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Many companies are turning to sustainable brand strategies to connect with society’s higher level of concern about environmental, economic and social issues. The changing consumer landscape is leading companies to integrate sustainability into their business operations and position themselves as sustainable brands. This has the dual effect of improving a company’s impact on the environment and enhancing the company’s value and prospects.

A sustainable brand accentuates a company’s efforts to aspire to a greater purpose than simply focusing on its bottom line. The inclusion of social and economic responsibilities, as well as environmental considerations, in sustainable branding broadens the scope and opportunities of a company to engage with stakeholders about its intentions and actions.

Is building a sustainable brand necessary?

Embracing sustainability and the values around it makes sound business sense. Sustainability has become a driver of corporate growth strategy, a capability that can reduce risk, enhance competitive advantage and create value. A sustainable brand strategy positively affects brand positioning and awareness, attracts customers, builds loyalty and enhances reputation. It is no longer a secondary consideration in the daily running of a business because stakeholders demand that companies take positive action to meet their sustainability responsibilities.

There is a growing expectation by consumers that brands be more sustainable in their business operations. Millennials make up about 30% of the world’s population and take their concerns about environmental sustainability and social issues very seriously. Sustainability is a major factor in the buying decisions of Millennials and Generation Z, suggesting this will be a long-term trend. A recent study concluded that younger employees were more inclined to work for a sustainability-oriented company and were prepared to sacrifice a higher salary to do so.

Investors are also taking a keen interest in how companies embrace environmental, social and governance (ESG) issues. A recent PWC survey found that 80% of investors include ESG considerations in their decision-making process, and 75% of investors think companies should address ESG issues even if it reduces short-term profitability. The increasing focus of investors on sustainability issues makes sustainable branding a business imperative to secure and retain investment.

Regulatory and statutory bodies are reinforcing the drive to embed sustainability into day-to-day business practice. A KPMG survey found that  96% of the world’s largest companies now report on sustainability or ESG matters. In the UK, a raft of legislation that requires companies of a certain size to produce annual sustainability reports is being introduced. Regulatory bodies such as the Financial Conduct Authority (FCA) are supporting this by requiring increasing numbers of financial companies to produce Streamlined Energy and Carbon Reporting (SECR) and Task Force on Climate-related Financial Disclosures (TCFD).

It is clear that sustainability responsibilities are not going away, and reluctance to build a sustainable brand can be detrimental to a company’s business prospects. Below, we look at some of the essential factors in building a sustainable brand and ensuring its sustainability in the long-term.

Don’t forget branding essentials

The normal processes of brand-building apply equally to a sustainable brand. Great care needs to be taken in developing and maintaining brand identity, image and reputation to enhance perception, build awareness and engender loyalty. A sustainable brand needs to be positioned as such and differentiated from brands that focus solely on their bottom line regardless of environmental and societal consequences.

All brands begin with a vision that translates into objectives and strategy and guides decision-making. A key difference is that a sustainable brand has a bigger vision: to attract customers, investors and employees and to create a lasting impact on the environment and society. This requires a long-term effort to integrate sustainability into business operations and communicate progress and achievements to stakeholders.

Effective and consistent communication of ESG and sustainability endeavours has become vitally important. A recent McKinsey survey found that investors favour companies with a compelling story that clearly links their ESG initiatives with financial performance. Investors view this as demonstrating a long-term orientation and sustainable competitive advantage.

Authenticity

Another difference from regular brands is the higher degree of scrutiny sustainable brands are subjected to. It is easier than ever before for stakeholders to track and evaluate a brand’s performance and discover whether it is meeting its sustainability objectives and promises. Companies need to deliver on their promises to avoid accusations of greenwashing: there is considerable scepticism that sustainable branding is simply a ploy to cash in on changing consumer attitudes. Stakeholders increasingly hold businesses to account and look to them for leadership as trust in governments declines.

Sustainable brands must demonstrate authenticity because the stakes are high: commitments are made to behave and grow the company in ways that benefit society as a whole. This necessitates the alignment of business processes and practices with the company’s vision and strategy. Outcomes must be verifiable and support the brands’ positioning. Dishonest communications and strategic decisions undermining the original commitments can considerably damage the brand.

Be realistic and transparent

The commitments sustainable brands make to improve the environment and society must be realistic. Goals should be achievable, verifiable, precise, and in harmony with the company’s core capabilities and brand identity. Devising unrealistic goals can make it difficult to keep brand promises, authenticity will be sacrificed and an opportunity for brand positioning will be lost. The three ESG pillars provide a working framework for setting targets, implementing initiatives and measuring progress. They enable companies to consider how sustainability objectives can feed into their core businesses and tie processes such as executive incentivisation into achieving goals.

Companies need to be mindful of changes and developments in the environmental and societal issues they are associated with. This will help them manage any effects these may have on their business and build expertise. It will also help them to engage with stakeholders and manage their expectations.

Stakeholders value transparency because it enables them to make informed decisions. It means that sustainable brands never ‘switch off.’ Being open with stakeholders can show how regular business practices, such as sourcing materials and disposing of waste, confirm brand promises and stakeholder expectations.

Start from the inside

Building a sustainable brand requires a comprehensive analysis of the internal working of the company, from supply chains to employee satisfaction and the company’s culture. The process for internal change starts with an audit of existing processes that identify areas where sustainability is already integrated into business practices and areas where improvements can be made.

This process provides the starting point for building a sustainable brand. All brand building begins with a compelling vision that motivates and inspires employees and management. They are the agents for enacting change within the company and will be brand ambassadors to external stakeholders.

Perivan has great experience in designing and producing branded material and sustainability reports. Our design team specialises in brand development and works with many companies to optimise their annual, ESG and sustainability reporting. If you would like to learn how Perivan’s design team can help you, please get in touch.