The interaction between product and branding plays a crucial role in determining a sustainable brand.
A sustainable brand cannot exist if the product itself does not have any sustainability characteristics. Similarly, a sustainable product needs to differentiate in the marketplace through branding that resonates with the consumer.
This is at the heart of a sustainable brand — combining the sustainability of the product and the brand to create a unique sustainable brand value proposition and identity.
This book won't attempt to tell you how to create a sustainable product. That will take a whole new book. There are many tools out there to help develop a sustainable product. At the very least you need to cut the fluff out when developing a sustainability product and having full product transparency will enable a more efficient way to assess product sustainability. And a great place to start figuring out how to get to product transparency is Ramon Arratia’s DōShort book on full product transparency.
However, we do need to understand product sustainability if we want to know how to build a sustainable brand that consumers will love and buy.
We could look at the sustainability ratings and awards to determine if a specific product is a sustainable product or not. There are numerous challenges with this approach. First, most rankings or awards are company focused and not product specific. Furthermore, awards and rankings are notoriously biased, based on their own set of criteria. I’ve always been skeptical about CSR rankings and ratings, partly because there are just so many of them. It sometimes feels as if we have a ranking and rating system for every company. Just find the one that fits your needs and away you go! But this also underlines a deeper problem with rankings and ratings: Is it even possible to have a ranking or rating system capture all the differences and diversity amongst companies?
There are a number of problems I have with the existing systems of rankings and ratings in determining if a product is sustainable or not:
1. Industry differences: The differences between industries are hardly even acknowledged but fundamental if we want to judge if a product leaves the world in a better place for future generations. Even if we limit our judgment to products and not services, the manufacturing or extraction differences are too steep to make a single standard rating workable. Most rating systems look at the impact of the manufacturing process — environmental impact, workplace practices, financial performance, community involvement, governance. Nothing wrong with the criteria used — from GRI to DJSI and beyond. All robust ways to measure the impact on how a product is created. Most companies within manufacturing can be judged according to these, right? Well, just hang on for a minute there …
2. Process vs. product: What most of these rating systems focus on, measure and rate are the impact of the process and not the impact of the actual product delivered by the manufacturing process. For example, it is possible for a tobacco company to have excellent CSR practices in their manufacturing process and therefore rank better than, say, a pharmaceutical company. They can pay farmers a decent price, have independent certification throughout their supply chain, be highly unionized and pay the best salaries possible, and provide benefits to their employees that go beyond what anyone else ask them. But the actual product delivered by the pharmaceutical company is vastly different from those of a tobacco company — one contributes to the health of society and the other does the opposite.
Now it will be easy to exclude tobacco companies — and many do. However, the basic principle remains. The extremes are easy to differentiate — and we can exclude tobacco and arms manufacturers. But what about comparing the products of an oil company to a pharmaceutical company? How do we judge the end product and the impact of that end product, especially when we start bringing in the idea of sustainability — leaving the future world in a better or no worse place? How do you rate a product that positions us better for the future against a company who serves an immediate need but at a much higher environmental and sustainability cost? How do you rate a software company who connects sustainable solutions to a company whose software is used for warfare? The differences in what the products deliver become complicated and make comparisons extremely difficult and challenging and almost impossible.
3. Shared value: The approach to ratings undermines a key development in sustainability over the last few years — finding the opportunity of mutual responsibility or shared value between the company and its stakeholders (or society at large). Most rating systems don’t allow for this to be reflected because they focus on the impact of operations and not the product impact. You therefore can (and will) have companies who practice sustainability the old way (ticking boxes, compliance, etc.) have a higher rating than companies who seek new ways to create product and service solutions that will benefit both society and the business itself. Too many ratings take a "tick the box" approach instead of looking at innovation, opportunity, mutual responsibility and societal benefit.
4. Standardization: The drive towards a common standard has another unwanted impact — individual criteria might mean a company has an excellent rating on some but fails on others. Let’s say a company rates highly on governance, philanthropy, financial performance and the environment but its major impact is actually on human rights. And let’s say this company then operates in countries where child labor or forced labor exists. The fact that it has great ratings in all but one most likely will give it a good rating overall. But it fails in the area that matters most to its specific company as it intersects with society. The standardization of ratings therefore fails to acknowledge the area of major responsibility and impact of the company — it places equal importance on all performance areas versus weighting those with greater social and/or environmental impact.
These are the biggest challenges in using ratings and rankings to determine whether a product is sustainable. They focus too much on the process and standardization and too little on the impact and value of the actual products and those areas of major impact and responsibility. A single standard rating and ranking to compare all companies cannot capture these differences adequately. Rankings and ratings go for the lowest common denominator and fail to rate truly those who benefit society today and tomorrow and fail to acknowledge the differences in impact between different industries — or even different companies within an industry.
The model I propose to use in developing the sustainable product aspect of developing a sustainable brand focuses on two sets of criteria: the impact a product has through its value chain and the inherent value of the product itself.
