Marketing should always be more than one-way spin, it should motivate the audience to take an action. This is even more important in sustainability, where the real impact will be determined not by whether people remember what you said, but whether they engage and help the company achieve its sustainability goals. 

Stay tuned for more details!

This “Accessibility” category incorporates three criteria: language, design, and interactivity.

Language is pretty straightforward: are the words and concepts presented in a way that a typical employee, customer, etc. would find comprehensible? Unfortunately, the GRI, as any technical standard does, tends to encourage specialized jargon and concepts that only highly-trained experts truly understand. While those concepts should underlie the report, they don’t have to obscure the meaning and hamper readers’ ability to understand. In addition, sometimes these concepts need to be translated into the specialized language of the intended audience, especially when explaining the business impact of sustainability to the financial community.

While Ford scores well overall, they fall down on this criterion. While the automaker gets top marks for explaining the rationale behind their sustainability strategies, they present their “materiality matrix” with little explanation. Materiality is one of the core concepts of sustainability that is essential, but the average consumer will likely find it mysterious.

On the other hand, Wal-Mart explains the importance of energy, waste, and the products it sells in a way covers the “material” impacts it has, but in language that is clear and comprehensible.

Design should serve two purposes. The first is to make the information attractive and inviting to read. But there is a fine line between attractive graphic design and a glitzy look that is meant to dazzle the reader rather than enlighten.

Closely related to design — especially online — is Interactivity. should also facilitate the understanding and exploration of the information. With online reports, that means an intelligent but restrained use of technology that uses features that displays data informatively and aides the reader in accessing it.

Starbucks Goals & Progress Report continues to be one of the best reports I’ve seen on these factors. They hit on a very attractive functional design a couple of years ago, and have continued to update it annually.

Attractive navigation visually represents each major area, such as Coffee Purchasing & Farmers Support of Energy & Water Conservation and individual icons represent a specific set of actions within each of these areas. The reader can click to read about the overall issue or drill down to the specifics easily.

Another nice feature Startbucks uses is an expanding text box — when you click through on one of the areas such as Energy & Water Conservation, you are greeted with a short summary of their activities. Click the “Read more” link, and without leaving the page, the text area expands to give you significant detail.

Ford uses web interactivity intelligently in its presentation of CO2 emissions: the chart presented allows the reader to toggle between a bar chart representation and a table of the actual emissions data.

As one might expect from a master of branding, Coca-Cola has an attractive design that reflects the brand image well. But this doesn’t detract from the breadth or depth of information available. Each major initiative such as Water Stewardship has a page which overviews their key goals and activities, has a video of the senior executive responsible for the area and links to data and downloads.

Coca Cola’s Goals & Performance section also nicely employs the ability to expand and shrink the amount of information displayed, making it easy to scan their accomplishments.

Contrast these examples with McDonald’s, a company who was a pioneer in addressing the environmental impacts of their restaurants by teaming with the Environmental Defense Fund in 1990 to examine ways to reduce solid waste. Their reporting is anything but pioneering. It is mostly a Web 1.0 straight html design with little additional functionality. While they have incorporated video, pieces like ‘The Road to Sustainability’ is a typical PR image polishing exercise with little substance. The language is often self-congratulatory, such as the opening sentence of the Environmental Responsibility page, “We’ve long recognized the value of minimizing our environmental footprint” then goes on to talk about what they did 30 years ago. The Progress Snapshot is a summary of recent accomplishments, with no apparent way to drill down to greater detail.

Companies like Starbucks and Coca Cola are thinking clearly about how their customers, employees and other mainstream audiences want to interact with their CSR data. Other companies can learn a great deal from their example about how to translate CSR and sustainability reporting data into a credible, effective piece of communication.

Other posts in the “Why Most CSR Reports Fail” series:

Part 1: Leadership

Part 2: Message Strategy

Part 3: Tone of Voice

Speaking Sustainability can evaluate your CSR report on our 15-criteria scorecard, benchmark you against your peers and best-in-class reports, and give you specific guidance on how to improve. Contact us!

At yesterday’s Babson Energy & Environment Conference, panelists discussing corporate sustainability focused mainly on the savings of various energy efficiency, waste reduction, etc. projects. While this is top-of-mind now and the easiest to prove, sustainability execs risk finding themselves out of a job once all the “low-hanging” fruit are plucked unless they can make a more lasting case for the contribution of sustainability to corporate financial success.

