Chess piece

Delivering on the green promise

Talking green and actually being green are two entirely different strategies.

For the past two decades companies across all industrial sectors have been striving to improve their eco-friendly credentials as they jostle for the hearts and minds of the ever more environmentally aware consumer. For some it has been a simple ‘greenwash’, business as usual behind a wall of appeasing words and heartening environmentally friendly images.But making an organisation sustainable takes more than mere hollow platitudes, it takes a commitment to reform the way that a company thinks, breathes and ultimately operates. Sustainable business is about implementing environmentally friendly and socially responsible practices while still maintaining commercial success, and some companies are clearly better at it than others.

This was seen recently when Toyota, 3M and Siemens came top of the pack in a survey by the influential Interbrand organisation in its global report, ‘Best Global Green Brands’.

Relevant green practices

The report’s conclusions show that the strongest green brands consistently differentiate themselves and engage in green activities that consumers find relevant, as well as implement profitable green practices, from setting and executing environmental programmes to effectively measuring and reporting their performance to the public.

Over the last ten years, Interbrand has built its corporate citizenship practice, advising brands ranging from Fairtrade to GE on how to create a corporate citizenship strategy that is integrated seamlessly with their brand promise. “We believe that corporate citizenship and sustainability aren’t just good practices, but smart practices and leading companies recognise this,” Alexander Murray, Interbrand’s senior consultant in Tokyo, explains. “Being green is not just increasing efficiency or reducing exposure to environmental risk; it is also driving product innovation, building stronger connections with customers and creating long-term brand value.”  

Interbrand decided to focus on green in this study because, of all of the areas of corporate citizenship, green initiatives may be among the most visible and perhaps the easiest to claim - and yet, they can be the most challenging. “It was surprising to see which brands stood out in terms of both developing and implementing sustainable practices as well as communicating efforts in a way that consumers find relevant and differentiates their brand,” Murray adds.

Global green brands

A number of brands on the table show large gaps between performance and perception. For example L’Oréal, Nokia, and HSBC all scored significantly higher in performance than perception, suggesting that while they are doing great in terms of environmental sustainability, they are not communicating efforts as clearly as they could.

On the other hand, McDonalds, GE and Coca-Cola all scored higher in perception than performance, suggesting that these highly visible brands enjoy being well-known and powerful, with green perception matching general perception.

There are several factors involved in this gulf between perceptions and reality. These include the so-called ‘halo effect’ - visible brands enjoying the positive impact of being well-known. “People may assume that they are green leaders because of their overall leadership position; these assumptions are sometimes ahead of reality” Murray says.

Then there is maturity of the sector - some industries appear to be ahead in embedding green into business and communicating achievements to the market. This is aided by a flagship product or service; a tangible expression of green commitment, such as the Toyota Prius, can drive perceptions.

Not just in America...

Not all brands and sectors are equal. The automotive and consumer electronics brands assessed tended to score above average on performance; this is probably in part due to industry dynamics. Once green practices are embedded into the sector, they become a pre-requisite to compete as a global brand.

Geographically, Japanese brands tended to rank well. “This is not surprising given that efficiency and miniaturisation have long been strengths of Japanese brands,” Murray explains. “Corporations are committed to efficiency throughout their business, there is also strong domestic demand for efficient products and services, and technological leadership is very important.

“Lastly, many of the leading Japanese brands have corporate philosophies inherited from their founders that include a strong commitment to society and the planet. These sit well with the 21st century concern for sustainability.

“We were pleasantly surprised by the strong showing from European and Asian brands, with five of the top ten from outside the US. This suggests that brands across the world are taking leadership on environmental matters” explains Murray.

Top of the pile

Although Toyota has had a torrid time in the US of late with quality issues, when it comes to being sustainable, the Japanese automaker comes out on top. “The number one brand, Toyota, is a leading example of making the environment a core management priority, while also engaging in a meaningful way with audiences,” Murrays adds.

