Wednesday, 07 December 2016 09:54

From greenwashing to sustainable business

Growing consumer concern over the environment too frequently translates into greenwashing strategies instead of a corporate culture that has genuine concern for the planet. This is unethical and must change, says Angelo Nicolaides, Professor of Business Ethics at Unisa.. Writing in the latest issue of the ‘IMM Journal of Strategic Marketing’, the magazine of the Institute of Marketing Management (IMM), he observes that this approach is not surprising, given that there’s ample evidence of consumers being willing to pay more for products and services that they deem to be friendly to the environment. For example, a 2008 survey of US restaurant customers showed they were happy to pay 10% or more for food and beverage items sold by businesses engaged in green observances. Sadly, says Nicolaides, many companies are tempted to promote their highly questionable claims in the knowledge that consumers may not easily be able to assess the validity of their claims. “Honesty is undoubtedly the best policy in dealings with all stakeholders and even ‘white’ lies are unacceptable, no matter how insignificant they may appear to be,” he states. The most famous recent example of a greenwasher being found out is that of Volkswagen, which rigged 11-million diesel engines with software that tricked emissions tests, allowing the cars to spew out far more pollutants than allowed. Noted the ‘New York Times’: “No matter how hard Volkswagen works to resolve this crisis, the episode is likely to live on in infamy as the latest and perhaps most egregious example of greenwashing.” Says Nicolaides: “Businesses need to substantiate all the claims they may be making about ‘green’ products and services, ‘environmentally friendly’ goods and ‘sustainable’ practices, since these will be scrutinised by environmental watchdogs, certification agencies, consumers and other organisations bent on exposing unethical practices.”
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Brands that demonstrate a commitment to sustainability now have real meaning for consumers and the resultant ability to provide healthy returns for manufacturers and retailers alike. This is according to the 2015 ‘Nielsen Global Corporate Sustainability Report’, which says that 68% of South African consumers are willing to pay more for products that come from companies showing a commitment to positive social and environmental impact. The local figure is marginally higher than the global average of 66% (which rose from an average of 55% in 2014). “Sustainability is a worldwide concern that continues to gain momentum, especially in countries where growing populations are putting additional stress on the environment,” says Allen Burch, Managing Director of Nielsen Africa. “Consumer brands that haven’t embraced sustainability are at risk on many fronts. Social responsibility is a critical part of proactive reputation management and companies with strong reputations outperform others when it comes to attracting top talent, investors, community partners and, importantly, consumers.” An interesting insight to emerge from the global study is that it’s also no longer just wealthy suburbanites in major markets willing to open their wallets for sustainable offerings. Consumers across regions, income levels, and categories are willing to pay more, if doing so ensures they remain loyal to their values. “Sustainability sentiment is particularly consistent across income levels. On a broader scale this has seen sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally, while those without grew less than 1%,” says Nielsen.
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Food, beverage and confectionary giant Nestlé has announced that KitKat will be the first global chocolate brand to use only sustainably sourced cocoa. KitKat already uses sustainably sourced cocoa in some countries, but the announcement extends this worldwide and will come into effect in 2016. “Sustainable cocoa sourcing helps safeguard the livelihoods of farming communities and delivers higher quality cocoa beans. This announcement will only strengthen consumer trust in KitKat as a responsible brand,” a Nestlé spokesperson said. However, a report by news agency Bloomberg seems to suggest that the move may be partly linked to long-standing criticism of Nestlé and other producers for buying cocoa from farms in emerging markets that practise child labour. “Random visits to 200 farms in Cote d’Ivoire that supply Nestlé found four children under 15 working in cocoa fields, according to a report by the Fair Labour Association last year,” Bloomberg said. Some smaller chocolate-makers have long been selling products made from ethically sourced cocoa. Madécasse, a niche brand headquartered in the US but operating in Madagascar, is one such example. It sources its raw product from local farmers on the Indian Ocean island and is certified as being Fair for Life, which asserts that the farmers are fairly treated and properly compensated.
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Company executives need to be aware of three critical factors when it comes how consumer boycotts may play out, says new international research on the subject.

Writing for the Canadian-based Network for Business Sustainability, an organisation of global academic experts and business leaders aiming to improve the sustainability of business, Professor N. Craig Smith of Insead Business School notes that one of the key lessons from the research is that “any boycott, no matter how illogically conceived or badly executed, can wreak long-term havoc on a company’s reputation – even if it does not hit short-term sales”.

Smith says the following are the key factors company executives must be aware of when facing consumer boycotts.

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A four-month public campaign headed by environmental group Greenpeace has led to Lego, the international toy brand, ending a lucrative deal with the Shell oil company.

The two organisations have business ties dating back to the 1960s and, in 2011, signed an agreement whereby co-branded Lego toys are sold at filling stations in 26 countries. The deal is reported by Britain’s ‘The Guardian’ newspaper to be worth around $US109-million.

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