Module 6 Sustainable Marketing and Marketing Sustainability / Focus on Values as a
Vehicle for Sustainable Financial Management
Sustainable Marketing and Marketing Sustainability
As consumers of the new generation, what are your preferences…
For food choices?
For leisure?
For clothes?
For hygiene?
For cars?
Sustainable Marketing
- Meeting the current needs in a way that preserves rights and options of future
generations of consumers and businesses
- Aligning organizational processes and goals with the general principles of
Sustainable Business Practices.
- It is the process of creating, communicating, and delivering value to consumers in
such a way that both natural and human capital are preserved or enhanced
throughout.
- It is not and cannot be business as usual.
Marketing Paradigms
Two Important Concepts to remember:
Consumerism – Citizens and government agencies move to improve rights and power of
buyers in relation to sellers
Example:
Right of consumers to be protected against questionable products
Marketing informs consumers about important aspects of the product
2. Environmentalism – Citizens and government agencies move to improve people’s living
environment
Example:
Maximize way of life
Concern with damage to ecosystem
Sustainable marketing is a holistic approach (Charter, Peattie, Ottman & Polonsky 2002, 12;
Bridges & Wilhelm 2008, 35; Emery 2012, 24).
A company’s mission and vision has to support sustainable marketing, which can be found in
the core values of a company. Designing, producing and delivering a sustainable product is
not only the responsibility of the marketing department but requires the collaboration
between all departments in a company. Otherwise, a company cannot be truly sustainable.
Furthermore, consumers increasingly expect not only the company to be sustainable but the
whole supply chain (Bridges & Wilhelm 2008, 35; Belz & Peattie 2009, 117).
Many companies outsource production to Third World countries, which technically frees
them of any responsibility. However, in some of these countries child labour and sweatshops
are common practice, which reflects badly on the company. The aim of sustainable
marketing is still to add value to the consumer and satisfy the customer’s wants and needs
but in a sustainable way (Charter et al. 2002, 12; Belz & Peattie 2009, 31; Martin & Schouten
2012, 10).
Therefore sustainable marketing can be defined as follows: Sustainable marketing is a
holistic approach with the aim of satisfying the wants and needs of the customers while
putting equal emphasis on environmental and social issues, thus generating profit in a
responsible way. In order for sustainable marketing to be successful, consumer behaviour
and consumption patterns have to be reconsidered.
Examples of common frameworks organizations use to develop sustainable marketing
strategies:
Placing value on incorporating cost of ecosystem services into operations
Mimicking natural systems in new product development and operations
Minimizing firms over-all Carbon footprint
Changing technologies to enhance natural resources
Difference between Sustainable Marketing and Conventional Marketing
- Classical tactical marketing mix – 4 P’s
- Sustainable Marketing Strategy:
Customer solutions addressing societal and environmental concerns
Commitment to customer cost that incorporate social and environmental product costs
throughout product life cycle
Customer communications which entails firm’s transparency
Convenience as firms go beyond conceptions of customer exchanges
Sustainable Business Model
Models that incorporate pro-active stakeholder management and the creation of monetary
and non-monetary value for a broad range of stakeholders and hold a long-term perspective
(Geissdoerfer [Link], 2018)
It is a modification of the conventional business model with incorporating concepts,
principles and goals that aim at sustainability and integrating sustainability into the value
proposition, value creation, delivery activities and value capture mechanisms
Value Proposition – Concerned with products and service offerings to generate an economic
return in a sustainable business.
Value creation – Deals with businesses that typically capture value by seizing new business
opportunities, markets and revenue streams
Value capture – How to earn revenues from providing goods, services or information to
users and customers
Marketing Sustainability
- This is an on-going demonstration that an organization has made commitments
towards sustainability goals.
- Ways of incorporating sustainability
Transparency measures
CSR Initiatives
Sustainability Reports
- An organization must be cautious with the marketing sustainability initiatives in order
to avoid false or exaggerated claims
- Positioning efforts through on-going journey clearly pointing both successes and
failures and adapting transparency will help truthful marketing of sustainability
Greenwashing
A concept first introduced by Jay Westerveld, an environmentalist from New York.
