Will companies know what has hit them?

There is a largely hidden revolution occurring, which will have a major impact on the performance of companies and brands in years to come.  Amid ongoing economic depression in the developed world, and social unrest in many developing countries, a generation is growing up with a new set of expectations.  6764862_sYounger people take for granted that companies should behave more responsibly towards society and the planet and appear increasingly prepared to act upon those beliefs.  Their purchasing power will have a growing impact on businesses’ performance in the future.

Keith Weed, Unilever’s Chief Marketing and Communications Officer, was recently quoted as saying that businesses have no option but to build their operations around a sustainable premise.  He went on to say that “…brands can be a force for change and for good”, reminding his audience that “Today’s adult generation has stolen from our children’s future financially…and we’ve also stolen from our children’s future environmentally.”

Keith Weed’s view was endorsed by Cynthia Figge of CSRHub.  At a Sustainable Brands conference earlier this year she said: “…more companies see sustainability as a breakthrough platform for strategic advantage”.  Her company and Brand Finance, having analysed the performance of 1,000 companies during 2012, demonstrated that 28% of brand value is related to CSR (corporate social responsibility) performance.  This is itself a huge increase on the previous four-year period, during which the figure ranged between 9% and 14%.

There is increasing evidence that the ROI for CSR/sustainable development is proven, but comparatively few companies, as yet, are realising both the criticality of the issue to their business and the potential opportunities.  As Dr Alan Knight, Sustainability Director for Business in the Community has said: “There are a handful of powerful companies that are looking at CSR not as a nice-to-do, but as must-do for future business sustainability.”

Most organisations seem so fixated by short-term performance, and dazzled by the excitement of new communication tools, such as social media and mobile marketing, that they are missing both the longer-term opportunities and threats. Yet ignoring, or paying lip service to, sustainability issues risks growing financial damage to brands and businesses.  Bill Shireman, President and CEO of Future 500, has highlighted the huge potential damage that NGOs could inflict on poor-performing organizations that continue to ignore the critical importance of sustainability.  He points out that, if a brand’s value is “nicked by social advocates by just 1%” that results in a $100mn loss for a $10bn brand or $1bn in the case of a $100bn brand.

The reality is that most companies are ignoring sustainability as a serious issue, however.  Worryingly, from a marketing perspective, is the fact that – with the exception of the leading few pioneers alluded to above – senior marketers are treating the issue as a low priority too.  As a recent survey by Cranfield University demonstrated, sustainability concerns come last in a ranking of issues for attention by UK and international heads of marketing.

This is, however, storing up problems for their companies, their brands and themselves.  As the Cranfield report comments: “…sustainability concerns will only heighten in the future and firms that wait to build their commensurate strategies may find they hit a tipping point where their offers are no longer competitive.”

A critical issue for companies, and for marketers, is when that tipping point will come.  The reality is that at some point in the not too distant future those companies that have seized the issue of sustainability, re-engineered their businesses and supply chains to reflect sustainable development needs, and positioned their brands to access the new opportunities, will power away from the also-rans.  The first cracks in what is likely to turn into a gaping chasm between the two sets of businesses are beginning to appear for those who care to take notice.

(Image credit: flippo / 123RF Stock Photo)

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About David Whiting

I help organizations to create competitive advantage, build brands and develop new opportunities, in particular by aligning sustainability understanding with customer insights
This entry was posted in Corporate Social Responsibility, Developing Sustainability Marketing, The Challenge for Marketing and tagged , , , , , . Bookmark the permalink.

One Response to Will companies know what has hit them?

  1. Pingback: 8 sustainability musts for marketers | sustainabilityneedsmarketing

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