And the case is there for three other important — and higher value — areas where sustainability improves financial performance:

• Shareholder value: In theory, a more sustainable company should be more profitable due to its greater efficiency and effective management of risks that could affect revenues, costs, or profits. This, in turn, should translate into higher stock price. In June 2010, a UK-based Business in the Community published a study showing that FTSE 350 companies that managed their businesses for sustainability “outperformed their FTSE 350 peers on total shareholder return 2002-2007 by between 3.3% and 7.7% per year.”  In addition, the stock price of these firms bounced back more quickly from the 2008 crash ”with an average 10 percentage points higher shareholder return.” An AT Kearney study in 2009 evaluating 99 companies in 18 industries showed that sustainability-focused companies outperformed peers by 10% in the September – November 2008 period and by 15% in the May – November 2008 period. So if a company can increase their market cap by between 3 – 10% by practicing sustainability, how much should they invest? 

• Brand value: In MIT Sloan Management Review 2009 study “The Business of Sustainability”, executives overwhelmingly cited “improved company or brand image” as the top benefit of sustainability. Brand consultancy Interbrand has calculated that “corporate citizenship” attributes account for on average 13% of a brand’s favorability — with higher levels in high-consideration purchases and B-to-B categories.How many marketing campaigns are successful in increasing brand favorability by 13%? How much would you have to invest in advertising to increase brand favorability this much? 
   

• Margin protection. In research surveys, consumers have long said they would pay more for “green” products. Actual market performance of such products shows that this is simply an effect of research bias: consumers answer surveys  in ways that make themselves look good, but at the grocery shelf, price, performance, convenience, etc. trump environmental attributes for all but the most committed niche segments. So if you can’t command a higher price, why market “green” products? But an intriguing study in the Winter 2009 MIT Sloan Management Review titled “Does it Pay to be Good?”  reports that the downside risk to not being sustainabile is greater than the upside benefit. Consumers will punish an unethical coffee brand by being willing to pay 28% less for unethically-produced product, vs willingness to pay 15% more for ethically produced coffee. T-shirts showed a maximum 6% increase in price, but a 15% decrease. While these studies still rely on consumer self-reported intentions, it raises an important new risk in margin erosion. In a competitive market place, lack of sustainability credentials may give customers one more reason to select a different brand.
   
  Even if we assume survey results overstate consumer intentions, and let’s say the downside risk is only in the 5% range, how much should companies spend to protect that 5%? 

   

As the economy recovers, and CFO’s can begin to look beyond reducing costs, I hope the sustainability community will prepare themselves to have robust conversations about sustainability’s contribution to shareholder value, brand value, and margin protection.

Daniel Goleman makes an eloquent case in Ecological Intelligence that giving consumers full information about the environmental impact of their purchases would be a powerful influence to steer buyers toward more sustainable products. But I have my doubts. After all, consumers ignore the mileage of SUVs and, even worse, the detailed information about fat content and calories on nutrition labels.

On the other hand, cosmetics and other personal care products have boomed on claims of being natural, not tested on animals, organic and other sustainability-related claims without any labels.

So what gives?

Like apparel, personal care products are all about making the user feel beautiful, confident, sexy, etc. So they work on a different level of purchase decision than the ego-driven automotive purchase or the cravings that drive food choices.

Brands like Aveda and The Body Shop succeeded especially because they linked using a responsible product with feeling even more beautiful, confident and sexy. Or maybe the availability of these products undercut the desired feelings of other products — after all, how could anyone feel beautiful with the image of a tortured animal or a clearcut rainforest in their mind?

Apparel appeals to the same emotions. Knowing that workers had had their power taken away took away the ability to feel more athletic and powerful wearing a pair of Nikes. Wearing clothes that pollute rivers or leave ugly piles of waste in a landfill may undercut the feelings of beauty they are meant to inspire.

The Apparel Index — when and if it ever comes to clothes labels — will be a good test of the Ecological Intelligence hypothesis.

