Your Sustainability Value Proposition
Your Sustainability Value Proposition will help set you apart from competitors and strengthen your own move towards response to Environmental, Social & Governance (ESG) in business.
Many organizations are actively engaging in corporate sustainability initiatives — from marked reductions in energy use & waste, and to growing sustainability across their supply chains. After all, not only is it common sense and the right thing to do. In a rapidly evolving media driven marketplace, an organisation’s approach and organisational response towards sustainability issues will help it keep pace with changing trends and consumer views. This is provided their leadership and management teams are clear on what their sustainability value proposition is – and how it embedded as a driver within the business’s strategy and long-term sustainability vision.
The bottom line? Many consumers want more sustainability action taken by the business sector and they’re looking ofr more business leaders to visibly and responsibly take that action.
“Every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Without a sense of purpose, no company, either public or private, can achieve its full potential.”
Larry Fink, Chairman and CEO of BlackRock, Inc.
Regardless of what business sector you exist in, you will have a significant group of competitors.
There will be a company with more customers, an organisation with a greater range of products, an established enterprise that dominates a lucrative sector or has the brand recognition to die for
Usually, one or two of them will be starting to draw apart as clear sustainability market leaders.
It’s tempting to believe that they have achieved their pre-eminence through luck, good fortune or because of a great marketing campaign.
Luck may have played a role in their sustainability growth and progress, but their continued success isn’t about luck, it is about leadership, vision, culture and the way it has combined to form an authentic sustainability proposition that customers have bought into.
Within their Business Model, they have a strong sustainability value propositions, and they know how to use it within their business strategy.
What makes your Business stand out regarding sustainability?
People won’t consider your activities sustainable if they don’t even understand why they should pay attention to them. They will only start to pay attention to your hard work only when you have a strong value proposition (VP) that reflects their own concerns and worldviews.
The usual definition of a value proposition is flawed when considering your sustainability VP. Value proposition are often defined as the “value a company promises to deliver to customers should they choose to buy their product.’
A sustainability value propositions when defined like this can fall short of the responsible, transformative and ethical leadership parameters that is now expected by society.
In these terms your sustainability VP is a modestly decent – but relatively innocuous – organisational business tool that lacks any real attempt to define your organisation’s sustainability culture, your sustainability vision, or strategic growth decisions. It is sustainability but not as the leading organisations know it.
A more useful definition of value proposition is “a believable collection of the most persuasive reasons people should notice you and take the action you’re asking for.”
What is Your Value Proposition?
The definition above is a more useful guide for business leaders when considering their own sustainability Value Proposition. It places a greater emphasis on two critical organisational components that help demonstrate sustainability maturity to others:
- Firstly that they care about what they stand for, and
- Secondly, have taken an authentic position on specific social or environmental issues.
Set out in these terms it helps guide both the ‘organic’ leadership internally within organisation, as well as decisison-making to bring about a reduction in the extent and nature of their business impacts on people and their environments. The process helping to inform and shape better external CSR communications.
If you don’t have a strong sustainability value proposition, customers have no good reasons to believe in you and act in your business favour.
For example, if your website claims that you are to all effects a well-run and efficient organisation that minimises its waste, manages its energy usage effectively and treats its staff accoring to standard practices. In all effect you cannot claim to be a leader in sustainability. You are a typical business with average recycling rates, mid-level energy consumption, a range of environmental management systems and probably an environmental policy. To see websites for such organisations claiming to be combating climate change, saving our seas from plastic amd claiming social leadership are misleading at best. They don’t ring true or reflect strongly that you are a socially caring organisation or authentic business to conduct trade with.
Why would anyone buy from you on the grounds of sustainability? There is without doubt another competing organisation whose consideration of the sustainability agenda is more believable, authentic and caring towards humanity.
Many businesses fail to realise that often the first steps towards sustainability is to focus on what you do well and to use that as the stepping stone for your sustainability value proposition and subsequent strategy. As a novice you are unlilley to be best in class across most of the Global Reporting Initiative’s (GRI) sustainability related parameters. It would be fantastic for a Start Up to achieve this, but unrealistic. So, focus on what you do or can excel in that is also directly linked into your overall business mission.
However, if you believe in and strive to be the best in class on a sustainability issue that you, your organisation or market sector is concerned about. You will attract the attention of those stakeholders, investors and consumers who value action in that area.
Unilever doesn’t have the largest product selection. Biogen isn’t the largest pharmaceutical company, Kesko isn’t the largest trading services company, and Patagonia the biggest clothing brand.
People buy services and products from them because of their own social and environmental values.
