THE SIGMA GUIDELINES- TOOLKIT · A key element of a sustainability marketing strategy is to understand the trustworthiness of your offering. From a consumers perspective there are

THE SIGMA GUIDELINES- TOOLKIT

SIGMA Sustainability Marketing Guide

SIGMA Sustainability Marketing Guide Getting started

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Contents Flow chart ........................................................................................................... 2

Contents ............................................................................................................. 3

Acknowledgments............................................................................................... 4

Introduction ......................................................................................................... 5

Four Essential Steps towards sustainability marketing ....................................... 5

1. Getting started........................................................................................... 5

2. Understand the market.............................................................................. 6

3. Audit your current products and services .................................................. 6

4. Develop strategic options.......................................................................... 6

A) Introduction to Marketing................................................................................ 8

B) Sustainable Marketing: Why it matters ......................................................... 11

C) Sustainable Marketing: Some practical lessons ........................................... 14

D) Who are the sustainable consumers? .......................................................... 17

E) Product and Service Sustainability Checklist................................................ 20

F) Assessing your Key Sustainability Issues..................................................... 28

G) Mapping the options..................................................................................... 29

H) Mapping trustworthiness .............................................................................. 30

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Acknowledgments We would like to thank the following for their expertise, enthusiasm and input to this guide: Martin Charter The Centre for Sustainable Design

Debra Massey Chartered Institute of Marketing

Lia Abady Stephanie Draper Forum for the Future

Mike Barry Marks and Spencer

Tom Dalziel Powergen

Bob Allen-Turl David Hare TNT

Jason Perks Sd3

We are also indebted to Jacqueline Ottman and Ken Peattie who are undertaking leading edge work in this area. Prepared by Rosalind Oakley and Jason Perks.

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Introduction The SIGMA sustainability marketing guide has been developed in conjunction with The Chartered Institute of Marketing, Forum for the Future, Centre for Sustainable Design and organisational partner companies in the SIGMA project. It is intended to help an organisation develop strategies to market the benefits of its approach to sustainability to its customers - taking advantage of opportunities and minimising risks. The guide is designed to help both sustainability practitioners and marketeers gain an understanding of each others respective fields and to use their expertise to collaboratively develop successful sustainability marketing strategies. The document is split into 2 parts: Four Essential Steps – suggested steps towards a marketing plan, utilising the tools briefly outlined below Sustainability help files – practical tools and briefings to help complete the steps suggested above. The guide is intended to provide some initial guidance for sustainability professionals and for marketeers in getting started. It provides some suggestions of initial tasks and analyses. Users should use their own judgement in deciding which areas to focus on and to make use of other resources available.

Four Essential Steps towards sustainability marketing As a part of the SIGMA guidelines, the 4 key steps assume that the organisation has already made a commitment to sustainability and that the organisation’s sustainability practitioners are seeking to get marketing colleagues involved. However, the guidance can just as easily be used by others.

1. Getting started Marketing and sustainability management are two very different specialist fields with their own jargon and approaches. For the Sustainability Practitioner: You may feel that you aren’t familiar enough with marketing concepts and how sustainability links to these to effectively engage with your marketing department. To help get you started, Introduction to marketing (1) provides a brief overview of the elements of marketing. Sustainable marketing: some practical lessons (2) further develops the nature of marketing, the approaches used and their linkage with sustainability providing a number of links to further information and guidance. For the Marketeer You may feel that you aren’t familiar enough with sustainability concepts and how marketing links to these to effectively work towards a marketing strategy that takes full advantage of your company’s approach to sustainability. Sustainability marketing: why it matters (3) provides a succinct evidence-based case for incorporating sustainability into strategic marketing thinking.

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2. Understand the market It is important to understand the potential appetite of your customers for sustainability-oriented products and services. This may well involve some tailored market-research, or you may be able to get some initial insights from existing research within your organisation or from surveys by other organisations. Who are the sustainable consumers? (4) provides some generic evidence for consumer-based opportunities.

3. Audit your current products and services A first step in devising a strategy should be to audit your current and planned products and/or services (offerings) to understand how well they support sustainability. This will help in identifying your current strengths and weaknesses, opportunities and threats(SWOT). The product/service sustainability checklist (5) provides a simple template for assessing your current offerings from a sustainability perspective. You should consider what need you are actually meeting. Could it be met by providing a service rather than a product?

For advice from the Chartered Institute of Marketing on conducting a SWOT see: http://www.cim.co.uk/mdoc/sect4/mclass2.htm

4. Develop strategic options Having identified the potential appetite of your current and potential customers for more sustainable products/services, and having assessed your current products/services, you should now be in a good position to identify some strategic options and assess their potential. There are many ways that you can approach this, and it will depend on your individual organisation. Although you may find you have an ideal candidate for marketing in your current products and services, the chances are that there will be some changes to make before you have an offering that meets all the criteria set out – and some changes may be quite fundamental, such as changing a production process, creating an entirely new product/service, or providing a completely different solution to the need that your previous product/service was meeting. In addition to considering specific products and services you also need to consider the overall positioning of the organisation. A first step might be to consider the options in terms of your key sustainability issues. Identifying whether each has any communication potential, whether it poses any risks, whether the credibility of your performance can be established, and whether it will enable differentiation against your competitors – and how easy will it be for them to follow you. Assessing your Key Sustainability Issues (6) provides a matrix for considering these factors for each of your key issues. Link to additional SIGMA tools Having made an assessment, a useful way of determining the best options is to map them in terms of their ease of communication and level of differentiation. Mapping the options (7) provides a simple method for doing this.