But now companies are told they need “dialogue”, “transparency”, and “authenticity”. Great concepts, but what do they look like? How does a classically-trained communications professional incorporate these new ideas into a CSR report? While dialogue, transparency, and authenticity aren’t confined to CSR reporting (social media is injecting these concepts into all marketing and communications), they are especially important here. Whether it is standing up to the scrutiny of an NGO or socially responsible investor or overcoming the innate skepticism the public has for companies’ professions of responsibility, the right tone is crucial. I contend you shouldn’t even claim to be responsible — put your strategies, initiatives and accomplishments out there, let your audience be your judge, and invite them to guide you in your future efforts.

Which brings us to “dialogue“. Many company have formed relationships with NGOs like Environmental Defense Fund and Natural Resources Defense Council which offer firms expert guidance on sustainability issues. Or they have advisory groups for various stakeholder groups like communities they operate in. And they report on these in their CSR report. All well and good. But few invite the readers of the report to become part of the conversation, and when they do it is often through a comment form online, or a general email address like info@company.com.

One company stands out on this criteria: Starbucks. Their My Starbucks Idea site has a robust conversation about social responsibility ideas. And not only has the company created this open, public venue for feedback, they list Idea Partners, individuals at the company who will “listen to your ideas, ask questions, tell you what we’re doing behind the scenes” – like sbx_slo, a sustainability manager. This is a great resource that is actually somewhat underused in their “Shared Responsibility” section of their website, with small links but no prominent invitation to these visitors who probably have some great ideas for them.

Transparency is a much simpler concept but one that is understandingly difficult for companies to execute: put lots and lots of data out there to support your claims. Or better yet, just share the data. Swedish forest products company SCA’s sustainability report publishes data on raw material use, energy, and waste by line of business and even down to the individual manufacturing and processing facilities.

Authenticity is perhaps more difficult, more of a “I’ll know it when I see it” characteristic. Too many firms follow the quip: “If you can’t be authentic, fake it!” Or they use typical marketing language that boasts how responsible the company is, or proclaims that the environment has been a top priority since the company was founded (how many of these claims would stand up to a search or EPA enforcement sanctions?).

Starbucks is again the standard. Their goal to serve 25% of beverages in reusable cups by 2015 is ambitious. The 2010 report shows their progress: serving 4.4 million more beverages in reusable cups in 2009 vs. 2008. They could have left it there and readers might have thought they were doing pretty well — 4.4 million is an impressive number. But they took the extra step to disclose that this is only 1.3% of all beverages served by the company, and their efforts “need improvement.”

Most companies flinch at the idea of admitting they are falling short of goals. They fear stakeholder anger, maybe even regulatory action if they are unable to fulfill their commitments. But this kind of authenticity innoculates Starbucks from this kind of backlash. It would have been far worse for them if some NGO or activist had done the calculation to show how far short of the goal they are.

Communications professionals are learning the art of dialogue on social media, and they must bring these new skills to the front when they work with their sustainability and CSR colleagues. But they must leave at their door their well-hone skills of selecting one particular facet and spinning it into a positive, leadership story. Facts, completeness, and balance go a long way in making a CSR report successful.

Other posts in the series “Why Most CSR Reports Fail”:

Part 1: Leadership

Part 2: Message Strategy

Speaking Sustainability can evaluate your CSR report on our 15-criteria scorecard, benchmark you against your peers and best-in-class reports, and give you specific guidance on how to improve. Contact us!

These elements wouldn’t appear in communication strategy briefs for ad campaigns, media relations efforts, and corporate communications programs. But how a company handles them sets the stage for a compelling report.

Visibility is very simple: does the firm put its sustainability efforts front and center or make interested stakeholders hunt for them? If all a company does is publish a printed report and make it available on request, they aren’t trying very hard to demonstrate their commitment. Companies like P&G, TJX, and Kimberly-Clark have a prominent link in the main navigation of their web site. Coca-Cola goes further and devotes precious home page space to their “Live Positively” sustainability program (though it could be labeled more clearly to differentiate it from the other marketing messages on the page.)

