November 25, 2022
The climate crisis is a pressing issue that governments, consumers and especially companies can no longer ignore.
According to the Breakthrough National Centre for Climate Restoration in Melbourne, Australia, we face a “near- to mid-term existential threat to human civilization” in the coming 30 years if the climate crisis isn’t addressed. (1)
Hand in hand with this goes a decline in biodiversity. Biodiversity in turn is the basis of global food security and nutrition. Different species help nurture the healthy soils that we need to grow the fruits, vegetables and animal products that provide a balanced diet to the global human population. As a result, declining biodiversity ends up destroying our food systems. (2)
According to the World Economic Forum (WEF), €45 trillion of economic value generation could be wiped out because of the dependence of business on nature, which is under threat. This means over half of the global GDP is in danger. (2)
It is obvious that none of us can afford to ignore this topic anymore. Especially companies, that are exacerbating the decline of our planet, need to figure out how to reduce their impact as a matter of urgency.
If the destruction of our ecosystem is not enough incentive for a company focused on its financial bottom line to change its business model (although it should be), the loss of potential new and long-term customers and dedicated employees as well as facing compliance risks should be reason enough to take steps to limit their harmful practices impacting the planet.
Concern about the threat to our ecosystem is no longer exclusive to activists. The general public worldwide wants more radical action to protect biodiversity. The Economist Intelligence Unit discovered that hundreds of millions of people all over the world are concerned about the climate crisis and that this number is only going to increase. (2)
What’s more, over half of consumers believe that brands are a more powerful force for societal change than the government according to the 2018 Edelman Earned Brand study, which interviewed 8,000 people across eight markets. (8)
Richard Edelman, president and CEO of Edelman, calls this the “birth of Brand Democracy”, whereby brands are being pushed to go beyond their business interests to become advocates. According to Edelman, a brand’s success is now based on its willingness to live its values and if necessary, even make the leap into activism. (8)
As consumer trends change very quickly, companies have to adapt to consumers’ demands as fast as possible to remain successful. This means companies must bring about rapid changes to products and processes to satisfy customers. Their expectation of businesses is to play a positive role in society, for example by lowering their carbon footprint.
For a long time, companies have refused to make a serious effort to improve. Their brand managers claimed that while consumers say they want to buy sustainable products, they don’t actually do so when in-store. (10)
However, a new generation of environmentally aware consumers are very clearly putting their money where their mouth is.
Nearly two-thirds of consumers will buy or boycott a brand based on its position on a social or political issue, the Edelman study revealed. These so-called belief-driven buyers are now the majority in many countries worldwide, including the UK and Germany. (8)
Even in the face of current political and economic uncertainties, the Climate Action Awareness Report 2022 showed that for three-quarters of those surveyed the climate crisis remains a high or top priority. Almost 10,000 people from countries across Europe and the USA were interviewed for this study. 6 out of 10 want transparent information so they can buy climate-friendly products. Consumers expect companies not only to take action to protect the climate but also to communicate their climate action initiatives transparently. (11)
What’s more, due to social media, consumers have a very public forum to air complaints. Therefore, ignoring the values and concerns of one’s most loyal and active customers can translate into a decline in sales and damage a company’s reputation. (1)
Fast-thinking companies are clearly responding to these consumer trends. Here are some examples of brands making changes towards more sustainability:
Patagonia was always one of the front-runners in terms of trying to fight the climate crisis. In the 80s the company was already donating 1% of its sales to environmental groups, whose mission was to preserve and restore the environment. In total, Patagonia’s contribution over the years has amounted to € 140 million. (13)
In September 2022, they made an impactful announcement, that the founder Yvon Chouinard is giving away the entire company to fight the climate crisis. 98% of the company’s stock will go to the non-profit Holdfast Collective.
“As of now, Earth is our only shareholder,” the company announced. “ALL profits, in perpetuity, will go to our mission to ‘save our home planet’.” (13)
In 2014, Oatly decided it was time for a rebrand. They created the Oatly Department of Mind Control. Its aim is radical transparency in their corporate communication. They work with a life cycle assessment specialist to calculate their product impact and then publicly share information on the origin of ingredients, sugar content, and products’ climate footprints.
Their transparency has paid off. The company’s revenue increased by six times from 2017 to more than €421 million in 2020. (14)
Tony’s sees itself as an impact company. This means their primary goal is sustainability.
When the company was founded in 2004, they were unhappy with the fact that there was no 100% guaranteed slave-free chocolate product on the market. The term slave-free refers to child labour and exploitation of farmers. This means they pay a fair salary and provide humane working conditions. (15) And consumers appreciate their effort: they have achieved considerable success in the Netherlands, their home market by becoming the market leader. (15)
However, they have not just been focused on their own success. They have decided to share their information and tools with competitors, so they can copy Tony’s strategy. This is a clear indicator that they truly live out their mission. (15)
They even went a step further and introduced the concept of the living income reference price. Their research found that a fair price lies at €2.20 per kilo. The price Tony’s were paying at the time was 20% less than that and they were already paying much more than the market average. But even though this step would dent their profitability, they decided to pay this fair price anyway. (15)
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So far, the cost of re-orienting a business model towards sustainability has been very expensive. Life cycle assessments analysing a product’s impact along the entire value chain are very pricy, costing up to €50,000 or more per product due to the intricacies of the data collection and calculations involved. (5)
We are able to assess and tell you how to optimise your production processes in order to make them as sustainable as possible. And our solution is much more economical than traditional LCAs, since our product is highly scalable.
After the optimisation, we help you communicate your achievements via product impact labels. We can assist you in meeting your consumer’s evolving expectations to ensure you remain successful and even reach new eco-conscious customers. Don’t be left behind.
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November 25, 2022