Right hand, meet left: How to align your message, avoid risk
Right hand, meet left: How to align your message, avoid risk
Organic. Natural. Eco-friendly. Fair trade. Locally grown.
Facing a deluge of green messages, today’s consumer is at worst cynical and hyperaware at best. Consumers have awoken to the trend of corporate greenwashing and are quick to catch on to inconsistencies in sustainability messaging.
Companies with such schizophrenic messaging put their reputations at risk. In today’s marketplace, reputational risk quickly transforms into business risk.
If you think all of the sustainability messages your company is sending come from your marketing department, think again. Other parts of your business are likely also sending messages to the marketplace on sustainability, perhaps without even being aware of it. This chorus (or cacophony) of messages can have a critical impact on your company’s reputation.
Over the next three weeks, this series will explore the ways in which companies may unwittingly send inconsistent messages to investors, customers and the marketplace on sustainability. If that gets you thinking about your own company’s messaging, stay tuned. The series will end with a checklist of considerations that’ll help you think about how to minimize reputational risk and maximize sustainability investments.
Money talks -- so put your money where your mouth is
Companies pay a lot of attention to how much they are spending. But very often, corporate leaders may not consider where and how they are spending their money -- and what messages that spending might be sending on their sustainability stance.
Procurement & Supply Chain
Where and how a company "shops" can speak volumes about how much it values sustainability. One way in which companies can slur their commitment to sustainability is by ignoring their supply chains. While this old news, please take note: If you are looking at your company’s environmental footprint, you have to cast your eye beyond your own offices, grounds and operations.
You also have to look at how you are sourcing your products and materials. As Chiquita and Dole (two of the world’s largest fruit producers) found out, consumers don’t want to buy organic bananas that are shipped around using highly polluting tar sands oil. They were bombarded with consumer petitions, and were the target of protests at stores. Both companies committed to phasing out use of diesel sourced from tar sands oil last year.
Engaging with your company’s supply chain managers and procurement officers regarding sustainability goals is a critical step to internal alignment and making sure you aren’t sending mixed messages to customers.
Lobbying & Funding Think Tanks
Another way in which companies may communicate an inconsistent stance on sustainability is through lobbying and think tanks. This phenomenon is captured in the Union of Concerned Scientists’ (UCS) recent report, which highlights seemingly schizophrenic messages from companies on their climate change stance. Over and over, the report points out that companies pledge to cut their carbon emissions on one hand, yet lobby to block climate change policy, and fund climate change-denying think tanks on the other.
The UCS report is just one illustration of the increasing demand for transparency in corporate affairs. Earlier this year, leaked documents detailing corporate donations to the Heartland Institute (a US-based climate-skeptic think-tank) led to responses from company PR agents trying to do damage control.
Many of the companies funding the Heartland Institute have extensive and impactful sustainability programs. Inconsistent sustainability actions can threaten to undermine positive sustainability initiatives and roll back years of hard work building a strong sustainability reputation.
“Some of the companies included on Heartland’s list of donors were surprising,” the Guardian reported, which included Microsoft in the list. “Bill Gates, the founder of Microsoft, has vigorously promoted clean energy in a number of speeches, and his charitable foundation works on helping farmers in the developing world who will be badly affected by climate change,” the article read.
General Motors eventually pulled funding from the Heartland Institute. A strategic move: the organization’s efforts to refute climate science didn’t sit well with GM’s foray into electric vehicles.
Corporate transparency is trending and will continue to do so. The sooner companies align their lobbying and funding practices with their overall sustainability stance, the lower their risk of tarnishing reputations and delegitimizing their sustainability efforts.
Your company can make significant investments in sustainability, whether it be through acquisitions or divestitures. Expanding your business model to include sustainable products or services or spending R&D dollars on environmental innovation can signal to the marketplace that you’re taking sustainability seriously.
For example, BP has invested $7 billion in alternative energy since 2005, and Shell has entered into a multi-billion dollar joint venture with Cosan (a Brazilian ethanol company). Despite the scale of these investments, it is worth noting that some have raised questions about their significance, considering that they are smaller-by an order of several magnitudes than say, their collective investment in developing carbon-intensive oil sands.
Making strategic investments in the name of sustainability is one thing, but equally important is considering your overall reputation when making "non-sustainability-related” investments. Many large companies with significant sustainability initiatives proactively seek to avoid reputational and business risk by sending out special units of environmental auditors to facilities they are considering acquiring. Having a polluting facility in their portfolio would go against company values. If news about the facility hit headlines, this would be damaging to their brand.
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How your company spends its money is a way of communicating your sustainability stance, and can impact your customers’ trust, brand equity, and existing sustainability investments.
Come back next week to read the second article in the series, which will focus on company communications and why internal alignment to ensure consistent and authentic messaging is especially critical.