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A key element of a sustainability marketing strategy is to understand the trustworthiness of your offering. From a consumers perspective there are three elements of trust. Mapping trustworthiness (8) provides a model for determining how strong your offering is in terms of these three elements If you haven’t considered the best way of communicating the message to customers and those who influence them earlier, you will certainly need to now. See CIM 10 minute guide to the promotional mix You are probably now ready to progress with your most promising options. Before you get too committed it’s worth checking that you aren’t about to make the same mistakes as others. Revisit sustainability marketing lessons for a quick reminder of some basic dos and don’ts. The next step is the development of a full marketing plan1.

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1 CIM, Forum for the Future and the Centre for Sustainable Development are exploring future collaboration to build on this initial guide and provide further practical guidance.

A) Introduction to Marketing

1. What is Marketing?

'Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably'

Definition from The Chartered Institute of Marketing

The products we buy, the stores we visit, the media messages we receive, the choices we make in our consumer society have been shaped by the forces of marketing. The marketing process is central to the business performance of companies large and small because it addresses the most important aspect of the competitive marketplace - identifying, anticipating and satisfying customer needs profitably.

Marketing is sometimes wrongly defined within the narrow context of advertising or selling, but that is not the whole story. Marketing is a key management discipline that enables the producers of goods and services to interpret customer wants, needs and desires - and match or exceed them in delivery to their target consumers.

It is all about getting the right product or service to the customer at the right price, in the right place, at the right time, in the right way.

2. What is Involved?

Marketing is both a concept dedicated to meeting customer requirements and a range of techniques which enables the company to determine those requirements and ensure they are met. One way to understand the broad scope of marketing is to refer to the four (or seven) 'P's, also known as the marketing mix. These are described below together with some sustainability considerations:

2.1 Product

Marketing is fundamental to product development and product management. There is little point in developing a product nobody wants to buy. Marketing therefore involves design, concept testing and product launch. Sustainability considerations: How sustainable is the product or service? What are the social and environmental impacts of making, using and disposing of the product?

2.2 Price

What people really feel about a product or service is reflected in what they are prepared to pay for it. Pricing plays a key role in what is known as the 'marketing mix'. It is the only element that generates revenue - all the other elements represent cost.

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Sustainability considerations: What is the true cost of the product – does it create social and environmental impacts which create costs that others have to bear? These costs might arise during the creation or use of the product or at the end of its useful life when it is disposed of.

2.3 Place

The movement of goods from point of productions to point of consumption or use is another key aspect of marketing. Effective distribution means getting your product into the right places - an essential consideration given the constant changes in retailing and international trade. Sustainability considerations: Can the physical distribution be greened and made socially responsible? Are their significant transport costs involved?

2.4 Promotion

This 'P' is perhaps the best understood, most broadly based and most visible aspect of marketing. Promotion means communication with customers. Promotion is persuasion. Its disciplines include corporate identity, branding, advertising, public relations, direct marketing, sales promotion/merchandising, sales/sales management, and exhibitions. The way in which all these elements are co-ordinated is crucial to the success of the overall marketing strategy. Sustainability considerations: Are claims accurate and truthful? Are we encouraging excessive consumption? Are we encouraging sustainable behaviour?

2.5 From 4Ps to 7Ps

This definition of the marketing mix has now been expanded to include three more factors – people, processes and physical evidence. Marketers of services are effectively dealing with intangible products and need additional tools to help them communicate their offering to the customer:

People – in a service industry the people who sell the service and deliver the service are a key component of that service. Courteous and efficient staff make an impression on the customer over and above the actual level of service they deliver. Sustainability considerations: Are we treating our people fairly? Do we practice discrimination, are staff paid a living wage?

Processes - one of the difficulties when marketing services is to ensure consistency across all points of customer contact. Strict procedures mean that the customer receives a consistent level of service, and a recognisable service experience wherever they shop.

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Sustainability considerations: Are our processes designed to respect and enhance natural and human resources?

Physical evidence – if the product is intangible then the points of customer contact need not be. Corporate identity in the form of uniforms, store layouts and communications pieces all create a tangible image in the mind of the customer. Sustainability considerations: How do avoid creating unnecessary and wasteful physical evidence? Each of the above factors contributes to an over-arching view of marketing as a total system of interacting business activities designed to plan, price, promote and distribute goods and services to meet the needs of current and potential customers.