So, if your business in its sector can authentically claim to be the first to take back its packaging waste, avoid the use of a known pollutant in its production or has voluntarily addressed aspects of human rights within its supply chain – but on all other criteria you are “just average”, celebrate it and consider whether this can form your sustainability value proposition. The businesses and consumers who value less packaging, safer products or who are concerned about worker’s rights will now have an incentive to buy from you.
So what is it that makes you the standout option for your target customers?
If you have no other business reason to differentiate yourself unless it is on price, you are in a race to the bottom, and they have no other good reason to buy your service or product.
If you do have a stand out sustainability claim, your competitors will not be slow to copy or exploit it as well, and that is why the leading organisations have a rolling strategy of sustainability improvements embedded within their leadership maturity and organisational culture.
Can you prove that?
If you are an oil company claiming, “we are the global leader in combatting climate change.” Will people flood petrol forecourts to buy your fuel?
No! They have no incentive to believe you.
Without proof, you can’t build trust, you can’t build authenticity and you can’t say how much you care about sustainability before it starts to sound like a marketing campaign or corporate ‘greenwash’. Consumers are now wise to many of these extravagant claims and pay little attention to such company messages, nor do they remember the expensive, glossy and exquisitely crafted advert.
For example, recent years have been memorable for:
- Volkswagen/BMW/Chevy/Ford/Mercedes-Benz ‘clean diesel’ autos, which has rocked consumer confidence in the brands, their engines and their belief in the diesel which they had been informed by the marketplace (and in some cases Governments) was the better environmental choice. The scandal has also now been linked with poor air quality and higher respiratory deaths in urban areas. The fact that all these organisations colluded together whilst spending $billions on advertising green credentials has seriously damaged their reputations as responsible businesses’, investor confidence, their finances through fines and legal actions, and ultimately the consumer’s desire to buy their next care from them.
- Nestle’s claims to have becomes the first major confectionery company to source 100% certified sustainable cocoa in the UK and Ireland. Unfortunately, a US d class action filed against Nestle claims that child slaves on West African farms harvest cocoa for Nestle, even though it labels its products as “sustainably sourced.” Successful or not, the damage has been done and consumers will be more wary in their belief of Nestle claims, its verification of sustainability and the humanity of its leadership group. Consumers will now demand greater proof that its products follow socially and environmentally responsible standards than its competitors.
Being the best isn’t enough. People need to believe you’re the best option for them.
If you cannot verify or prove your claims, customers are unlikely to really trust or believe them. And your sustainability VP becomes useless.
The only sensible action is to provide authentic and reproduceable studies, verification from reputable trade bodies, and honest common sense, among other methods, to prove your claims of sustainability.
The iSeal Alliance has developed a guide to assist organisations and brand holders in the steps that are required to develop and manage for controlling claims and labels relating to their standards system in regard of sustainability. It is impressive and useful guide for organisations but leaping onto the sustainability VP bandwagon in the hope that there is something there without first considering your own organisation’s sustainability maturity is an easy mistake.
When evaluating your brand or organisation in terms of its sustainability VP, you must take into consideration not only its economic or financial criteria but also by its morality. A sustainable or ethically responsible brand/service should not harm public good; in addition, it should contribute to or help promote public good.
Organizational maturity and understanding of sustainability issues
When assessing an organisation or its leadership group for the extent of assistance or guidance they will require, it is useful to evaluate the maturity in understanding sustainability, its existing influence on their business sector and whether they have the leadership capabilities and desire to either know the way, go the way or show the way to others regarding sustainability.
Organisational leaders can develop sustainability value propositions for their products or brand when they are confident in their management maturity to either:
Know the way
A business moves their products or services responsibly towards greater sustainability. Routinely collaborate across their networks of suppliers to reduce their reliance or resource usage. The operational management of sustainability is part of their strategic route towards increasing their competitive agility.
Sustainability value propositions enforce their competitive edge in reducing adverse or unsustainable attributes. Differentiation is through key human and natural resources and how they are managed.
Go the Way
A business, often with an existing reputation for responsible management or with market leading products, adopts the wider principles of sustainability across its enterprise and within its organisational leadership. Their sustainability value propositions concern how they have adapted or challenged existing ‘business as normal’ or ways of working to drive overall organisational sustainability. Differentiation is through their appeal directly to investors, customers and employees that they have moved, invested or restructured supply lines to demonstrate a more humane, socially responsible or caring approach to unsustainable activities.
