Yo,
Struggling with commitment? Hop behind Nestle, PepsiCo, Unilever, and Dianone in the long list of companies with commitment issues. They join, may I dare say, a majority of the Fortune 500 companies that have set sustainability pledges… and then proceeded to miss them.
For those of you who read the article I submitted for Morning Brew, consider that a teaser for this one. In light of the COP27 that’s ongoing, we’re going to be discussing sustainability. Sexy, I know.
I could’ve also have called it “public relations whitewashing”, but I’ll just call it what it is: sustainability.
What’s up with that? Well, let me tell ya, lets lock in.
Ambitious Claims Lack the Follow Through
Roughly 275 of the Fortune 500 have gone on the record saying they have set sustainability goals for their company by 2030 or 2050, and most of them can even be found on the front pages of their website. These goals range anywhere from “We aim to collect and recycle a bottle or can for every one we sell and make 100% of our packaging recyclable” to “Planning to source 100% renewable electricity at sites in the United States by 2025 and globally by 2035”.
Why are companies doing this in the first place?
That’s an easy one. Companies will primarily do this for two reasons: the consumer and the employee.
The Consumer
Consumers have shown time and again that they will make purchases that are aligned with their values. People will by organic food over food with GMOs, use “all natural” deodorant over deodorant with aluminum, and buy hybrid/electric cars over gas powered ones.
By making these goals these brands are ensuring that they maintain their customer, and thus their market share as well.
And it has a domino effect. For example, if Pepsi makes ambitious goals, then odds are that Coca Cola will too. Gotta love competition, right? That’s how we ended up with 275 companies having sustainability goals.
The Employee
Employees want to work for companies that align with their values and companies want to increase employee retention. By making these goals, companies are showing employees that they care about their interests.
For example, if there are two employees, one that really cares about climate change and one who doesn’t care at all, then by creating a climate change goal the company will retain both employees. The one who cares will be happy about the commitment, and the one who doesn’t care simply… won’t care. But if they don’t make the promise, then they risk losing that second employee.
These two items are summed up in this chart, that sadly I didn’t make this time:
Loss of customers is the number one concern, along with damage to the brand which both the consumers and employees contribute to.
Tell Me Lies, Tell Me Sweet Little Lies
Ok great, but who cares? And what happens when they miss?
Nothing, absolutely nothing. Ha!
Maybe not “Ha”, but “Sad!”
These goals, promises, pledges, whatever you want to call them are all voluntary actions, which means there are little to know repercussions at all. And the competition is driving corporations to make increasingly more progressive pledges Hence the public relations whitewashing comment earlier.
The other thing that you’ll see them do is not reduce their emissions at all, but just offset them by planting trees, buying carbon credits, and investing in eco-centric companies.
You’ve got to love corporations; they’ve always got something up their sleeve.
So, what we’re seeing is companies making these pledges, missing them, and then just saying “Oh well, we’ll try harder next year”.
They’ll make a huge deal about it when they make the initial promise to get the good PR, and then when they miss that same promise, they’ll put it at the very bottom of their annual sustainability report in size 6 font that only one outlet will pick up on. In other words, there’s no consumer awareness generated.
Lucky for you, I’m all knowing. I read those reports.
As a result of these tactics, non-profits have even made a chart (once again not mine) indicating how much you can actually trust the claims being made by some of the biggest companies.
No high integrity companies. What happened to giving someone your word and being good for it?
Tired of Reading This? Try Mini-Wheats.
Just to calibrate everyone, we see edgy product claims everywhere. Here’s one of my favorites:
Yes, you read that right. Mini wheats are clinically shown to increase attention. Step aside Adderall, pass me the box of mini wheats.
Anyways, the difference is that product claims, for example this one, come with steep fines if they are misguiding because they directly impact the health of the consumer. Whereas climate related claims are a little more nebulous. It’s tough to quantify them and the issue is so massive and long term that the measures just aren’t in place yet.
So, What’s Next?
Well first and foremost keep an eye out for some more missed goals. Plenty more will be coming. Followed by the words “whitewashing” and “greenwashing”.
Personally, I wouldn’t expect anything from Wall Street either, as their main focus is going to be returns while the times are tougher right now.
I would look for more of this to be incorporated into laws/regulations with fees and penalties attached. We’re already seeing the legal system pick up on this and begin incorporating it into government action. This could increase the hit rate on these pledges, or at least reduce how outlandish some of them are.
Lastly, look to the consumer. If proper awareness is given to these problems, I would expect the consumer to shift their behavior.
Maybe not in this economy though, with the nation seemingly slipping into a recession, budgets for many will be tight and freedom of choice will be limited. Consumers will focus more on cost and less on brand affiliation. Right now, I could care less about the cage free eggs.
I think as time goes on and we get closer to those benchmark years this will become a bigger item. Keep an eye out for more misses and decreased sales due to one of these pledges.
Let’s have ourselves a weekend.
from, matt