3. Planning a Marketing Strategy

The different elements that go into the 'marketing mix' cannot be planned in isolation. Marketing focuses on the customer, researching their needs and preferences, analysing their attitudes to promotion, and other factors that influence their purchasing decisions and persuade them to buy products and services from you rather than a wide range of competitors.

All of that requires a marketing strategy that is co-ordinated and considered - not a piecemeal approach to each part of the task - and realistic in terms of making the most effective use of the resources and budgets available.

Planning a marketing strategy starts with a detailed and ongoing investigation of the market and its sub-markets or segments. Companies look at the social, political, economic, cultural and technological trends which are shaping the market, at their own position within it, and at the resources they can marshal to change or influence it. This is sometimes known as the marketing audit.

A marketing plan defining objectives, targets and performance measures is then developed with a financial budget. And when specific goals have been defined, then strategic alternatives to the current position can be discussed, and ways to achieve those alternatives can be chosen. The marketing strategy is then formalised within a specific plan of action, which is constantly revised and updated and the marketing campaign progresses.

Planning an effective marketing strategy within the organisation is intimately bound up with the total business planning process because it is linked to overall corporate strategy and requires endorsement from the top. It also needs to be continually reviewed. Therefore collaboration between marketing and other corporate activities such as finance, research, development and production is important to ensure that the marketing strategy is implemented effectively.

Marketing is a team effort requiring the orchestration of a range of different skills, outlooks and personalities. Some aspects of marketing deal solely in facts and finance; others explore the ambiguities and uncertainties of changing consumer styles.

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B) Sustainable Marketing: Why it matters

1. What is sustainable marketing? Sustainable marketing is both a challenge and an opportunity. Customers and society want more than just product and service performance, they want it with a conscience. Increasingly they want to know what all the impacts of your product and services are- what is the impact of making and using them, on health, people, environment? And what happens when a product’s useful life is over, can it be recycled, reused, will it pollute? This includes consumables you use to provide your service. 2. Is it new? Yes and no. Many companies are already taking some useful steps e.g. good employment practices, supporting the local community, reducing environmental impact. But doing a bit is not enough. A few trees planted or a few thousand to charity is just lip service if your products, services and business operations are part of the problem in the first place. In most cases that means some fundamental rethinking about how you operate. 3. Why should I care? Society, consumers and legislators are all taking more interest and action in this area, so there are both market opportunities and risks. Increasingly, a company’s footprint on society is bound up with its licence to operate. Government measures are changing market behaviour, taxing company cars which emit more carbon dioxide for example has transformed the buying behaviour of car fleet managers, while the introduction of landfill tax is changing attitudes to waste. Another trend is to place responsibility on producers to take back their products. Consumers are more willing to discriminate in their purchases. At the very least you need to manage the risks. Better still focus on the opportunities. 4. Opportunities

Brand value and reputation A responsible approach to business can enhance brand value. The average reputation score for those companies with an expressed commitment to business ethics was between 4.7 and 6.7% higher than the score for the group without such a commitment.2

2Verschoor, C.: A Study of the Link Between a Corporation’s Financial Performance and its Ethics, Business and Society, (1998), based on Fortune’s 100 Most Admired Companies” list

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Increased profitability and loyalty Leadership in this area can create powerful brand differentiation and loyalty leading to increased profits. The Cooperative Bank for example has calculated that c. 20% of its profits come from its ethical and ecological positioning3. But it’s not just the leaders who are seeing benefits. 30%of people bought a product because of a link to a charitable product while 28% had boycotted a company’s product on ethical grounds.4 Electrolux’s Green Range of white goods that have a lower environmental impact achieved a 3.5% higher gross margin than the company’s standard range.5 A growing market – not yet being effectively reached. Conservative estimates suggest overtly ethical products in 1999-2000 were worth well over £1.3 billion. Although market share is still small many of these are growing fast. The UK organic market has increased rapidly over recent years with growth rates of 30 to 50% per annum.6 Yeo Valley organic foods for example was the fourth fastest growing brand in the UK with sales of £25 million (A.C. Neilsen The Biggest Brands Report’). Sales of fairly traded coffee have been growing at about 9% a year in a fairly static market. 7 The global market for wind power has been growing at over 40% year on year for the past 10 years from around 300MW of installed capacity in the early 1990s, to around 4.5 gigawatts by last year.8 The 30:3 syndrome: 30 % of consumers regularly claim to be concerned about companies’ social and environmental records, but currently ‘ethical ‘ products typically attract 3% market share. The gap presents a real opportunity for innovative and effective marketing. What do the customers think? 42% of people think companies should be wholly or partially responsible for solving social problems9 49% of consumers take some note of green aspects when buying10

