New Definitions of Value

09 Jun 2011 – Mark Lee

I am in Monterey, California this week, at the Sustainable Brands conference, where I gave the opening plenary talk on Wednesday, June 08. This blog post was adapted from those remarks.

Play on

The theme of each Sustainable Brands conference sets an important tone. This year was convened under the aegis ‘Play On’, providing attendees the opportunity to learn how to apply the creativity, innovation and sheer fun inherent to games and sport in their work on sustainability issues. The great lineup of speakers was tasked with immersing attendees in the rules of the sustainable brand game, by sharing what they themselves have learned about how to excel at it.

For my own remarks, the Sustainable Brands team asked me to discuss New Definitions of Value. I was thrilled at the topic, because I perceive the sustainability-value connection vexing many organizations. Specifically, I believe that, while we have been good at identifying and protecting the value that sustainability brings companies, most still struggle to use sustainability to actively capture and/or create value – particularly monetary value – for their organizations.

SustainAbility ♥s Brands

The foundations of our thinking at SustainAbility about sustainable branding have been enduring. We believe brand is the embodiment of an organization, that it has power to do good from a sustainability perspective, that sustainability is good for brands (and vice versa), and that when sustainability is made part of a brand promise, it’s less likely to be compromised. But as I reviewed the breadth of our past brand work preparing for this talk, I was taken aback at how non-commercial much of it was. We’d fallen into the trap of sustainability as brand halo rather than capturing it as a value-adding element, describing ‘builds and protects’ reputation aspects far better than ‘makes customers beat a path to your door’ ones.

So this has me thinking about sustainability and value in two ways: how it’s measured, and how to find more such value in new places.

Add it up

Our organization has chipped away at questions surrounding measurement of sustainability and its value through our think tank research and client work for most of our existence.

We’ve looked in depth at corporate sustainability reporting – as a proxy for sustainability performance – for a decade and a half, concluding that corporate transparency is critical, and that the sustainability reporting process dramatically increases business intelligence, but also noting that sustainability reports and metrics are most focused on accounting for and assuring past behavior.

More recently, one of our projects delved into sustainability ratings. Rate the Raters looked at the organizations and methodologies behind more than 100 high profile initiatives, from investment rankings (like the DJSI and FTSE4Good), to issue or industry specific ones (like the Carbon Disclosure Project and the Access to Medicine Index), right on through media ‘best’ lists like Newsweek Green.

Rate the Raters found the rankings and the people behind them well-intentioned and committed to continuous improvement, but struggling to deliver to consistently high quality standards and to provide users with actionable information they can use in deciding what investments to make or which products to buy. In the investment space, few ratings are perceived to deliver alpha; in the consumer arena, ratings too rarely influence purchase decisions.

Finally on measurement, we are launching now – with Sustainable Life Media, the people behind Sustainable Brands – Signed, Sealed…Delivered?, a new piece of research exploring eco-labels and their impact on trust and behavior change across the value chain. While some eco-labels are high profile, and they are proliferating madly, ask yourself: Which eco-label assurance unfailingly improves supply chain conditions? How many consumers determine which products to buy based on certification marks? And to what extent do eco-labels generate trust and improve relationships between brands, suppliers, business partners and customers?

What’s next?

In this field, sustainability reporting, sustainability rankings and eco-labels are about as mature as any process or tool available to us. They are each, in their own way, about value assessment and communication. Sustainability reporting and ratings are mostly about identifying and protecting value. Eco-labels stretch to the ‘capture and create value’ realm, but their limited success tells us how hard this is to do.

So our challenge, in terms of ‘New Definitions of Value’, is to define what sustainable value will look like in one, three or five years. Here are four insights into what the future of sustainable value will look like:

1. First, less will be more. It is certain that more and more sustainable value will come from doing or using less. You’ve heard the statistics – if everyone shared the same lifestyle as Americans, we’d need the resources of six planets. Seven billion people already live beyond ecological limits, and the demographic curves predict nine or ten billion on Earth by mid-century. Organic food commands premium prices while undergoing less processing. Less packaging conserves resources, saves money and eases stress on waste systems. The Unilever Sustainable Living Plan makes ‘less’ its cornerstone. An increasing number of companies will follow their example.
2. Second, everything old will be new again. Collaborative consumption and reuse are exploding. Think WhipCar, where instead of sharing cars owned by a single organization, people register their cars in the WhipCar network, and then rent their neighbor’s car, or a stranger’s. Recylebank, RecycleMatch, eBay and Freecycle are all emblematic of this trend. Cradle to cradle thinking in manufacturing, like Nike Closed Loop, is of the same spirit.
3. Third is hidden in plain sight. There will be – needs to be – a trend to intentional stealth as relates to sustainability initiatives. We work with a major seafood buyer. Nearly 100% of their fish is certified as sustainable under at least one independent or industry scheme. And they communicate nothing about this to their customers. The value here is in seafood sustainability and supply chain resiliency. Their customers continue to get the same quality fish as previously, without new messaging or labels that might confuse. If we are going to take sustainability to the mass market, this type of activity is going to become as common as it is essential.
4. Finally, there’s location, location, location. 100 mile diets show the growth in interest in local, driven equally by concern about climate change and interest in knowing the story, and the person, behind what you eat. Over the last few weeks in Germany, dozens have died, and thousands are ill due the largest E. coli outbreak ever. After blaming Spanish cucumbers, and then sprout farmers in northern Germany, they still don’t know the source. People are dying, and European-wide trade has been disrupted as governments point the finger at one another and close borders to trade. There is immense and growing value in knowing exactly where things come from.

More clichés await re-purposing, but this blog running too long to take more time to explain the thinking behind ‘Information isn’t power’ and ‘Don’t talk the walk’! Instead, I hope the message is already clear. While measurement has not yet itself delivered sustainable value to the degree envisioned, the measurement tools and initiatives extant have framed the landscape of sustainability and value. The next challenge is to find or invent the new means to release, and new types of, sustainable value needed to balance markets, society and ecology.

(With thanks to my colleagues Patrin Watanatada and Chris Guenther, whose ideas were central to my Sustainable Brands talk and this piece.)