viernes, 23 de febrero de 2007

Chapter six: Sustainability, Triple bottom line, a new Corporate Consumer relationship

“I managed Interface as a looter, taking things that were not mine. Things that belong to every creature on Earth. At some point I realized: Oh my God! There will come a time when this will be illegal. A time when looting won’t be allowed. Some day, people like me will end up in jail”.
Ray Anderson, chairman and CEO, Interface

A recent survey carried out by The Synergos Institute in several countries shows that 95% of consumers believe that companies have a debt towards their employees and the community. It also indicates that 3 of every 10 English consumers either chose or boycotted brands, products, or companies for ethical reasons in the last 12 months.
It would indeed look as if we are converging, little by little, at the same manner of thinking. The same ethos. Sustainable development, a concept that leads us not to live beyond our possibilities –– not to burn down our house to keep ourselves warm, or cut the tree branch we are sitting on. A concept that leads us to attend to current needs without jeopardizing future generations’ possibilities, in the words of Swiss philanthropist and businessman Stephan Schmidheiny. Actually, this concept is sheer common sense: the one that drives us to close the faucet while we are brushing our teeth.
Because of these and other signs, pioneer brands are already working on integrating the sustainability of their positioning strategies and communicating it to their publics. They understand the imperious need to establish a new relationship with their consumers.

Signs: Model companies and responsible consumers
• Toyota Motor Co. created sedan Prius, the first low-cost mass-produced electric car. By this means it expects to reach 15% of worldwide sales of hybrids, which would entail beating General Motors as the planet’s greatest automobile manufacturer.
• The annual sales of Interface –one of the world’s largest carpet manufacturers– add up to about USD one million-million a year. Since the company started its sustainability initiatives, it has saved more than USD 70 million. For the year 2020, Interface has set itself the challenge of becoming the first sustainable industrial company on the planet.
• Brazilian cosmetics company Natura was, back in the 80s, one of the first in the world to incorporate the concept of “refill”, thus proving its concern for its products’ environmental impact. Today, holding 19% of the market, it is the leader of its sector in South America – a brand valued at 113% of annual sales, and having grown 32% in sales in 2 years.
• No less than 84% of consumers in Brazil would recommend products that assign a percentage of their sales to a social cause or a NGO.
• 40% of consumers in Chile have punished or are willing to punish irresponsible companies.
• In Argentina, 51% of consumers are willing to pay more for products from companies that show they are socially responsible.
• According to the World Bank, European consumers have refused to buy American genetically modified foods.
• On the other hand, the USA –under pressure from its consumers–forbade the importation of tuna fish from Mexico due to that country’s not having prevented the killing of dolphins while fishing.

Nike: Change of habits
The world’s great economic and media groups base their business model on their capacity to influence the needs, desires and lifestyles of their consumers. But what happens when consumers voluntarily change their habits? Market researches have already identified a new consumer that rewards socially and environmentally committed companies while punishing irresponsible ones. Consequently, in order to stay competitive, companies must adjust their business model and anticipate new demands. Some pioneer brands have already found an innovative way of communicating with this new client.
In the aftermath of the scandal caused by its use of sweatshops (as denounced in Naomi Klein’s book No Logo), Nike started manufacturing in a cleaner, more responsible manner. “We know from experience how much a brand can suffer when its practices are questioned,” say company presidents Mark Parker and Charlie Denson. The company launched the Nike Considered line of products, incorporating organic cotton. Furthermore, it changed the values reflected in its advertising campaigns. “I don’t play for prizes,” affirms Ronaldinho, Brazilian football’s star player, in one of the brand’s recent ads.

Kryptonite: Consumers to power
Many are the companies have implemented decisive transformations in their way of doing business. They have understood that, in this new environment, brands must bare their souls, mission, sense, and commitment to a world that both desires and needs to be sustainable. They have understood also that deception cannot be gotten away with and that, in this era, consumers simply cannot be ignored.
Kryptonite is a manufacturer of bicycle padlocks. One year ago, a user posted in a blog that their “high security” padlocks could be opened with a pen. The company tried to ignore this and discredit the comment. A few days later, there appeared on the Internet a video showing that the padlocks were truly “made of butter”. Stubbornly, Kryptonite issued a press release insisting that they were safe. Then, another few days later, the story appeared in the New York Times, making an approximate 5 million readers aware of the episode. Kryptonite finally announced that it would change all the padlocks at an estimated cost of USD 10 million.

“We want to be happy and content and not to exploit our employees. We are interested in music, hedonistic, and love sex.”
Dov Charney, founder, American Apparel

American Apparel: The business of doing things right
American Apparel is located in downtown Los Angeles, where all the cotton garments the company manufactures are cut and sewn. While a great part of the textile industry has opted for foreign labor plants –located mainly in those countries where labor force is much cheaper than in the USA– American Apparel intended from the very start to distance itself completely from the so-called “sweatshops”. The company treats its employees with dignity and respect, besides offering them salaries that are way higher than the average, medical benefits and paid holidays.

This strategy has paid off fairly well: today, American Apparel is considered to be among the ten most growing companies in the country within its sector. In the period spanning the years 2000-2004, its sales increased 900%, compared with the 12,9% growth of the garment industry in the USA. Competitors GAP and H&M reached 40% and 76% respectively. For Dov Charney, founder and owner since 1997, the success of this no-logo brand can be explained thus: “Our aim is to make clothes that people like, without employing slave labor. And it seems that people are liking them…”

The future is here
The following news, published towards the end of the year 2006, show that the world has already changed.

• On September 20th, the State of California filed huge claims against six large car manufacturing companies for their responsibility regarding global warming. General Motors, Toyota, Ford, Honda, Chrysler, and Nissan were sued for manufacturing millions of vehicles that release 289 million tons of carbon dioxide a year into the atmosphere.
• “This is not a hobby. We aren’t doing it to improve our reputation or to feel good,” said Gary Sheffer to ABC channel. Mr. Sheffer is Communications and Public Affairs Manager of General Electric, whose sales of environment-friendly products have grown 100% in 2005, reaching a total of USD 10,000 million.
• “We want to transform the world’s largest supermarket chain into the greenest one, and to transform our suppliers as well,” says Lee Scott, CEO of Wal-Mart, the greatest buyer of organic cotton on the planet.

Sustainable human development
It’s part of the business already. It’s not certain whether it was consumers, activists, or pioneering businesspeople that set it in motion – but, sometime while we were all discussing its signs, the change began.

Triple Bottom Line
This term refers to a company’s results, measured in economic, environmental, and social terms, as expressed in the corporate reports of sustainable development-committed companies. For the time being, these measurements are voluntary. 68% of Western European multinational corporations currently carry out this kind of measurement, while in the USA, even though the figure is lower at a current 41%, the increase is still dizzying. In every case, companies presenting this kind of analysis have realized, before the rest, that in the immediate future consumers will become more and more responsible – and will demand to know the economic, environmental, and social impact of the products they reward with purchase.

“An authentic brand has to decide what it will give from itself. It must answer itself difficult questions. Who are we? What is our mission? How do we want to contribute to the world? This is the greatest challenge brands must face today: to rediscover their inspiration. It’s a process that can only be carried out by looking inwards, with less market research and more self-evaluation”.
Jay Walljasper, editor, Ode

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