3 Our impact, Partnership Report 2001 The Cooperative Bank 4 MORI survey quoted by Sue Adkins in Cause Related Marketing- who cares wins (1999) Butterworth Oxford UK 5 Hedstrom,G, Shopley J and LeDuc C Realising the Sustainable Development Premium (2000) Arthur D Little 6 Sales in 2000-2001 amounted to £802 million, up by 33% on the previous year. 2001-2002 sales are predicted to be up a further 20% to over £950 million Source: http://www.defra.gov.uk/farm/organic/actionplan/prospects.htm 7 Who are the Ethical Consumers? Roger Cowe and Simon Williams (2000) Published by the Cooperative Bank 8 In the first six months of 2001 Vestas, the Danish Wind Turbine company and its associates delivered 995MW - 75% more than it did in the same period of 2000. source: HSToday: COMPANY FOCUS 9 Simon Zadek, Doing Good and Doing Well: Making the Business Case for Corporate Citizenship, (November 2000) Conference Board

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10 Quoted in in Marketing and sustainability p7 by Martin Charter, Ken Peattie, Jacqueline Ottman and Michael J. Polonsky. (April 2002). Published by Centre for Business Relationships, Accountability, Sustainability and

2/3 of ‘alpha class’ (high education/income) customers have considered switching brands because of corporate social responsibility issues. Some of the most concerned consumers are also affluent. See D) Who are the sustainable consumers? for more information on consumer attitudes. 5. Time for action Talk to your colleagues managing environment and sustainability. Undertake an audit. What are the main social and environmental impacts of your products and services? How do they matter to your customers? Which ones would interest your customers? How easily can you communicate them?

Society (BRASS), in association with The Centre for Sustainable Design. Or see:http://www.cfsd.org.uk/smart-know-net/smart-know-net.pdf

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C) Sustainable Marketing: Some practical lessons 1. Introduction At first glance some might argue that sustainability and marketing are incompatible. Some associate marketing with ever growing consumption, with creating desire for unnecessary things, and cynics might say with built in obsolescence, limited durability and endless product and service extensions that keep people coming back for more. Sustainability on the other hand is about consuming less, about making more with less, better and for longer. It is also about the ‘world behind the product’. First impressions are not always accurate. Sustainability and marketing have much to offer each other. Marketing has the ability to understand customer expectations, behaviours and patterns and to influence them by persuasive communication and to influence product sourcing, design and packaging. Marketing deals not just with individuals but with businesses, government and distributors. Sustainability offers marketeers new opportunities: the potential to build reputation and brand value; outstanding loyalty; meaningful differentiation and an impetus for radical innovation. Sustainable marketing is still a new area; there are still relatively few experiences and extensive case studies to draw on. Nor is it an area without risk. Companies claiming sustainable credentials may find themselves under even more exacting scrutiny and vulnerable to charges of greenwash or hypocrisy if found wanting. Nor is a sustainable marketing strategy a magic bullet. It is still necessary to do the usual marketing homework of understanding the customer. Feel good claims will not overcome ineffective or overpriced products. This short briefing pulls out some key points from a brief survey of articles and case studies and seeks to identify key learning points for sustainable marketing. See Resources section at end for further information 2. Key sustainability marketing lessons

Understand the full impact your product or service is having throughout its lifecycle, socially, economically and environmentally. What is the impact of sourcing the raw material and making the product? What is the impact on communities within the company’s supply chain? How is the product used, what energy is used, does it have social consequences. How is it disposed of – can it be reused, does it pollute? Focus on the areas of greatest impact. Integration and coherence is crucial. Customers will look not only at individual products and services but also at the performance of the organisation as a whole. Brand values and broader organisational behaviour act as shorthand to support buying decisions

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Performance, quality, price and convenience still matter. Sustainability criteria differentiate. Stress the benefits for customers and make things easy for them remembering that these customers like any others will fall into different segments motivated by different attributes, lifestyle choices and cultural/ethical make-up. Ensure your marketing effort is credible. Make meaningful claims, don’t overplay insignificant features or assume tweaking one or two aspects make a product or service sustainable. See for example the National Customer Council green claims code of conduct http://www.ncc.org.uk/pubs/green.html. Engage stakeholders. They can bring important perspectives on your performance. Credible third party endorsement is more powerful than claims you make yourself. Be proactive, demonstrate leadership. Identify problems and deal with them, don’t wait for others to prompt you. This builds credibility. You may need to help educate the customer. Think differently. To rise to the sustainability challenge you need to rethink how stakeholder needs are met. Rethink the value your product or service provides. What is the underlying need and how can it be met more sustainably, with less impact. Is a product needed? Think of your product or service as part of a system - what part does it play? How can you move from making a negative impact to making a positive one? Key characteristics: durable, non toxic, non exploitative, minimally packaged, reusable. Key trends ‘dematerialising’, from products to services; from creating social and environmental damage to enhancing value 3. Avoiding pitfalls Jacqui Ottman provides the following advice on avoiding a backlash:

• Ensure you position individual initiatives as part of a corporate programme • Promote responsible consumption • Consider the environmental impact of your marketing methods • Use meaningful claims • Be specific and prominent • Provide complete information • Do not overstate • Enlist the support of third parties • Consider eco labels –but be aware of risks here too 4. Case studies Not surprisingly given the emphasis on not just talking sustainability but being sustainable, the case studies that most exemplify these points tend to be of