Timing: Commitment entails regular and consistent updating of data and results. An annual sustainability report is no more acceptable than a single annual financial report, but annual reporting is the norm today.  Where most companies completely fail is that their annual report may be 6 months or more after the reporting period. Things are beginning to change and SAP is showing that quarterly updates are possible; (of course, as a company selling software that provides this kind of real-time data, these updates are a demonstration of their product’s capabilities and thus as much a marketing imperative as a reporting imperative). While SAP gets kudos for publishing these quarterly updates, they can still improve: they promise their annual report in “spring”, a rather soft date.  And a note to the webmaster: time to update the link to the sustainability report: it still says it links to the 2008 report.

• Corporate structure: Many companies take this myopic view, organizing the communication around their products, operations, business units, etc. While this may make sense to internal stakeholders, it is not easily comprehended by those who don’t look at their business in the same way.

Triple bottom line structure: Companies like Colgate and Coca-Cola, use some variation of the cliche people/planet/profits categories. It is easy to throw out these buzzwords, but this structure is so general that it is probably a good mask for companies whose efforts are superficial. For companies with a serious commitment, it doesn’t showcase the depth of analysis they have done to identify the most material impacts they have.

• Issues: This is a much more user-friendly approach, organizing actions around areas like waste, carbon reduction, water use, community responsibility, etc.  Marks & Spencer features five pillars and uses a clever web design that highlights the activities that support each pillar.

The goals that a company chooses to pursue and highlight in their CSR report say a lot about how serious they are. Many are vague promises to reduce waste or energy use by some percentage. No manager worth his salt would present such vague goals to his boss or his staff, and they aren’t credible in a CSR report. Goals should have three components: a target, a timeframe and a baseline, eg, reduce waste 10% vs. 2008 levels by 2012. Companies shouldn’t create goals in a vacuum but show that they are in tune with relevant science and public policy goals. Climate change has a clear goal — the Obama Administration’s target of a 17% reduction in greenhouse gas emissions by 2020. But real leaders view these as baselines to beat: Ford has committed to a 30% reduction in new vehicle emissions by 2020 compared to its 2006 vehicles.

Clear criteria for ensuring the report is highly accessible, regularly updated, clearly organized and offering relevant, accountable goals provide the framework for writing and designing a report that is substantive, not superficial.

The next post will flesh out how to get the words and images right so the report steers clear of greenwash.

Other posts in this series:

Part 1: Leadership

Part 3: Tone of Voice

Speaking Sustainability can evaluate your CSR report on our 15-criteria scorecard, benchmark you against your peers and best-in-class reports, and give you specific guidance on how to improve. Contact us!

CSR reports are often criticized as glossy PR efforts or obtuse, jargon-filled documents that only an insider can decipher. But these general criticims, however valid, aren’t helpful to companies trying to be truly responsible. The next four posts will outline concrete criteria you can use to evaluate how well your report communicates to core audiences of employees, customers/consumers, business partners and mainstream investsors.

I’ve spent a lot of time reviewing CSR reports lately trying to define what makes a report a persuasive and compelling read for a concerned, average person. I’ve developed a diagnostic scorecard with 15 criteria that fall into four categories. Of two dozen reports I’ve assessed, only two get a passing grade.

How can firms improve?This post will start with the first category: Leadership.

Leadership is a vague term that every PR person loves to claim for their company.  But in sustainability, there is a clear dividing line between those taking important but basic actions and those who are really taking the lead. Simply working within your company to reduce waste, cut energy use, treat employees fairly, etc. once qualified as leadership but initiatives like WalMart’s role in kick starting the Sustainability Consortium and Starbucks’ recylcable Cup Summit have raised the bar. Leaders now go outside their four walls — even recruiting their competitors – and use their influence to attack problems bigger than a single company can solve alone.

Companies also demonstrate leadership by showing that they are thinking not just about how to score image points, but are seeing the business value of responsible behavior and building it into their culture. The public is highly skeptical of business’ motivations and commitment for “doing the right thing” so when a company like TJX touts its acronym “V.A.L.U.E” to represent its commitment to responsible business it looks like typical corporate spin. To be fair, I think TJX is sincere and there may well be more to their efforst than meets the eye. But their communication falls flat. The discussion is wrapped in expected platitudes  such as “our vendor relationships…have been a key factor in our success.” Then stating that their code of conduct “requires each of our vendors, at a minimum, to act in accordance with all applicable laws and regulations” sets a very low standard.

