with relation to funding. Less funding is given toward their sustainability; they often rely solely on the crowd for funding. This means they are more likely to rely on the opinions of the crowd and better succeed.

The Utility & Society

The relationship between utilities and society has become complex in recent years, eroding the business case for much needed capital investment and creating competition from more community-minded business models. How can energy and water companies find a new way of working with consumers in a way that will restore trust?

Communicating the “S” word

Whist technical terms can help sustainability professionals, they can be a turn-off to the public and to mainstream colleagues. Conscious capitalism, circular economy, natural capital, net positive, shared value, closed loop etc.  We ask the table to debate these terms, and draw conclusion on what is needed to engage the mainstream in these issues.

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Preferred Terminology
• Whilst technical terms can help sustainability professionals, they can be a turn-off to the public and to mainstream colleagues;
• It is important to use a term that captures on-going success and has a strategic outlook;
• But it is also important to understand the needs of the customer and labels can undermine that process;
• There can be different mantras and messages relayed internally and externally.

Preferred Term Comments
“Corporate Responsibility” Focus on operational aspects of sustainability.
“Corporate Social Responsibility” Connotations of separate, philanthropic activities.
“Sustainability” Too general for some, but can be flexible to clients’ needs, and mean what they need it to mean.
“Sustainable Business” Prefixing or suffixing gives specific context.

Cultural Differences
• Terminology has trends and different preferences in different areas of the world;
• The USA uses ‘Corporate Citizenship’, whereas African cultures are concerned with localised community issues;
• Sustainability is a somewhat European-centric term derived from the political term ‘Sustainable Development’.
Wearing the Wrong Hat
• Talking to people with the label of ‘sustainability professional’ can lead to prejudices and preconceptions that undermine credibility and the business case;
• On the other hand, a room full of sustainability professionals is not productive and lacks any real external influence.
Placement of Sustainability and Longevity of ‘S’ Word
• Sustainability teams are slowly being dissolved and integrated throughout organisations;
• The desire and mission of a sustainability executive should arguably be to make their role irrelevant and integrate sustainability throughout an organisation;
• A ‘systems approach’ may be more appropriate, utilising relevant skills throughout the organisation to enable others to do their jobs more sustainably and make more sustainable decisions.
Regulation, Risk & the Business Case
• The business case is still paramount for boards and decision-makers, and leads to an ability to enable action, particularly in the short-term;
• The business case is inherently linked to risk, such as ‘reputational risk’ especially for expensive brands.

“The consumer” or “The citizen”?

“The consumer” is an inherently unhelpful view of the individual, argued Jon Alexander in the Guardian recently. Brands that start to treat people as citizens, recognising our capacity to participate in new ways, will form more meaningful connections. But will a change in language lead to a change in attitude? How can the Crowd lead to ensure it does?’

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• It was described how New Citizenship Project survey found that people were referred to as “citizens” rather than “consumers” responded more positively to the concept of sustainability, highlighting that language is important when communicating.
• The table was interested how well brands understand the people they provide products or services to.
o BR outlined how NHS ensure that patient and visitors’ experience in hospital is amiable and if this were done in other examples, brands would increase their competitiveness.
• It was expressed that sustainability efforts should be appropriate to product e.g. important for Pampers, but not for operations which have little impact on environment.
o LJ highlighted importance of actions behind claims to maintain integrity.
• The table was interested whether opportunities exist in markets where sustainability and other ethics seem unlikely, such as Jaguar.
o DH outlined that things are happening in market e.g. car sharing schemes and accounts with transport providers such as Virgin Atlantic that offer door-to-door first class “experiences” rather than solid product of a car.
• It was noted that choice editing excludes consumers from the conversation and creates a credibility gap where customers are expected to trust in brands completely.
o AS described how B&Q advert which is a positive example where gap is bridged.
• It was noted that research found that younger demographics expecting more dialogue on products, but with focus on customising personal experience rather than the bigger picture.
o DH research saw recent drop in Chinese ostentatious market due to sustainability concerns.
o AS described how “China Dream” by Peggy Liu outlines new set of values to achieve improved livelihoods and prosperity for people.
o CS maintained that are China taking advantage of sustainable development and will avoid risks where the America are failing with unsustainable consumption.
o AS pointed out that negative environmental experiences are more evident (smog, etc) particularly stimulate these strategies in China.
• It was questioned how we can move beyond consumption and engage people to find out about their needs and whether this is possible.
o CS thinks it is possible and drew on example of Fair Trade coffee. Also outlines how these conversations are important, but are only happening at high level and not with- and between- the people themselves. This could instigate sharing Sky programmes, stimulating community and wider benefits.
• The table described how NHS showed good examples of communicating with end-users.
• Discussed when dialogue should occur:
o HB outlined how it should not be at point-of-purchase and MK mentioned that it should play out through the product itself.
o LJ suggested trials.
• The table outlined importance of data collection to enhance trust in sustainability credentials and to better understand people’s behaviour
• Suggestion of book: “Who cares wins” by David Jones.