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companies whose approach to sustainability is a core part of their positioning and strategy. See for example: BP http://www.bp.com/bponthestreet/home/default.asp This includes a feature on BP’s US advertising campaign and its BP on the street campaign. Patagonia outdoor clothing: http://www.patagonia.com/enviro/main_enviro_action.shtml B&Qhttp://www.diy.com/bq/templates/contentlookup.jhtml?content=%2Faboutbandq%2Fsustainability&root=%2Faboutbandq Interface carpets and floor covering http://www.interfacesustainability.com/ Body Shop, http://www.thebodyshop.com/web/tbsgl/values.jsp SMART car http://www.smart.com/ See also report from McCann Erikson for brief profiles of more sustainable marketing efforts by household names: http://www.uneptie.org/pc/sustain/reports/advertising/can-sustainability-Sell%20.pdf See also http://www.greenmarketing.com for several case studies 5. More Resources We are particularly indebted to the work of Jacqueline Ottman, Martin Charter and Ken Peattie who are undertaking leading edge work in this area. See especially: Books: Green Marketing: Opportunity for Innovation Jacqueline Ottman (NTC-McGraw-Hill, 1998) This has extensive examples and case studies and provides practical advice. Despite the title much of the advice is applicable to sustainable marketing. Greener Marketing, Charter M and Polonsky M Ed (Greenleaf Publishing UK, 1999) Websites: Visit http://www.greenmarketing.com This is the site of Jacqui Ottman’s consultancy: Ottman Consulting, Inc, and includes extensive information including an online version of Green Marketing: Opportunity for Innovation. It also includes lessons from the green graveyard looking at marketing mistakes: http://www.greenmarketing.com/speeches/tspd7.html Visit www.cfsd.org.uk/smart-know-net this includes references to other sites of potential interest to sustainable marketeers.

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D) Who are the sustainable consumers?

Our understanding of customer behaviour on ethical and sustainable development grounds is still evolving. Particularly useful is groundbreaking research by Roger Cowe and Simon Williams.11 They classified UK consumers by their use of ‘ethical’ criteria. Cowe and Williams propose the following segmentation ‘Do what I can’ 49% This most substantial segment tends to be older. They have ethical concerns but don’t hold them very strongly. Service, convenience and brand name are most important to them. Their ethical concerns focus on treatment of employees. ‘Look after my own’ 22% This is the segment least concerned with social, ethical or environmental concerns. ‘Conscientious consumers’ 18% More upmarket than the first two segments. More likely to be car owners homeowners and shareholders. Quality is more important to them than brand, so if quality and price are removed then ethical considerations influence their decisions. They will buy or avoid products because of company reputations. ‘Global watchdogs’ 5% This is the most concerned segment and most likely to act on their concerns. They are also the most affluent with 10% having a household income of over £40,000 a year. They are typically 35-55 and professionals. They actively seek information on ethical considerations, with brand unimportant to them. ‘Brand generation’ 6% Many of this group are young. They are concerned with ethical issues and talk about them to their friends, but when shopping, brand names quality and value for money are most important. Their sustainability concerns focus on treatment of employees and environmental impact. They could be described as the Nike generation influenced by the publicity over sourcing practices. The ‘Global watchdogs’ segment is the one with the most obvious potential but the other segments offer opportunities too, notably the conscientious consumer and the Brand generation. 11 Who are the Ethical Consumers? Roger Cowe and Simon Williams. (2000) Published by the Cooperative Bank

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In the US Roper Starch World-wide12 has identified five segments of customers with varying degrees of concern and action True blue green 11% major green purchasers and recyclers Greenback Greens 5% will buy or give green but won’t make significant lifestyle changes Sprouts 33% who care but would only spend a little more to buy green Grousers 18% see the environment as a problem but somebody else’s Basic Browns 31% essentially don’t care won’t care Research by Weber Shandwick Worldwide13 demonstrates the potential of social responsibility issues such as environmental or employment policies, to cause ‘Brand switching’. A survey of 8000 customers worldwide suggested that two-thirds of all ‘alpha class’ (high education/high income) customers have considered switching brands because of corporate social responsibility issues. A study by Pulse™/UNEP study14 sought to gain a better insight into how young people view Sustainable Consumption. The research took place in 28 countries across Europe, Asia Pacific, South and North America. The study found general confusion regarding the terminology ‘Sustainable Consumption’, but found that young people have strong concerns about three sustainability related issues: the protection of the environment, animal testing and human exploitation in developing countries. The study suggests that young people want to ‘Have it All’. They are both hedonists and idealists, they want a sustainable planet and their favourite brands. This is the ‘use and throw’ generation, but at the same time, they have dreams of a private and wonderful world. They are not yet aware of the consequences of their own shopping behaviour. There is a feeling that they are ‘unable to change the world’. Yet they want the world to change. See UNEP website for further information on the views of young people and other consumers 15. In Green Marketing Jacqui Ottman identifies 3 key customer needs to tap into:

• The need to make a difference – to feel empowered to contribute despite the scale of the challenge