It is a practice of companies falsely informing their consumers of their Environmentally
friendly products or services
It is also a deceptive use of Green PR or Green Marketing.
Seven Sins of Greenwashing (Terra Choice)
Sin of Hidden Tradeoffs
Sin of No Proof
Sin of Vagueness
Sin of worshipping false labels
Sin of irrelevance
Sin of lesser of two evils
Sin of Fibbing
The Sin of the Hidden Trade-Off occurs when one environmental issue is emphasized at the
expense of potentially more serious concerns.
The Sin of No Proof happens when environmental assertions are not backed-up by evidence
or third-party certification.
The Sin of Vagueness occurs when a marketing claim is so lacking in specifics as to be
meaningless.
The Sin of Worshiping False Labels is when marketers create a false suggestion or
certification-like image to mislead consumers into thinking that a product has been through a
legitimate green certification process.
The Sin of Irrelevance arises when an environmental issue unrelated to the product is
emphasized.
The Sin of Lesser of Two Evils occurs when an environmental claim makes consumers feel
'green' about a product category that is itself lacking in environmental benefits.
Sin of Fibbing is when environmental claims are outright false.
Sustainable Marketing Organization
Characterized by smarter, more efficient, less wasteful use of all resources that contribute to
the delivery of market offerings.
A Sustainable Marketing Organization stretches natural resources use by striving to increase
the productivity of a given unit of virgin resource by a measurable, meaningful amount while
at the same time seeking to identify and incorporate alternative recycled or renewable
resources into its operations.
Difference between a sustainable marketing organization and conventional marketing
organization
For SMO: Economic profits >> Business Goals = Sustainability goals
For CMO: Economic Profits >> Business Goals (i.e. Increase Profits)
Sustainable Marketing Organizations are driven by overarching goal of achieving
organizational resilience both in the short and long term time horizons.
Sustainable Consumer Behavior
Consumption behaviors that addresses social and environmental issues while meeting their
needs.
Consumer behavior that integrates Sustainable Business´s values with their preferences and
choices.
A sustainable consumer behavior would look into products which were made by business
that
Minimized the use of virgin natural resources
Increased the use of recycled, re-used, and re-purposed resources
Rewarded value chains organized around sustainable principles through on-going exchange
Engaged in co-creative processes of value production with sustainable marketing
organizations.
Influences of Consumer Behavior
- Cultural : Social Class and Subcultures
- Social: Family, Reference Groups and Status
- Personal: Sex, Age, Occupation, Life Stage, Disposable Income, Lifestyle,
Personality
- Psychological: Motivations, Perceptions, Beliefs, Attitudes, Experiences, Identity¡
- Situational: Time, Company, Place, Circumstance
- And Marketing!
Difference between a sustainable consumer behavior and conventional consumer behavior
•Sustainable Consumer behavior explore the benefits of market offerings that emphasizes
the use of value over display or status values and look for ways to transcend common
property challenges
rd
•Sustainable consumer behavior looks to various 3 party verifiers to support sustainability
journey.
Integrating Sustainability with Human Resource Management
Appropriate Human Resources
- Appropriate human resources are the individuals in the organization who make a
valuable contribution to management system goal attainment
- Inappropriate human resources are organization members who do not make a
valuable contribution to the attainment of management system objectives
Rights and Duties of Employers and Employees
Fundamental Labor Rights
Right to organize and bargain collectively
Right to safe and healthy workplace
Right to secure a job
Managing a diverse workforce
Diversity – Variation in the important human characteristics that distinguish people from one
another
- Primary dimensions: Age, ethnicity, gender, mental or physical abilities, race, sexual
orientation
- Secondary dimensions: Communication style, Family status, First Language
Major Trends in the Workforce
Many women are working than before
Immigration has profoundly re-shaped the workforce
Ethnic and racial diversity is increasing
Workforce still continue to get older
Millennials are entering the workforce
Qualities of World’s most sustainable companies
Deeply ingrained values
Strategic positioning
Top Management support
Systems alignment
Metrics
Holistic integration
Stakeholder engagement
Areas of Human Resource’s greatest contributions
Leadership Development
Training and Development
Diversity and Multi-culturalism
Ethics and Governance
Talent Management
Workforce Management
Areas that need more HR contributions
Change Management
Collaboration and teamwork
Creating and inculcating values
Health and Safety
Indra Nooyi
PepsiCo Chief Executive Officer (CEO)
She grew up and took her College education in India
In the 80’s, she went to the US and got her 2nd Masteral degree at the Yale School of
Management
She was a long-time Management consultant then became PepsiCo’s Corporate Strategist
before being a CEO 12 years after.