DEBATE: Should business seek to shape consumption?

Let’s assume that business is capable of shifting consumer demand towards more sustainable solutions, it is right to do so? Are we encouraging companies to develop potentially exploitative practises, and is there a risk that society will object to the growing influence of business?

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Trust Issues
In shaping consumer decisions the most important factor arising from discussion was that of trust. Without perceived integrity, married with the impression that the firm is doing all it can internally, attempts to shape consumption may be met with scepticism and recalcitrance.

Branding Decisions
To make sustainability, or any other feature for that matter, a central pillar of a brand is to take a risk in that once a brand is leading the pack it must maintain that position to perpetuate itself. The discussion pointed to several examples where a firm has intentionally stayed in the middle of the pack, despite being aware that if publicised some metrics would put them above average, because this would then create an obligation to maintain such metrics at their present level. This contrasts however with perspectives that a brand should indeed aim for the front of the pack, presumably so long as it is a metric which matters tot heir consumers, because this creates better affinity and love between customer and brand; allowing the brand to grow organically.

Language and Voice
When aiming to shape consumption the communications aspect of such campaigns was identified as particularly important. A human voice, trusted and honest, is often the most compelling voice to use in such areas and bring the additional benefit that if things do go wrong customers are more forgiving.

Consumer Responsibility
The discussion mirrored a logical extension of the statistic that 75% of consumers expect business to take a leading role in driving sustainability, but only 15% actually consider sustainability while making consumer decisions; despite clamouring for sustainability drives it is sometimes the case that this is not followed up by individual action or altered purchase decisions. It appears that individuals care as citizens, but when faced with economic decision making often substitute such worries with utility maximisation.

This dichotomy presents a conundrum for business in that conventionally trust goes both ways, but integrity is demanded by the consumer but sometimes not reciprocated. As an example, if consumers demand openness and clarity in supermarket labelling in attempts to fight rising obesity levels then this should be matched with an intention to heed the labels and take individual action in the form of altered purchase decisions. It seems this reciprocal action is unfortunately woefully lacking.

The Power of Owning Up
Where a problem has been found, owning up to the fact, communicating with stakeholders, and openly designing solutions is not only essential for the trust mentioned above, but can be used as an internal springboard for change which can go beyond solving that individual problem.

Venue Detail

Bank of America Merrill Lynch: King Edward Hall

King Edward Hall | 2 King Edward Street | London | EC1A 1HQ

Directions

Bank of America's offices are a very short walk from St Paul's tube station (Central Line). Exit the station at Cheapside/Newgate Street. Go past the BT centre, with it on your right-hand side and take the first available right down Edward Street. Continue down this road for 80m and the entrance to the venue is on your left-hand side.

Do not go to the main reception desk at their offices when you arrive. You are looking for an entrance that leads you directly into the King Edward Hall.
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