• The need for information in order to make a choice

• The need to maintain lifestyle- product performance, quality, convenience and price remain important

12 Quoted in Marketing and sustainability p7 by Martin Charter, Ken Peattie, Jacqueline Ottman and Michael J. Polonsky Published by Centre for Business Relationships, Accountability, Sustainability and Society (BRASS), in association with The Centre for Sustainable Design, April 2002. Or seehttp://www.cfsd.org.uk/smart-know-net/smart-know-net.pdf 13 Quoted in “Can Sustainability Sell?’ (2002) McCann-Erickson / UNEP. Also at:http://www.uneptie.org/pc/sustain/reports/advertising/can-sustainability-Sell .pdf 14 Pulse UNEP study quoted in “Can Sustainability Sell?’ (2002) McCann-Erickson / UNEP Also at:http://www.uneptie.org/pc/sustain/reports/advertising/can-sustainability-Sell .pdf 15 Examples of UNEP trend studies are “The Global Consumer Class” and “Is the Future Yours?” can be found on UNEP’s website:http://www.uneptie.org/sustain

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The B2B Market There is increasing evidence of interest from the B2B market in sustainability. The Institute of Business Ethics16 found that: “in August 2001, 73 of the companies listed in FTSE100 either had a code of business ethics or had one in preparation.” These codes frequently cover subjects such as product responsibility, responsible advertising and marketing and may refer to sectoral initiatives such as the Portman Group which publishes and monitors guidelines on the distribution of alcoholic beverages. The number of large companies publicly reporting on their sustainability performance rose sharply in the 2001/2 reporting year. This was led by pressure by institutional investors particularly the insurers who have threatened shareholder action against companies who do not produce this information. Fifty of the top 250 largest companies reported for the first time in 2001/2. This takes the tally for top 250 companies producing substantial sustainability type report to 103, with a further 87 including the information in Annual Reports. Take up of the international environmental management standard, ISO14001 has grown, by the end of 2001 it had been taken up by over 37,000 organisations across the world. Companies concerned about sustainable development and corporate social responsibility are becoming increasingly interested in the performance of their supply chain on these issues, and in some cases attaching performance conditions on suppliers.

16, Business Ethics and Company Codes, Simon Webley, (2001) Institute of Business Ethics 17 Who are the Ethical Consumers? Roger Cowe and Simon Williams. (2000) Published by the Cooperative Bank 18 Who are the Ethical Consumers? Roger Cowe and Simon Williams. (2000) Published by the Cooperative Bank 19 Quoted in “Can Sustainability Sell?’ McCann-Erickson / UNEP2002Pulse UNEP study 20, Business Ethics and Company Codes, Simon Webley, Institute of Business Ethics (2001)

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E) Product and Service Sustainability Checklist (based on the WBCSD document, Sustainability Through The Market)

See SIGMA Risk, Opportunity and Sustainability Guide for pitfalls before completion of checklist, ref 4. Key lessons and things to avoid

Question Yes/No Action Comments 1. Innovate

All businesses must innovate to survive and prosper. Both technological and social innovation can do much to improve quality of life and address the depletion of resources and the build-up of pollution around the world. Any innovation process must be sensitive to the interests of the public. If we are to become more sustainable in the way we live our lives, we need to find new ways to satisfy our needs and aspirations. We need to find new ways to do old things, as well as new ways to do new things. Markets liberate ingenuity by encouraging experimentation and rewarding those ideas that meet people’s needs and aspirations most efficiently Example: Sony has introduced energy saving features into its SDM-N50 liquid crystal display units to reduce energy consumption in the user-phase of the product’s lifecycle. A user senor automatically switches the screen to sleep mode if no one is sitting in front of it; while an ambient light sensor adjusts the screen brightness and therefore energy consumption according to room light conditions. Is the product/service designed to last, easily repairable?

Is the product / service innovative in terms of its potential impact on quality of life or reduction in depletion of natural resources and pollution?

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Question Yes/No Action Comments Does the product / service allow new way(s), to do ‘old things’, or new way(s) to do ‘new things’?

2. Practice eco-efficiency Eco-efficiency is a management strategy that combines environmental and economic performance. The strategy enables more efficient production processes and better products and services while reducing resource use and pollution. In short, it is creating more value with less impact. The pre-eminent goal is to grow economies qualitatively, not quantitatively. Eco-efficiency = unit of value provided per unit of environmental burden Example: General Motors redesigned its chemical management approach to create a single primary manager of chemicals for each manufacturing facility that is responsible for the outputs from the chemical services rather the supply of the chemical. In this way efficiencies such as cutting spillages rather than buying detergents to clean spillages are encouraged. At GM’s Detroit/ Hamtramck assembly plant this approach in one year cost US$19,000 to implement, but saved US$1.6M; while reducing water use by 11.8M litres and 115,000 litres of topcoat paint. Is the product/service energy-efficient, i.e. reduced CO2 emissions in the making, use and recovery/disposal?

Is the product/service non-polluting? Is the product/service re-usable and recyclable?