She managed PepsiCo at the time when the business is in a brink of a collapse
Under her leadership, PepsiCo diversified. The company now groups its products into three:
“Fun for You”
“Better for You”
“Good for You”
Ursula Burns
She is a Mechanical Engineer who served as CEO of Xerox since 2010, in which one of her
achievements is returning a company once only known for paper copiers into a viable and
profitable business enterprise.
She was hailed as the first African-American woman to lead a Standard and Poor (S&P) 500
company.
According to her, her personality was formed by her mother, brother and sister, and her
community in New York
Integrating Sustainability with Human Resources Management - Annex
Me too Movement
- The movement was founded by activist Tarana Burke, who coined the term “MeToo”
in 2006, but it gained widespread attention in 2017 when actress Alyssa Milano
urged victims of sexual harassment and assault to share their stories on social
media. Millions did so, and in the years that followed, hundreds of powerful men lost
their jobs or roles after accusers alleged that they had been victims of harassment or
assault by these men in the workplace.
Embracing Diversity and Inclusion in the Workplace
Definition
Diversity
- Gender
- Age
- Ethic
- Physical Ability
- Sexual Orientation
Equity
- Education
- Disability Rights
- Food Security
- Housing
- Health and Healthcare
Inclusion
Social Inclusion Assessment Tool – 4 Questions:
Are excluded groups identified?
Is there any ex-ante analysis on social inclusion
Are there actions intended to advance social inclusion?
Are there indicators to monitor social inclusion?
Why is DEI Important?
Thoughts?
“D&I is good business. It doesn’t have to be at the expense of financial outcomes. . . . This
isn’t an issue where leaders can say, ‘We can’t do diversity right now, because we’re under a
lot of pressure.’ Diversity is one of the things you’ve got to be mindful of in every context.” -
Bryan Hancock from McKinsey Talks Talent
Benefits of DEI in an organization
Fostering DEI in an organization
Factors affecting employee inclusion
Industries approach to DEI
Companies can repair the broken rung on the career ladder for women in technical
industries and roles.
Organizations can make traveling in cities safer and more comfortable for at-risk groups.
In media and entertainment, women remain locked out of top roles.
Research from the oil and gas industry suggests actions for the sector to consider to help
attract and retain women.
Women are leaving the mining industry.
The COVID-19 pandemic hit the education space hard; as the recovery continues, ensuring
that education is equitable and inclusive will be vital.
Reducing the firm’s Environmental and Social Footprint as the Cornerstone of
Sustainable Operations Management
What is a footprint?
According to Merriam-Webster Dictionary, it is "an impression of the foot on a surface. 2. a. :
the area on a surface covered by something.”
Impacts
It is what you leave behind
Definition
Sustainable Operations – Operations that were able to maintain existing practices without
placing future potential resources at risk.
Two measurement or reporting method for Sustainable Operations:
Environmental Footprint – company’s impact based on the following aspects: resource
consumption, environmental harm, and pollution emissions.
Social Footprint – company‘s operational impact to internal and external stakeholders.
Environmental Footprint
Imagine a manufacturing company producing XXX pieces of products a day. What could be
their environmental footprint?
Raw Materials
- Sources of materials
- Process in getting materials
- Transporting materials to factory
- Waste generated
Imagine a manufacturing company producing XXX pieces of products a day. What could be
their environmental footprint?
Manufacturing Process and Use Stage
- Emission Generated
- Water Pollutants
- Biodiversity affected
- Packaging Used
- Waste generated
Imagine a manufacturing company producing XXX pieces of products a day. What could be
their environmental footprint?
End of Life
- Waste Segregation
- Waste Treatment
- Waste Disposal
Picture a manufacturing company producing XXX pieces of products a day. What could be
their social footprint?
