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January 03, 2019

Why consumers do business with sustainable brands

Ian Koenig is the SVP of Business Development at Investis Digital 

My wife and I have three children, and we want the best future possible for them. So you better believe that we choose to do business with companies that are trying to build a better future, too, even if we have to pay extra for a pair of jeans or shampoo. And it turns out we are not alone. The Retail Industry Leaders Association (RILA) reports that 68 million adult Americans base purchasing decisions on their values (personal, social, and environmental) and will spend up to 20 percent more on environmentally sound products. And 93 percent of global consumers want to see more of the businesses they use support worthy social and/or environmental issues, according to the Sustainable Lifestyles Frontier Group

For corporate brands today, embracing sustainability/environmental & social governance (ESG) is good business. As RILA wrote in a recent report, “Brands with purpose, or brands that offer functional benefits, personal well-being, and collective well-being, perform better on marketing KPIs such as impression, brand familiarity, premium pricing, and purchase and repurchase intent than brands that are not purpose-led . . . Corporate sustainability commitments and achievements provide a valuable opportunity to connect with consumers and achieve marketing goals.

As more businesses wake up to this reality, they are embedding sustainability into every fiber of their operations, according to McKinsey. But why has sustainability/ESG become so important? I think a few factors come into play:

Millennials

First, the millennial generation has become bigger and more powerful. They should overtake Baby Boomers as America’s largest generation in 2019. And millennials have ushered in a new set of consumer values. About three out of four millennials are willing to pay extra for businesses committed to sustainability/ESG compared to 51 percent of Baby Boomers. And 81 percent expect their favorite companies to make public commitments to corporate citizenship, according to Horizon Media's Finger on the Pulse study. Noted Kirk Olson, vice president of Trend Sights at Horizon Media, “It used to be that companies would align with charities that shared their same values. Now brands are taking these do-good values and baking into their corporate identities.” The mandate is clear: communicating your story about sustainability/ESG is becoming essential to have a relevant brand now and in the future.

Emotionally Connected Corporate Brands

Along with the rise of the millennial generation, we’ve seen the emergence of newer generation challenger corporate brands that have figured out how to connect with consumers more emotionally through sustainability/ESG. For example, eyewear maker Warby Parker, which didn’t even exist until 2010, is as famous for its “buy one, get one free” retail model as for its sunglasses. For each pair of glasses it sells, Warby Parker pays for the production of another pair to support consumers and companies in developing countries. Warby Parker entered a business in which eyewear manufacturers make enormous profits. Warby Parker realized that by looking beyond pure transactional profits and doing good, the company could forge a deeper emotional bond with customers – the kind of bond that turns customers into brand ambassadors. Warby Parker is now a $1.2 billion brand. And the brand has resonated especially with millennials.

Businesses Get On Board

As a result, businesses of all kinds are getting on board. Procter & Gamble, which has existed 181 years, has steadily made sustainability/ESG a way of doing business. For example, P&G has pledged to provide one billion people access to water-efficient products by 2020 and to ensure that 90 percent of all packaging is recycled. These commitments are part of a program called Ambition 2030, which rallies the entire company around shaping a better future.

But importantly, P&G does more than live sustainability. It lets the world know about it. P&G’s website is a resource for information about goals and progress toward meeting those goals When P&G talks about sustainability, the company employs an earnest tone short on chest beating on heavy on factual reporting. Its communications approach lends credibility to its commitment to sustainability.

Share Your Story

P&G’s narrative creates more of an emotional connection with consumers than P&G would by discussing about how many tubes of Crest it sells a year. And creating emotional connection is what customer loyalty is all about. We talk with many businesses that are adopting sustainability/ESG practices, but they need help activating their story. In my view, strong activation is the first step toward brand relevance. Businesses that want to stay competitive need to think and act holistically about how they activate their stories, which includes harnessing social media, owned media, advertising, employee communications, and influencer outreach, among other elements.

At Investis Digital, we regularly analyze and score corporate brands on how well they’re leveraging their ESG/CSR story digitally. We combine strategic insight with original ideas to create a sustainability narrative that’s relevant and compelling for each of the audiences your work affects -- a story that goes beyond policies and performance, unlocking awareness, affinity, and action across every stakeholder group. As a next step, we suggest assessing your corporate brand to better understand gaps and opportunities around leveraging your story to drive business impact. Contact us to learn more.

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