1. Value chain impact: The value chain impact looks at the social, environmental and economic impact of a product in its creation and life in the marketplace, from sourcing to manufacturing to transport to the marketplace to post-consumer. Everything that it takes to bring a product to life and through to the end of the product life. Simply put, assessing the impact via a product life cycle assessment. Not all products are created equally. For instance, sourcing diamonds through the Kimberley Process follows established legislation and monitoring that regulates diamond mining, importing and exporting. The goal is to make the diamond trade more transparent. It might not be perfect, but it is much better than the alternative where "conflict diamonds" easily can be smuggled across borders and over oceans to disguise their true origins, supporting and stimulating conflict. The same can be said of how apparel is manufactured, palm oil sourced, oil extracted, etc. The value chain impact will be vastly different depending on the way it is sourced and manufactured.
2. Inherent value impact: The second part of the model looks at the inherent value of the product itself. The question it tries to answer is whether a product creates a positive or negative good and what is the long-term impact of the product. Does it help address a key sustainability need of the world or is it a product that is a luxury or driven by want and greed? It might look like I am making a value judgment here but that is not the aim. The inherent value impact part of the product sustainability analysis is very simply a question of whether the product helps us live more sustainable lives. For instance, renewable energy and fossil fuels both provide us with essential products. One is a negative good in the long run because of the impact on climate change, health, dependency and conflict, while the other addresses many of those negative impacts — it leaves us with a positive good.
Of course, this is as true of services as products. In this book we use the term products but only because it would be cumbersome constantly to write products/services. But services should also be judged by both how they were created (the value chain impact) as well as the consequences of the service itself (the inherent value impact). For instance, a financial services company can be well managed with a strong governance structure — and even address salaries and bonuses in a way that gets the support from the Occupy movement and governments. It can even have strong community programs, great environmental initiatives and an employee volunteering program. However, if it uses its key product — money — to finance mountaintop mining or conflict mining or lend money irresponsibly then the impact of its product is a negative good.
Conversely, just because a product delivers a positive good does not mean that is a sustainable product. You can create a wind turbine by using slave labor, conflict minerals and dodging taxes. That makes the product itself of great value to society but the value chain impact is horrendous.
Similarly, shared value, where companies focus on growth opportunities by tackling social problems as core business objectives, are no guarantee of a sustainable product either. Just because a product finds a shared value proposition in its interaction between the product and society doesn’t mean it is a sustainable product. A product can focus on the shared value intersection with society but still have a negative impact because of its overall product impact. (Similarly, shared value tells us nothing of the brand itself — only about a program of shared value that may or may not have brand value.)
The model below attempts to create an easy way to evaluate a product’s sustainability based on these two elements — the value chain impact of a product and the inherent value impact of the same product.
This model allows us to determine the overall sustainability of a product and how it can improve. It also will highlight the inherent limitations of that product.
Knowing these limitations is important as consumers and activists regularly accuse companies of greenwashing. Yes, this can be because of communications and brand positioning but it is just as often because the company will highlight how a product was sourced or created and ignore the inherent negative impact of the product. For example, taking another shot at the easy target of tobacco: any cigarette company can create a product by developing some form of Fairtrade sourcing of tobacco, manufacture using the best and latest Social Accountability International standard, launch a huge recycling initiative targeting the box, and be free of animal testing, etc. You think this is farfetched? Think again, an "ethically sourced" cigarette was launched in the U.K. in 2007. No one was surprised by all the negative publicity and reactions to this product. The product might be created using the latest and greatest in sustainable sourcing and manufacturing but the end product still kills.
Similarly, consumers instinctively know that solar power always will be an environmentally friendlier product than coal — no matter how clean the coal claims to be. The same way that most people instinctively know that a diet of fruit and vegetables will be more beneficial to the health of the average person than fast food hamburgers and fries. Or that a hybrid car will be better for the environment than a gas-guzzling SUV.
However, the product world isn’t always that clear cut when it comes to the benefits of a product. A hybrid might be friendlier than a gas-guzzler but still not as good as a bicycle. But a bicycle has other, severe limitations in the modern world. Similarly, LEDs and CFLs are better than the old light bulbs but maybe not as good as a candle. The candle just isn’t fit for a modern lifestyle and therefore not truly a sustainable product when using the people, planet and profit triple bottom line approach.
What kind of products are those which will rank the highest in the inherent value impact? It will be the products that were created to deal with specific sustainability challenges or offer unique sustainable alternatives to fit our modern lifestyle: for example, wind turbines and solar power to harness renewable energy sources, Fairtrade and Marine Stewardship Council certified products, "green" cleaning products, LEDs and CFLs, hybrid and electric cars, healthy and organic foods.
On the flip side will be the extremes such as tobacco that will have a negative impact on people’s health, guns and ammunition for obvious reasons, "blood diamonds" sourced from and financing conflicts and wars, food with unhealthy levels of sugar, salt or fat, products with high emissions of carbon or CFCs, etc.
Most products will fall somewhere closer to the middle. We will have to judge each product on its own when using this model. Think of where a pair of Timberland Earthkeepers will fall compared to a pair of TOMS. Or where any of those two will fall compared to the knock-off sold on the streets in New York? Some are easy to determine and some a little bit more complicated.
This model allows us to determine one component of a sustainable brand — the product side. The flipside is looking at how sustainability is embedded into the branding of a product.
This article is excerpted from The Changing World of a Sustainable Brand (Dō Sustainability, April) by Henk Campher, senior vice president of business and social purpose and managing director of sustainability at Edelman. GreenBiz readers can use code GBiz15 at www.dosustainability.com to receive 15 percent off any DōShort. Vitruvian Man image by Janaka Dharmasena via Shutterstock.