Raw Materials
- Employees Salaries and Benefits
- Health and Safety
- Indigenous Peoples
- Involuntary Resettlement
Social Footprint
Picture a manufacturing company producing XXX pieces of products a day. What could be
their social footprint?
Manufacturing Process and Use Stage
- Employees Salaries and Benefits
- Health and Safety
- Product Safety
- Customer Satisfaction/ Complaints
- Innovation and Product Development
Picture a manufacturing company producing XXX pieces of products a day. What could be
their social footprint?
End of Life
- Livelihood from products
- Health and Safety
Life Cycle Analysis
“LCA is a tool to measure and inventory the full range of environmental impacts associated
with the inputs and outputs of raw materials, energy and waste during the life of a product –
from the acquisition of material manufacture, final product fabrication, packaging and
distribution, to consumer use and disposal.” From “The Procter & Gamble Company: A
Life-Cycle Analysis”
IFC Performance Standards for Environmental and Social sustainability
IFC’s Performance Standards provide guidance on how to identify risks and impacts, and
are designed to help avoid, mitigate, and manage risks and impacts as a way of doing
business in a sustainable way, including stakeholder engagement and disclosure obligations
of the client in relation to project-level activities.
Evaluation of Human Behavior for Social Footprint
Human Capital – Personal health, knowledge, skills, experience, and other resources of an
individual
Social Capital – Social networks and mutually-held knowledge by collectives (group)
Constructed Capital – Material things such as tools, technologies, and infrastructures that
people produce
Environmental Management as Competitive Advantage
Cost Savings
Product Differentiation
Technological Innovation
Regulatory Risk Reduction
Strategic Planning
Sustainability Framework to Minimize Environmental and Social Footprint
A Return to ValueS-centric Governance as a Key Driver to Sustainable Operations
Values-based entrepreneurs
- Simultaneously achieve economic, environmental and social goals.
- Eager to challenge and defy convention
- Game changers
- Operate with a fundamentally different view of the role of business.
- Believe that business is deeply rooted in society and has multi-dimensional
responsibility to it.
- Believe in self-interest but also understand that business must be part of the solution
to society’s ills.
“Are you sure about your leader?..”
Form your own groups. Assign a Leader
Identify a business leader that embodies the following phrases (See right)
Discuss how your chosen leader became a game-changer that has defied conventions and
lead with values.
Key Principles/ lessons/ guidelines about value-centered entrepreneurship
Commit to a (meaningful) purpose
Be Committed
Business can solve world problems
Write an inspiring mission statement
Lack of knowledge is not problem unless you do not have grit
“GRIT = PASSION + PERSEVERANCE”
- (ANGELA DUCKWORTH)
Raise capital with a mission in mind
Start small, but dream big
Do it yourself before doing it for others
Raise early stage financing from friends with shared values—be resourceful.
Be open with institutional investors.
Explore public markets but remember the risks
Hire talented employees with shared values
Hiring employees with similar values
Make your company values a recruitment leverage
Entice talented employees to join the firm
Make efforts to retain talented employees
Promote your company values
Don’t be shy about promoting your values to connect with customers.
Treat customers as intelligent individuals, using good and honest information.
Be honest and authentic—be yourself.
Build a soul first, then the brand.
Don’t be afraid to advocate your case or even take a controversial
Build a cohesive, dedicated team
An employee-oriented organization is an important component of their core mission.
Offer benefits and compensation packages that far exceed the industry standard.
Make efforts to build a work environment that is pleasant and cooperative.
Be thoughtful about designing organizational policies that empower their employees and
deliver results.
Encourage employees to give back
Make money, but also make exceptions
Plan to make difficult choices
Maximize profits whenever possible
Make exceptions to the above to exercise values/mission
Seek and achieve win-win situations
Minimize your environmental and social footprints
Determine and articulate objectives/priorities clearly.
Develop concrete policies and action plans.
Experiment with and pursue new technology and innovative methods to reduce harm.
Minimize any direct damage your company may cause to the environment by minimizing
waste and offsetting pollution.
Measure (quantify) your achievements.
Find ways to minimize the financial burden associated with pro-environmental or pro-social
investments.
Spread the message to customers and business partners to maximize impact.