Is the product/service manufactured from locally sourced materials to minimise transport impacts?

Can the material intensity of the product/service be reduced?

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Question Yes/No Action Comments

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Can the energy intensity of the product/service be reduced?

Does the product/service reduce toxic dispersion?

Does the product/service enhance material recyclability?

Does the product maximise sustainable use of renewable resources?

Is it possible to extend the durability of the product/service?

Can the service intensity of the product/service be increased?

3. Move from stakeholder dialogues to partnerships for progress This means moving beyond talking to one another to acting together for the purpose of sustainable development. Partnerships for progress are built on common goals, empathy, open feedback, flexibility, ability to compromise, and sharing rewards Example: Aventis Pasteur produces and sells over a billion doses of vaccines per year. To help bring greater security of supply to developing countries it has become a partner in the Global Alliance for Vaccines and Immunization (GAVI). The partners in GAVI are from the vaccine industry, the World Health Organisation and governments. Participation in the alliance is a central approach for Aventis Pasteur to help participate in reaching the 40-70 million children born yearly who would not otherwise have access to preventative intervention. Does the use of the product/service create a social nuisance?

Does the use of the product/service h d h ll b i ?

Question Yes/No Action Comments create a hazard to human well-being? How accessible is the product/service to different people? (e.g. people with disabilities, excluded groups?)

Does the product/service have a positive impact on local communities?

Does the product/service have a positive impact on society more generally? (e.g. educational or safety benefits)

Are there any ‘strategic partnerships’ that could be explored for developing or marketing the product / service?

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Question Yes/No Action Comments 4. Provide and inform consumer choice

Consumer choice in a transparent and competitive market economy can improve everyone’s quality of life. Market choices allow us the freedom to decide how best to use our own resources to enhance our quality of life. Providing choice is therefore a key part of promoting sustainable development. Business and other stakeholders can use the media and advertising to promote sustainability messages, fostering a consumer culture that helps people wield the power of demand in a thoughtful way. Companies increasingly find that they must communicate the values and principles on which they base their operations – values that their stakeholders can identify with over the long run. Individuals will change their consumption practices when they realise that they gain added value from sustainable behaviour in terms of financial benefits, quality of life and security. Consumer choice helps achieve sustainability, by reducing environmental and social impacts and by increasing the market share of sustainability-minded companies Sustainable consumption is not about consuming less, it is about consuming differently, consuming efficiently and having an improved quality of life. Consuming differently = more quality and knowledge and less quantity and waste Example: Members of the International Association of Soaps, Detergents and Maintenance Products (AISE) have sought to be more closely involved in reducing the environmental impacts of soaps and detergents by promoting the proper use of products. Life cycle analysis suggest consumers control the majority of energy use, air emissions and solid waste associated with laundry products. Since 1998 AISE consumer packaging has included a Washright logo as part of a wider media campaign to reduce laundry products’ impacts as well as a reminder panel of hints to reduce environmental impacts. Is sufficient information about the product/service provided to customers to enable choice?

Does the advertising for the product / service promote ‘consumption solutions’, rather than intensifying ‘consumption problems’?

Can you be sure that what is advertised as being ‘sustainable’, or

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Question Yes/No Action Comments ‘eco-efficient’ is consistent with what the product / service can actually deliver in practice?

5. Improve market framework conditions Markets depend on a stable and supportive framework of public policy. The rule of law, freedom of competition, transparent accounting standards, and a safe social context all contribute to the ability of business to create wealth. Market aspects which hinder sustainability include monopolies, corruption, perverse subsidies, and process which do not reflect real economic, social and environmental costs. Legislation and regulations should promote competition, effective intellectual and physical property rights, reliable contractual terms, fair and transparent accounting standards, accountability for government intervention, freedom and democracy, and full-cost pricing of goods and services Example: The European Union Energy Labelling system was introduced on fridges and freezers in 1995 and has since been extended to washing machines, tumble driers, dishwashers and other household goods. This mandatory scheme which ranks equipment on a scale from A to G was introduced to harmonise national measures relating to consumer information, while over time the worst performing appliances have been withdrawn, although consumer pressure has performed the task in the main. Is child labour used in manufacturing the product/service in-house or under contract?

Is forced labour used in manufacturing the product/service in-house or under contract?

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Question Yes/No Action Comments 6. Establish the worth of Earth

The market system needs accurate and timely price signals so that resources are not wasted and future opportunities squandered. We can improve our markets so that they reflect the true costs of environmental goods and services and social impacts. Often this is by moving towards full-cost pricing – including removal of perverse subsidies. Economic instruments such as tradable permits can encourage business towards constant environmental improvements. Realists pricing is the optimal means of supporting change in the market. Example: Since 2000 Shell International has established an internal market approach to reducing corporate greenhouse gas emissions. The company issues a limited quota of permits to emit GHGs which are traded among participants as they would for other commodities. In the first year of operation emissions were reduced by half a million tonnes over 1998 levels. Is packaging associated with the product/service minimised?

