Focus: A Sustainability Brand Can Be Easily Dented

This is part 3 of 11 from “Sustainability: The ‘Embracers’ Seize Advantage,” a report on the findings of the 2010 Sustainability & Innovation Global Executive Study and Research Project.

Larger companies have built sustainability into their brands. When asked to rank companies that have established world-class reputations in addressing sustainability, for example, respondents put General Electric, Walmart and Toyota — all multibillion-dollar enterprises — at the top of the list. Two smaller companies also appear on the list: Patagonia and Interface Global, while Natura, a large Brazilian company that is less well-known in international markets, also appears on the ranking.

In fact, both embracers and cautious adopters in our survey highlight improved brand reputation as a benefit of addressing sustainability, while senior business leaders also express this view. “There is an additional element in the business case, which is brand composition and brand equity,” says Unilever’s Santiago Gowland. “The views of consumers increasingly resonate with some of the social, economic and environmental messages of brands. … So I think that in some brands, the sustainability agenda can reinforce brand proposition.”

For Clorox, says executive vice president of international and personal care Beth Springer, the big growth opportunities relating to consumer megatrends have prompted the company to reposition and reinvigorate the Brita water pitchers and filter line, to launch Green Works all-natural cleaning products and to acquire and expand Burt’s Bees all-natural personal care. “We really saw an opportunity to apply our skills as brand builders to this emerging natural space,” she says.

FIGURE 3

However, if sustainability credentials can build a company’s image, those credentials can be easily damaged, if not by a company’s own actions, then by the actions of others in its sector. When, in both 2009 and 2010, respondents picked the companies they considered world-class in sustainability, several moved position in the space of the year, with Toyota falling from second to third place in the ranking (no doubt driven down by the recall of the Prius and other models) and Shell falling from fifth position to seventh in 2010, possibly as a result of the drop in respect for oil companies following the BP oil spill in the Gulf of Mexico.

If big-headline news stories can hurt leading brands, they are also facing a reputation landscape that has become more risky, since the instant and global nature of online communications means grassroots activists, bloggers and disgruntled consumers now have the tools to make their voices powerful. And as the world becomes more developed, growing numbers of its population have access to communications technology, increasing expectations of transparency.

Stuart Hart, SC Johnson chair in sustainable global enterprise and professor of management and organizations at Cornell University School of Management, cites the recent woes of companies such as Toyota and BP. “It’s becoming increasingly clear that companies that fail to live by a set of principles that optimize results for all stakeholders might get away with it for a while,” he says. “But in the end, the negative feedback loops get you, and it’s going to bring you down.” So while companies may see brand building as one of the payoffs of addressing sustainability, it also exposes them to intense scrutiny and accusations of greenwashing. In short, unless reality matches rhetoric, making sustainability claims is a risky business.