The word on the street these days is sustainability – everybody’s thinking about it, everybody’s talking about it – but few are doing anything about it; in the business world anyways. That’s why in today’s blog we are going to talk about #sustainability as a strategy and show why it’s not just wise, but essential, to get serious about sustainability.

A few months back we talked about The New 20%. The essence of the post was that in today’s world, most brands are so irrelevant that the average consumer wouldn’t care if 80% of them ceased to exist tomorrow. That means that only approximately 20% will survive as we shift to a new economy, becoming The New 20%.

+ Reality Check – The New 20%

Why?

The majority of companies have always operated on, and continue to operate on, the assumption that the only thing that the average consumer cares about is that a product/service does what they want and is available at as cheap a price as possible. Thus they have outsourced production to China, replaced real materials with cheap synthetics and plundered precious ecosystems for scarce inputs, all the while thinking consumers wouldn’t care.

But they were wrong. People do care. And now the game is changing.

Recently a study – The ReGeneration Roadmap – was completed to better understand how much consumers care. Naturally, one of the study’s main sponsors was a corporate juggernaut (cough SC Johnson) whose main interest is to further enhance it’s greenwashing capabilities ; however, the study, which included over 6,000 consumers across six countries, did reveal some illuminating insights into the future of purchasing.

The majority of respondents said ‘we need to consume a lot less to improve the environment for future generations.’ In this light, alternative consumption patterns are emerging (#DIY, repair, reuse, etc.). In developing countries, 60% said that they would be willing to pay more for products with social and environmental benefits, versus 25% in developed countries.

Globally, consumers agree that they would purchase more products that are socially and environmentally geared if:

  • 75% would buy more if it performed as well or better than the alternative
  • 70% would buy more if it didn’t cost more
  • 64% would buy more if the company’s’ claims were more believable

Interestingly, there is some discrepancy between the barriers to ‘sustainable consumption’ in developing versus developed markets. In developed markets, price is the key barrier, while in developing markets the problems relate more to performance and not knowing the benefits.

Perhaps one of the most interesting insights revealed relates to the tribal dynamic, where 54% of consumers in developing markets would purchase more sustainable products ‘if it connected them to a community of peers who share their values and priorities.’ This insight coincides well with what we see emerging as part of our research into the collaborative economy, especially in industries like fashion, where the social aspect of purchasing is becoming more and more sought after.

+ BMB: Fashion 2.0

While we can see how the consciousness around purchasing is undergoing a dramatic shift, we certainly don’t expect it to stop. In developed countries, ‘having a lot of material possessions is important to my happiness’ was true for 49% of respondents (vs. 23% for developing). In developing countries, 77% said that ‘shopping for new things makes me happy’ (vs. 48% in developed).

It goes to show that, while cutting down on consumption is certainly an imperative, we also need to focus on consuming better. The more conscious the consumer, the more pressure there is on brands to develop products/services that are in-sync with the world around us. And rather than just consume, consumers (for a lack of a better term) want to play a part in the regeneration, with more than two-thirds globally saying that they are:

‘interested in sharing their ideas, opinions and experiences with companies to help them develop better products or create new solutions.’

That’s what we call co-creation, and it is the most powerful force that next-generation brands can tap into.

So given that the rules of the game are changing and the lines are being redrawn, who are these new consumers and how can companies connect with them?

Image taken from Green Africa Directory

The study broke down the market into four key segments:

  • Advocates (14%): highly committed to sustainable purchasing

28% Brasil. 15% India.

  • Aspirationals (55%): style & status seeking, aspire to purchase more sustainably

53% China. 42% India. 35% UK.

  • Practicals (34%): price and performance minded

43% Germany. 37% UK. 36% US.

  • Indifferents (16%): the least engaged

22% US. 18% UK.

Developing markets present huge opportunities for ‘sustainable brands.’

For those brands who want to be at the forefront of this movement, it is the two leading segments that are the most intriguing.

The Advocates are willing to pay extra for socially and environmentally-driven solutions. They feel a sense of guilt about their impact on society and always try to do the right thing; they believe others should follow their example. The interesting thing about this group is that while they are relatively small in size, they have the potential to disproportionally influence others by taking action on issues and causes they care the most about.

+ 81% are interested in sharing their ideas and experiences to help companies develop better products and advance solutions;

+ they are fact seekers, so if you try and BS them, there will be ramifications.

The Aspirationals are referred to in the study as the ‘persuadable middle,’ meaning that while they are materialistically oriented, they aspire to purchase more sustainably. This is the group who is actively seeking info online from social networks, along with their family and friends, in order to help inform their decisions. Despite the fact that they care more about style (65%) and social status (52%) than the other segments, they are the biggest market segment of all four and they sincerely want to use their purchasing power to make good things happen.

+ it’s as much about people as the product for them, so brand socially;

+ to reach them, brands need to design new business models with fewer impacts.

New Business Models. That’s the point we want to focus on.

To make #sustainability as a strategy work, it has to be embedded in the heart of the business model. It has to come from the core.

Many companies try and tack on something that they think will be perceived as sustainable into their product or service and then market themselves as if they are ready to reinvent the world. The problem is that consumers can sniff out these half-hearted initiatives in a heartbeat, leaving the integrity of the brand in question and planting doubts about how sincere the company to change the future.

Instead companies need to be willing to redefine their value proposition to consumers and in many cases redesign the entire experience. To put it succinctly, bold brands need to march out there and move sustainability to the core of their strategy, putting short-term profitability on the line and exposing itself to potential failure. The upside is that they are the only ones who will be around in the future.

+ Business Modelling 2.0

Who’s out there doing it now?

Osklen, a Brazilian-based pioneer in luxury fashion, is one prime example that we have talked about several times before on the blog.

+ Avant Garde: Moving Fashion Forward

At the grassroots level, there is FAIR Spirits, a France-based company producing the world’s first line of fair-trade certified spirits. The video below takes us into the heart of Bolivia to see the company’s production facility for its Quinoa Vodka:

The team at FAIR has thought through multiple dimensions beyond just the product itself; from the inputs, to the workers, to the dispersion of wealth, it’s a company that’s designed to make a difference.

At the top level, NIKE’s Material Sustainability Index initiative is one of the best examples of a sincere effort that we have seen from #bigbusiness. The company has been working with the Sustainable Apparel Coalition and Duke University to create an open API for a global sustainable-materials database, giving ‘future makers’ the ability to find and source top-quality sustainable materials.

You can read more about the specifics of the project on the RhOK website (Random Hacks of Kindness):

+ RhOK: Nike MSI brief

This open R&D venture by Nike reflects a serious effort by the company to make #sustainability as a strategy work, and makes us at least consider that this company wants to be around in the future. Despite the numerous social and environmental hurdles that still face the company, it’s clear that they are making moves from the core:

+ Nike Sustainable Business Report

Using materials as the key focus, they are going on the offensive with sustainable innovation and working towards their vision of a closed-loop business model. Whether you agree with their vision or not, they have at least aligned the pieces to make it happen.

Overall, these few examples go to show that #sustainability as a strategy is no longer reserved for the eco and organic brands of the world. It’s something that every company needs to take seriously and start embedding into their strategy. While the types of moves required to make this work are not for the faint of heart, those that move now will at least have a pulse when the dust settles.

Have you seen any great examples of #sustainability as a strategy?


+ The Entrepreneurship Era
+ The Redistribution of Dealflow


Building Blocks – PLAN – the Business Model