Contrast this with the materiality matrix that Ford publishes. Management has clearly put a sincere and concentrated effort into understanding both the issues of concern to stakeholders and how those issues impact their business. For example, “low-carbon strategy” appears in the quadrant that is high concern to stakeholders and high impact on the business, presenting a clear business rationale why the company must address the issue in order to achieve its other financial and business objectives. The low carbon strategy has clearly moved beyond a clever ploy to deflect criticism and has engaged the company in an effort to reinvent its business.

 UK retailer Marks & Spencer makes it even more straightforward in their “2010 How We Do Business Report“. While their business depends on moving more and more goods, they see that they have a clear business interest in ensuring that their supply chain works to minimize materials used and protect natural resources — not from a tree-hugging, save-the-planet perspective, but because their future  business depends on it.

M&S doesn’t shy away from the good they are doing, but they also tie it to their bottom line, stating that their sustainability initiatives have dropped £50 million to the bottom line.

Purists may complain that by pursuing benefits to their business, M&S and Ford aren’t pursuing sustainability for the “right” reason. But after watching business fudge and spin their environmental commitment for the past 20 years, when companies demonstrate their view that environmental performance and business performance can coexist, I am more confident that the firm will follow through with their commitments.

Other leadership issues relate to consistent effort at sustainability internationally and embracing the emerging trend toward abolishing the CSR report in favor of the “integrated” report covering financial, governance, social, and environmental issues.

How well does your report stack up to these criteria?

Other posts in this series:

Part 2: Message Strategy

Part 3: Tone of Voice

Speaking Sustainability can evaluate your CSR report on our 15-criteria scorecard, benchmark you against your peers and best-in-class reports, and give you specific guidance on how to improve. Contact us!

1. What is the company’s vision of sustainability? Don’t get me wrong, energy and waste reduction initiatives are to be applauded. But as Lewis Carroll said, “if you don’t know where you are going, any road will get you there.” Companies that haven’t thought about what their business would look like if it were sustainable, may or may not be addressing the most important impacts the company has on the environment or society.
2. Does the company have a quantified baseline of its social and environmental impacts? Taking a step back (or better yet, engaging stakeholders) for an evaluation of the impacts a business has is the first step in developing a strategy. Only then can you know whether your biggest carbon footprint, for example, is due to your manufacturing operations, distribution, employee travel, etc.
3. Has the company defined a plan to reduce its biggest impacts? With a baseline, the firm can prioritize its efforts on the areas where it can have the biggest impact quickly, and set priorities for how it can address each impact in a series of initiatives over time.
4. Does the company define sustainability in business terms? I applaud companies that want to “do the right thing.” But this implies that there is a difference between what is “right” and what is good for the business — and if that is the decision, what is good for the business will ultimately push aside the “nice to do” good actions. The efficiency, profitability, productivity, and other benefits that come with sustainability should be articulated as the driver behind sustainability.

In my report for Verdantix on PR and marketing agencies’ sustainability services, all provided a long list of commendable conservation practices: using recycled paper, setting their copiers to print two-sided, encouraging employees to turn off their computers at night, etc. Most tracked and reported their carbon footprint to their parent company. Some occupy LEED certified office space. Several mentioned that employee travel was a big contributor to their carbon footprint.

But none offered a vision, a baseline quantification of its impacts, had a clear plan or could relate sustainability to their business.

These agencies are practicing “random acts of sustainability”. Does your firm do better?

1. Substantive, not superficial. Sustainability communications can’t begin until a company has taken substantive operational changes in raw material selection and sourcing, supply chain management, production/manufacturing efficiency, etc. Superficial efforts like using recycled content in packaging or even creating a separate line of “green products” while the rest of the products are unchanged doesn’t provide a strong enough foundation to support an authentic sustainability message. Even significant energy reductions alone are insufficient; as a first step in a broader strategy, however, they can be the opening of a sustainability communications strategy.

2. Core stakeholders, not niche audiences. Corporate social responsibility reporting typically focuses on a small, specialized, elite in the CSR world that Peter Knight at Context America calls “the Green Ghetto.” Companies that are serious about sustainability will make it a core attribute of their corporate reputation and brand identity. Thus, they will use language and media accessible to consumers/customers, employees, business partners, and mainstream shareholders. The Internet and social media will be central to their sustainability communications media strategy.