Stay with it for the long haul
Think long term, think legacy. Plan to stay with the company for a long time.
Have patience.
Think twice before selling the company while your mission is not completed.
Stay private if possible.
Make living a priority
Make giving a priority and start early.
Make giving an important function and institutionalize it within your company.
Give substantially but also target your gifts for maximum impact.
Encourage employees and customers to get involved.
Giving makes you happy (and helps other feel happy as well).
Be a role model for others
Mentor other entrepreneurs.
Share your experiences and practices with other companies and the general public.
Encourage other companies to emulate your goals, policies, and even your business model.
Inspire other firms to change their business practices in meaningful ways
Recyclebank
Earn points by doing more waste recycling activities
Companies can also use their platform to promote how their products can be recycled.
Maya Pedal
Old bicycle parts are used as pedal-powered machines such water pumps, grinders,
threshers, tile makers, nut shellers, blenders (for making soaps and shampoos as well as
food products), trikes, and trailers
Business sustainability in action: Global initiatives and emerging issues
Global initiatives on business sustainability
United Nations global compact (UNGC)
- It was established on July 26, 2000 in New York City.
- UNGC is regarded as a global strategic policy initiative for business committed to
aligning with 10 globally accepted principles
- Currently, UNGC includes 9,704 in 161 companies.
- These principles are categorized in four genera categories:
Human Rights
Labor
Environment
Anti-corruption
Ten principles of United Nations global compact (UNGC)
The Ten Principles of the United Nations Global Compact are derived from:
1. Universal Declaration of Human Rights
2. International Labour Organization’s Declaration on Fundamental Principles and
Rights at Work
3. Rio Declaration on Environment and Development
4. United Nations Convention Against Corruption.
UN Sustainable development goals
Officially rolled-out in January 1, 2016.
Over the next 15 years, countries will do their part in order to end all forms of poverty, fight
inequalities, and tackle climate change. No one is left behind.
It is not legally binding. Governments are expected to take ownership and establish national
frameworks for their achievements.
Global citizenship
Refers to putting an organization’s commitment to social and environmental responsibility
into practice worldwide, not only locally or regionally. Companies demonstrate this
commitment by proactively building stakeholder partnerships, discovering business
opportunities in serving society, and transforming a concern for financial performance into a
vision of integrated financial and social performance.
Macrosustainability issues
Water Consumption*
An estimated 663 million people lack ready access to improved sources of drinking water.
The number of people without reliable access to water of good enough quality to be safe for
human consumption is at least 1.8 billion (UNICEF/WHO, 2015), and possibly significantly
more.
Agricultural (70%) and industrial water (19%) usage accounts for most of the world’s Water
Withdrawal.
Macrosustainability issues
Expanding population increased the loss of natural resources that businesses rely on
World’s energy consumption (i.e. oil) has increased from 76,000 to 87,000 barrels a day from
2000 to 2010.
Businesses must adapt their business practices to mitigate the effects of climate change and
reduce amount of greenhouse gases (GHG’s) in the Earth’s atmosphere
Macrosustainability issues
● Corporations are vulnerable to resource shortages:
Increased degradation of ecosystem services lead to unsustainable businesses
Reputational and brand-loyalty perspective issues
Level of product mechanization lead to ethical concerns for value-added products
Climate change and its impacts
- Climate Change is the change in global climate patterns attributed largely to the
increased levels of atmospheric CO2 produced by the use of fossil fuels.
- Climate Change Impacts:
Temperatures are rising
Sea levels are rising
The ocean is acidifying
Climate change is reflected in water cycle changes and in extreme weather
GHG Reporting trends
Company interest in GHG emissions of their operations and supply chains are driven less by
regulatory concern than by three other factors:
1. Reputation Management
2. Customer Expectations
3. Efficiency Goals
7 Reasons why investors should pay attention to sustainability performance (PWC, 2012)
Shareholder sustainability resolutions are gaining traction
Steady growth in sustainability investment
Studies show positive correlation between environmental, social, and governance
sustainability performance and financial performance
Financial services firms establish sustainability research departments
Availability of Sustainability indices
Use of EGSEE Sustainability Performance data
Growing interest in sustainability information by institutional investors