BRANDS TAKING STANDS™ NEWSLETTER
Continue the important conversations on corporate responsibility long after 3BL Forum with the Brands Taking Stands™ newsletter. Written by veteran journalist, John Howell, this newsletter is published every Wednesday morning.
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THE BIG STORY
Boards Take Sustainability Seriously
More corporate boards are taking sustainability seriously. That’s the topline finding of a recent report that looks at acceptance and implementation of the issue at the highest level of business governance.
“There’s no question that there is growing awareness that the integration of environmental, social and governance factors into business practice is vital to managing risk and creating long-term value for the company,” writes N. Craig Smith in the WSJ.
The author is the INSEAD Chair in Ethics and Social Responsibility and a member of the Scientific Council of Vigeo Eiris, a social responsibility rating agency.
Smith quotes one director who sums up the case succinctly:
“Sustainability is no longer only about the environment, it has developed into a more holistic and broader view that you could call long-term value creation.”
Smith also finds that while boards are increasingly aware that sustainability needs to be incorporated into broader business practice and strategy, they are also struggling to figure out how to address it.
He references a recent Board Agenda and Mazars’ survey that confirms the problem. “Of the 234 business leaders polled, only half could say with any certainty that their firm’s sustainability principles and intentions were delivered by effective business policies. And around 30% indicated their policies may not be up to the mark.”
For these findings, Smith and Ron Soonieus, executive-in-residence at INSEAD, interviewed non-executive directors representing 50 large, well-known European companies. From these conversations, they identified five elements for boards to take effective action on sustainability:
- find the right people
- define how sustainability fits with corporate purpose
- have the right data
- make sure the board has the right structure and authority
- recognize the complexity of sustainability
Smith’s findings are an useful outline of the obstacles and the opportunities that inform what he calls “the fundamental changes needed to integrate sustainability into firm strategy.” For a deep dive into Smith’s ideas about how brands will need to stand for more than their products and services, see his recent book (with Eric Orts), The Moral Responsibility of Firms.
CASE STUDY
Best Buy
Best Buy is a Fortune 500 company that faces big challenges where its sustainability practices are concerned. The size of the challenge is commensurate with the company’s scale: $42.8 billion in revenue, 1,200 stores, and over 125,000 employees. As a global consumer electronics retailer with a complex supply chain, the firm’s sustainability landscape covers a wide range of areas, from logistics to store energy footprint.
The good news, Best Buy reports, is that the opportunities are equally outsized, and the company is launching new programs and making major progress on current ones that promise to make a very big difference in the values that underlie its operations.
Best Buy has set a new goal to help consumers save $5 billion on utility costs and reduce carbon emissions by 20% by 2030 through an increased focus on Energy Star products. At the same time, the company plans to further reduce its own carbon emissions, committing to decrease emissions 75% by 2030 through efficiencies like renewable energy sources, LED lighting, a hybrid vehicle fleet, and investments in on-site solar panels, solar farms, and Renewable Energy Credits. And its recycling program, which has already collected two billion pounds of e-waste, is expanding.
To confirm these ambitious initiatives, Best Buy’s efforts will be certified by the Science Based Targets initiative, a collaboration between Carbon Disclosure Project, the United Nations Global Compact, World Resources Institute, and the World Wide Fund for Nature.
Between cost savings through efficiencies and brand reputation enhancement as a responsible company, Best Buy is taking a definitive leadership position among Fortune 500 companies in its big bet on sustainability as the new “business as usual.”
NEWS YOU CAN USE
CEO Activism
Over 150 more CEOs and company founders have signed on to an open letter in support of abortion rights. Among those joining the corporate stand for this issue are Reddit, Asana, and United Talent Agency, along with many other medium- and small-size businesses. The message: “You can’t have equality in the workplace if people don’t have access to reproductive health care.”
The initial publication of the “Don’t Ban Equality” statement on June 10th was signed by 180 CEOs and founders. Collectively, the current 330+ signers represent more than 129,000 employees. See the full text of the letter and the updated list of signers at dontbanequality.com.
Investing and Markets
The growth of impact investing continues at a double-digit rate, according to the Global Impact Investing Network’s (GIIN) annual survey. In a poll of 266 respondents active in the industry, the report finds that in 2019 they plan to inject $37 billion into over 15,000 investments — a 13% projected growth rate in the volume of capital invested and a 14% growth rate in the number of investments. The reason? The bottom line finding is that investing with values-driven intention doesn’t sacrifice performance. Over 90% of respondents said that performance was in line with or exceeded both their impact and financial expectations. About 15% reported outperformance.
As the GIIN notes, this growth rate indicates a fundamental shift in investment practices. “Assumptions about the fundamental purpose of finance in society are changing and integrating impact considerations in investing is becoming the ‘new normal.’” Public companies with purpose-driven strategies, take notice.
Consumer Trends
Consumers are increasingly weighing “values” against “value” in their buying choices. That’s the conclusion of the most recent study showing issues are rising to top of mind, overriding convenience or price.
The survey, catchily titled American Shopping Guilt, sampled 2,100 consumers in 25 cities to evaluate how issues guided their shopping habits. A loaded question set up the polling: “Do you feel guilty about shopping habits that impact the environment?” This query set up the bottom line ask: “Does it really matter if companies are environmentally, ethically, and socially responsible?”
The key findings were:
- Over 80% of people surveyed would stop supporting their favorite brand if it did something that hurt the environment or was unethical
- Most consumers said they regularly pay up to 10% more for goods that are ethically produced, better for the environment, or made by a company that shares their values
- The impact plastic straws have on the environment has gotten a lot of media attention, but it wasn’t a big concern for American consumers
- Americans care least about “organic” and care most about “non-toxic” and “cruelty-free” labels
For future success, companies will need to make sure that their customers are aware that the values of their brand are equal to the value of their goods.
C-SUITE COMMENTS
“Purpose-led brand communications is not just a matter of ‘make them cry, make them buy’. It’s about action in the world.”
— Alan Jope, CEO, Unilever
Excerpted from The Guardian
PEOPLE ON THE MOVE
Patsy Doerr is returning to Credit Suisse as Global Head of Diversity and Inclusion. She had been Global Head of Corporate Responsibility, Sustainability and Inclusion at Thomson Reuters. Prior to that post, Doerr worked for Credit Suisse as Director of APAC Business School.
Sapna Shah was named Managing Director at the Global Impact Investing Network (GIIN). Shah was previously the Strategy Director at the GIIN, and has led the GIIN’s Network Membership as well as an Investors' Council working group on sustainable agriculture investing in sub-Saharan Africa. Prior to joining the GIIN, Sapna was the program officer and regional coordinator for CNFA. Earlier, she worked at the Center for Corporate Citizenship with Fortune 500 companies to create business practices that were responsive to emerging market opportunities and social and environmental challenges.
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- John Howell, Chief of Thought Leadership and Editorial Director, 3BL Media