Show the Way
Through their leadership teams, the business adopts a business model that has seeks to deliver multiple sustainable outcomes). Forward-thinking businesses focussed on sustainability (i.e. Unilever) routinely challenge and works closely in collaborate across their networks of suppliers, partners and customers to create new solutions and innovations that bolster their competitive agility. They will actively challenge the herd of ‘elephants in the room’ that their market sector has traditionally accepted as the way business is conducted. Their sustainability value propositions are that they stand out because they stand up for something that consumers care about.
Unilever has seen, first-hand, the tangible value of making purpose a core driver of growth and differentiation. Nearly half of its top 40 brands focus on sustainability. These “Sustainable Living” brands, including Knorr, Dove and Lipton, are good for society. They are also good for Unilever—growing 50 percent faster than the company’s other brands and delivering more than 60 percent of the company’s growth.
Patagonia’s value proposition is closely tied into its ethos “We aim to make the best product, cause no unnecessary harm, and perhaps most important, inspire solutions to the environmental crisis.” Their clothing range recycling recovered sea plastics has been one approach underpinning their Sustainability VP.
The clothing and apparel sector have a long reputation for unsustainable practices such as human trafficking, forced labour and exploitation. Patagonia’s own internal audits found multiple issues within its first-tier suppliers. The company has worked hard to weed out wage issues, overtime abuses, and health and safety violations among these suppliers, reducing the number from 108 to 75. Subsequent audits have evaluated 2nd their suppliers and into the material production chains —the mills and suppliers who work with the raw materials that make textiles. This has helped Patagonia exert greater control over how their brand manages sustainability and the production systems that underpin their ethos and sustainability value proposition.
Why you need a Sustainability Value proposition
New, smaller brands often use their sustainability value proposition as a competitive strategy against existing and larger rivals whose brand value proposition has long been tied through marketing to product quality.
This doesn’t mean large brands can’t compete on higher sustainability purpose. Existing business brands and products may have a built-in sustainability advantages that has yet to be built upon once recognised.
Another key factor is that the age of the target customers can help companies determine how to focus their purpose and subsequently their sustainability value proposition. Approximately 60% of Gen Z (born between 1980-1999) and Millennials (2000 onwards) believe it’s important for companies to take a stand on issues such as human rights, sustainability and climate change. Barely more than 50 percent of Gen X (1965 to 1980) and the Baby Boomers (1945-1965) feel the same. This suggests brand purpose will be even more important for future generations.
While most people, unlike the growing climate change militancy within the Millennials, aren’t taking to the streets demanding change, many within Gen X and Z are paying attention to sustainability issues and rewarding a company’s ESG or CSR efforts by giving them their business.
Business’s should pay increased attention to buying preferences of Millennials. Millennial spending will grow to 30% of total retail sales within 2020. But consumers of all ages are becoming more sustainably and climate conscious, signalling that sustainability should no longer be seen as distraction from core leadership traits but rather as a growing societal value that they must incorporate into their own leadership portfolio, and hence into their organisation’s business culture.
The take home message – your value proposition needs to be evaluated not just on its economic or financial criteria but also on its linkage to responsible management and sustainability issues. Your sustainability value proposition should not harm public good or ecosystems services; instead it should contribute to or help promote public goods, social development goals and ecosystem services.
Safeguarding your sustainability value proposition
Organisations need leaders who have a strategic vision that encompasses sustainability, and increased middle management involvement, accountability and buy in towards environmental, social and governance (ESG) and Corporate Social Responsibility (CSR) agendas, such as climate change and human rights.
Can I repeat that again, as it is so important in bringing about changes in innovation, engagement and accountability in organisations!
Companies looking to build their competitive agility need to find new ways to stand apart. Sustainability and the sense of organisational Purpose it provides can deliver the differentiation that many companies seek.
When you start paying attention to (or creating) your sustainability value proposition, the first step is to find the core of it.
The core of your sustainability value proposition is made up of the concept or strategic vision ideas that make your organisation clearly the best choice for consumers or customers who share your vision or ethical
No company (or its leadership team) can claim that all its products, services or actions have been sustainably perfect. But there will be components that are recognisably sustainable or actions that are being taken towards greater sustainability as a business.
It is these parts that will makes the biggest difference towards identifying your sustainability value proposition.
Identifying their value, confirming their veracity and using them as the keystone can help your journey and recognition towards becoming a sustainable business leader in your sector. You are doing it and you can prove that it too.
If you have any questions, or you’d like to share your value proposition, contact us.
I acknowledge the help I have had in structuring this blog from articles and ideas by ‘influencer’ Neil Patel as I have tried out a new blog article style.
At Leading Green, our approach to sustainability in business training and leadership consulting encourages our clients to look closely at their own internal leadership strengths and goals. Helping them adopt an inquisitive state of mind and supporting them in how sustainability can support their long-term business strategy.