Is the product/service manufactured from renewable resources?

Does the product/service use or create hazardous materials?

Is the product/service tested on animals?

Does the use of the product/service create a hazard to animal well-being?

Does the product/service restore the environment?

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Question Yes/No Action Comments 7. Make the market work for everyone

Poverty is one of the single largest barriers to achieving sustainability through the market. The 2.8 billion people living on less than two dollars a day have little or no access to the market to improve their lives. The market does create enterprises and jobs, but there will be rewards for companies who deliberately create more opportunities and a better quality of life for the poorest. Many of these opportunities will lie in the areas of healthcare, water, housing, nutrition, electricity, education, appliances and sanitation Example: The Sustainable Community-orientated Development Programme (SCODP) is working in rural Kenya tackling soil nutrient deficiency through the provision of small packages of micro-nutrients and seeds to small scale farmers at affordable quantities. These packs bring improved harvest while simultaneously breaking the cycles of soil erosion and also social decline. How affordable is the product/service to those for whom it represents a basic need?

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F) Assessing your Key Sustainability Issues

If your organisation has begun to understand and manage its sustainability issues, you should have a good idea of the key issues – and these can become the basis for your assessment. For each issue you need to assess: What is the wow factor? – does this issue have a resonance with your customers or potential customers? Does it represent a significant and recognisable difference from your competitors? What are the risks? – are there potential risks from making positive claims around this issue, for example, a company may have managed to reduce or eliminate the amount of pesticide residues in some of its produce. This is a risky claim as it highlights both the fact that the produce used to contain pesticides – and that some other produce still does – and the customer may well have always assumed that there would be no pesticides in the produce. Can the credibility be demonstrated? – How can you convince your customers that the issue is a point of difference and that your performance is demonstrably better? A good example of this might be being placed top in a league table assessing this issue – provided of course that the league table has credibility with your customers. Some issues are more readily understood by consumers, or have clear standards that can be met. For example, eggs are either free-range or not, food is either organic or not, your company has won an award or not. How easy is it for your competitors to follow? – How much of a head start do you have on your competitors? Would your position be unassailable, be a benefit by you being the first, or will you find that this is no longer a point of difference in six month’s time – and will that matter? An example of an unassailable position might be a company that develops a technology for which it owns the patent and can control its use, or a company which produces all its products in-house so can provide cast-iron assurance of meeting high labour standards when all its competitors have outsourced their supply so can’t.

Key Sustainability Issue

What is the ‘wow’ factor for your customers?

What are the risks?

Can the credibility be demonstrated?

How easy is it for your competitors to follow?

Assessment

Issue 1 Issue 2…

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G) Mapping the options

The Point of difference scale measures the extent to which your offering is different from your competitors and how long it can remain so. The Ease of communication scale measures both the ease with which the credibility can be demonstrated and the ease with which this can be communicated in a way that interests the customer. You may do this mapping using your best judgement, or you may wish to establish some quantifiable criteria with which to justify your assessment. Those closest to the top right hand corner are the most promising.

best

offering

offering too

hard to communicate

Poin

t of

dif

fere

nce

nothing to differentiate

offering

worst offering

Ease of communication

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H) Mapping trustworthiness

Trust is important in assuring brand value, building customer loyalty, creating added value and many other areas of business. When sustainability is added to the equation, trustworthiness becomes an even more potent ingredient. Assessing the trustworthiness helps to decide the most promising offerings and also to identify the risks involved. A product that has high levels of trustworthiness for personal and future trust, may look promising, but if it’s produced using un-audited developing-world suppliers, could present a major risk if those suppliers turn out to be using child labour. A risk that makes it’s potential for marketing on sustainability grounds unviable. This does not mean that the offering has no potential – it could just mean that the organisation must assure its supplier’s performance before developing a marketing campaign.

How trustworthy is the offering?

Personal

Looking

after me and

my family

e.g. pesticides

Future

Looking after the future

e.g. fish stocks

Others

Looking

after others

e.g.

child labour

Offerings that fit here have the most potential

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About the SIGMA Project The SIGMA Project - Sustainability Integrated Guidelines for Management was launched in 1999 with the support of the UK Department of Trade and Industry (DTI) and is led by:

British Standards Institution - the leading standards organisation • • •

Forum for the Future - a leading sustainability charity and think-tank AccountAbility - the international professional body for accountability.

The SIGMA project has developed the SIGMA Guidelines and a series of tools to provide clear, practical advice to organisations to enable them to make a meaningful contribution to sustainable development. The SIGMA Guidelines consist of:

• a set of Guiding Principles that help organisations to understand sustainability and their contribution to it.

• a Management Framework that integrates sustainability issues into core processes and mainstream decision-making. It is structured into phases and sub-phases.

The SIGMA Toolkit, consists of targeted tools and approaches to help with specific management challenges, and case studies explaining how organisations have used the SIGMA Guidelines and Toolkit to tackle real issues. More information including the full SIGMA Guidelines and the accompanying SIGMA Toolkit are available at: www.projectsigma.com.