“It’s always difficult to expect a certain ranking from independent agencies,” Jean-Yves Jault, general manager, corporate communication at Toyota Europe, says. “However, it’s not such a surprise for us since being a green brand has been at the core of our corporate, product and production strategy for over 15 years now.”

Toyota made a clear strategic decision in the early 1990s towards environmental leadership, with its corporate mission to contribute to society through manufacturing automobiles. “Either we could operate a technological shift to enable us to produce and sell mobility solutions that are friendly to the environment, or we could not survive as a business,” he continues. “This is why we created Prius and launched it commercially as early as 1997 and have since sold more than 3.3 million hybrids worldwide.

“Our strategy is not simply a ‘marketing’ gimmick. We have profoundly integrated environmental priorities in all areas of our business, from product development to production to logistics to retailer sustainability.”

Sustainability is completely embedded in the Toyota organisation. Today everyone is involved in sustainability. This does not only include the environmental aspects, but also social and management aspects.

Environmental portfolio

Another company that came out of the report in the top three was German-based Siemens. Much like Toyota, the company has had sustainability ingrained in its corporate make up for some time, having established its first environmental office 40 years ago. “Sustainability as an overarching element started gaining momentum some years ago when we launched our environmental portfolio as well as when our managing board member, Barbara Kux, was appointed chief sustainability officer in 2009,” a company spokesperson says. “However, the main goal is not to pursue a sustainable image - rather, this image is a result of our actions in transforming the company overall towards greater sustainability.

“Siemens looks to find answers that help our customers deal with issues like increasing urbanisation, climate change, industrial productivity, and the demand for affordable healthcare, all of which are sustainability topics. Much of today’s and tomorrow’s challenges are technological in nature - and society looks at companies like Siemens to help find the answers to these.

“Sustainability is an overall important part of Siemens brand, and green is part of our strategy. We established the Environmental Portfolio not only because we spotted significant growth opportunities, but also as one of the strategic ways to respond to one of the megatrends relevant to Siemens: climate change. By highlighting the products and solutions in our Environmental Portfolio, we are able to provide our customers with a series of specific options to reduce their own GHG footprint and install environmental-friendly technologies,” the spokesperson continues.

Making a difference

Being green is one thing but ensuring that sustainability differentiates your brand from the competitors is something else entirely, but there are various ways that this can be achieved. From the company’s viewpoint, it is about embedding green practices into the business and the brand itself. From the market perspective, a tangible expression of this commitment is important, either at a corporate level such as The Body Shop, at a sub-brand level such as GE’s ecomagination campaign, or a product level such as the Toyota Prius. “It is also critical to understand the different expectations and touch points around green as these vary by country and by industry” Murray says.

The results clearly demonstrate that communications are essential if brand owners are to realise the full value of their investment in sustainability. It is not enough to assume that great work will be recognised by the market. There is real value to be gained from communicating good work to build brand preference and choice.

“There is a risk, however, around brands whose green perceptions significantly exceed their performance scores,” Murray cautions. “Care needs to be taken to manage expectations and improve performance.

“Last year we ran a major global corporate citizenship study. The results showed that corporate citizenship, including green activities, plays a significant role in increasing brand favourability, and contributes to actual purchase decisions. Interestingly, the impact was strongest for B2B brands.

“However, we would caution that the strongest green brands lie at the intersection of performance and perception. It is essential that the brand is credible; green appearance without green action represents a risk to the brand.” Murray says.

A warning note can be read into this year’s results with the findings suggesting that some brands and industries have not fully understood the value that could be derived from credible green communications.

“There are two groups to consider separately; those brands that see a positive gap, where performance is higher than perception, and need to look at improving their perceptions, and those brands that see a negative gap, where perception is higher than performance, and need to look at managing expectations and improving performance,” Murray explains.

But fundamental to any organisation’s strategy is ensuring that being green is more than just a marketing mantra. “As a company, we believe that ‘brands have the power to change the world’,” Murray concludes. “From a business perspective, we believe that green activities can contribute to stronger connections with stakeholders and build long-term brand value.” *

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