Brand building in the low-carbon economy
Consumer awareness and understanding of 'green language' is evolving rapidly, and brands face an increasingly difficult task of both educating consumers and attracting low-carbon customers, according to Harry Morrison, general manager for the Carbon Trust Standard, and Peter Walshe, senior global director for UK brand agency Millward Brown.
Carbon is becoming a significant issue for brand marketers. Research by Futerra in 2007 found that the term 'carbon footprint' was unfamiliar to most consumers and poorly understood. However, by February 2011, almost three quarters (74%) of consumers surveyed said they were familiar with the term 'carbon footprint'.
This rise in awareness is due, undoubtedly, to an influx in 'go green' messages over the past few years not only in the media, but also from environmental groups, as well as businesses seeking to bolster their brands by presenting a greener reputation.
But with consumer awareness increasing, and the fact that business is directly responsible for 65% of the UK's emissions, what are the risks and opportunities for brands and their marketing teams? One of the key risks for brands in communicating their climate responsibilities lies in the severity of the issue of climate change within the minds of consumers.
According to research commissioned by the Carbon Trust Standard of 1,000 UK adults, the majority believe that climate change represents the greatest environmental threat facing the world today. More than half (56%) are more concerned than they were five years ago about the impact of companies on the environment.
Marketers have long seen the reputational value of promoting environmental credentials. However, some brands haven't backed their communications strategy with a robust action plan. As a result, corporate 'green washing' has jaded the public into an atmosphere of cynicism. Only 7% now believe company claims of action on climate change, and 66% question whether companies are genuinely cutting their emissions when they make claims to have done so.
It's clear that the public are in a very uncomfortable place regarding corporate climate change. They understand the significance of the issue; they realise business is a major carbon emitter; but they are also unclear as to the full extent, and they are also unsure what real corporate climate action looks like. In terms of brand loyalty, this confusion leads to inquisitiveness and, given time, a backlash against corporates that fall short (in the consumer's opinion).
But what impact can this consumer mistrust really have on brand value, and can companies achieve growth by taking action on climate change and winning back consumer trust? The Carbon Trust research found that, at a basic level, firms that measure their impact, and commit to reducing them over time, are at an advantage: some 61% of consumers are more likely to buy from companies with good eco-reputations.
With the shop 'til you drop, credit fuelled consumer binge days past, and cash harder to come by, consumers are more discerning now about the brands they buy from. And brand loyalty isn't really about making a sale; it's inspired by long term engagement. Reducing corporate climate impact provides a key touch point in the customer journey, and sends a clear message about the brand's good intentions for the future.
As the survey showed, 56% of consumers are more loyal to brands that can show, at a glance, evidence of their environmental actions, and 54% want to work for companies that can clearly demonstrate their commitment to reducing their impact on climate change.
BrandZ, an annual quantitative brand equity study run by Millward Brown, echoed the Carbon Trust's findings, finding a direct correlation between firms that make it into the 'Top 100 Global Brands' list and those with a good reputation for environmental responsibility. On average, approximately 80% of sales are generated by the product brand itself (from pricing, quality and so on), while 20% of sales were found to be directly linked to corporate reputation.
In breaking the Corporate Reputation category down further, BrandZ found that at least 2% of sales were attributable directly to a brand's environmental reputation. This may not seem like a significant percentage, but for many companies even this small margin represents millions in sales.
Many leading brands are using sustainability to develop and differentiate new products and services. For example, customer feedback from the 11 million guests that visit Whitbread's hotels and restaurants annually showed a marked interest in the carbon footprint of the food they eat and the places they stay - so much so that Whitbread placed sustainability at the heart of its strategy and is striving to make its Premier Inn hotels the lowest carbon venues of their kind.
Similarly, in the transport market, Eurotunnel complements its reputation for providing low carbon channel crossings by independently auditing carbon performance and committing to year-on-year reductions. By displaying its achievement of the Carbon Trust Standard on its home page, it consciously taps into the mind set of carbon-aware business travellers.
From a reputation point of view, however, so-called 'green initiatives' by brands can experience a key pitfall, apart from the obvious trap of 'greenwashing': investing in action on climate change when it is not effectively communicated to or recognised by customers.
Six out of ten (60%) of those surveyed said they needed to see independent verification from a respected climate change body before trusting environmental claims, followed by 53% who trust only in scientific or academic endorsements. The greatest concern for consumers is that firms simply make one-off improvements to win publicity, and then return to business as usual. The Carbon Trust Standard, however, aims to address this concern by only being awarded to organisations that pass a rigorous assessment of their data, proving that their carbon impacts have been reduced over a three year period.
Over the past five years, the pace of recommendation of brands by consumers has speeded up drastically, partly due to the rise of social media. While companies should build their environmental actions into company sustainability and corporate responsibility (CR) reports, but it is also essential that these positive actions are also disseminated around the social web. The first place consumers turn for information is not necessarily a company's website but a search engines or a social network.
With the advent of social media, the actions of firms going 'above and beyond' to reduce their climate impacts are highly likely to be published online by consumers. One in three (33%) are more likely to opt into company news and announcements by 'following' or 'friending' businesses that can prove positive environmental performance. And one in five (20%) said they would blog, or write about them in web forums. A proactive approach to promoting environmental success online as well as monitoring to understand consumer sentiment about a brand's environmental behaviour is critical.
Brand marketers are often kept out of the loop on corporate environmental actions until there's a one-off story to promote but, given the need for businesses to win consumer trust in the long term, it is imperative for marketers to play a stronger role in driving change. CSR directors and environment managers are already lobbying boardrooms for greater investment in carbon reduction programmes from both cost and efficiency points of view. It's now up to marketers and communications directors to join them in influencing organisational change.
Although business is responsible for 65% of the UK's emissions, the reason they are emitting is to deliver products and services to consumers. Unless brands can prove they are reducing their impacts, they will not be able to educate consumers about everybody's collective responsibility for limiting climate change, or receive the recognition that real action deserves.