3. Owning externalities, not giving to charity. Corporate philanthropy is great and can do a lot of good. But by itself it is not a sustainability communications strategy. A firm’s sustainability strategy must focus on the impact the company has on the environment, the communities where it operates, and the people its activities touch along the way. In the excellent Harvard Business Review article “Leadership in the Age of Transparency“, authors Christopher Meyer and Julia Kirby sum it up with this simple concept:

When the costs of externalities become sufficiently clear — and onerous – they manage to get internalized one way or another. The scope of impact you are responsible for managing can only continue to grow. Your choice in the matter is whether to take charge of that scope or have it thrust upon you. In terms of corporate reputation, that makes the choice easy, because the worst of all worlds is to be made responsible, but still not be considered responsible.

4. Proof, not puffery. Grand claims, altruistic platitudes, and self-congratulatory fluff are out. Aggressive, quantifiable goals that the company measures and holds itself accountable to are central to the communications. But firms shouldn’t wait until they have achieved them so they can pronounce how responsible they are. Sustainability leaders like Starbucks publish their goals at the outset of a new initiative, track progress with data and numbers, and evaluate how well they are doing.

5. Authenticity, not corporatespeak. The typical PR approach of couching everything as a major accomplishment undercuts the kind of trust that companies must put at the core of their sustainability communications program. Audiences will be much more forgiving if you admit that you haven’t made the progress you aimed for than if you try to spin the shortfall into good news. Someone will out you and your stakeholders will be angrier at your coverup than at the fact you missed your target. But authenticity also means accompanying this kind of bad news with an outline of what you have learned and how you plan to get back on track.

Sustainability communications is different than its precursors: “green marketing”, corporate social responsibility, corporate philanthropy and cause marketing. It borrows and builds on some elements of these approaches, but discards much of the baggage that has marginalized these strategies in corporate decision-making. It follows the trend of sustainability as a core business strategy to improve efficiency and build value to improve the brand and corporate reputation.

I defined sustainability communications in my report for Verdantix :

 Engaging the support of core audiences in strategic directional and operational changes to the business, which decrease the firm’s enviornmental footprint and contribute to solving social problems.

Let me unpack that a bit:

Note that the definition doesn’t talk about features or benefits of products, not does it target consumer wants, needs and motivations. Rather than being a new form of marketing, sustainability communications is rooted in the business, not the brand. But as sustainability becomes an important operational strategy for the business, it begins to provide a halo for the brand.

This requires “directional and operational changes” that alter many unstated assumptions about what it means to have a growing business, eg, to make something you have to create waste; growth requires increases in energy; factoring environmental responsibility into production results in higher costs; labor is just another cost of production that must be minimized through low wages and skimpy benefits, etc.  When companies find new ways of operating that change these assumptions — or at least radically reduce what has historically been an accepted level of impact — they have a sustainability initiative worth communicating.

Sustainability embraces social and environmental issues. This is pretty standard “triple bottom line” stuff. But rather than the corporate philanthropy approach of picking issues that offer the CEO good photo ops for the annual report, or the cause marketing approach that says “if you buy our product, then we’ll solve this problem” companies take responsibility for the externalities their business causes. (Thanks to Christopher Meyer and Julia Kirby for their HBR article “Leadership in the Age of Transparency” which removes the fuzziness around definitions of corporate responsibility and defines is as taking responsibility for a business’ externalities.)

And sustainability targets core audiences: consumers/customers, employees, business partners and mainstream shareholders. Unlike corporate social responsibility whose main aim is to mollify narrow niches including NGO’s, socially responsible investors, regulators, and activists, sustainability communications speaks in plain English to mainstream audiences to explain where the company is on its evolution toward sustainability.

But the most important word in this definition is “engaging”. Unlike marketing, this is not a case of spinning the best story and making the most compelling case for buying the product. The best companies start a two-way dialogue with concerned stakeholders, even inviting them to participate, as Marks & Spencer does by encouraging customers to sign up for their own set of Plan A activities and as Starbucks does by bringing a range of industry players together to create a recyclable cup.

Building on this foundation of real business change and engaging core audiences in meaningful ways will create the sustainable businesses — and brands — of tomorrow.