Sustainability as a Brand and Business Strength

In the race to sustainability, many brands are diluting their identity and relying on undifferentiated strategies to ensure environmental efficiency and social compliance along their supply chains. The challenge lies in the quality of sustainability investments brands are willing to pursue, but also in their ability to communicate the reasoning behind these efforts.

In the post-pandemic world, most luxury brands have decided to include a version of sustainability and social responsibility in their mission statements. But many of them still shy away from elucidating consumers beyond these statements. This is because luxury, with its aura of non-essential consumption, worries that talking about the broader issues along supply chains will attract accusations of “greenwashing,” or providing misleading information about their sustainability.

Brand value enters the debate right about here. As the aggregate result of perceptions and mindsets, brand value typically translates into quantifiable metrics such as sales volume, equity, audience size and market potential. All of these elements allude to consumption, and therefore to a brand’s sustainability performance.

The moral motivations to invest in sustainability are no longer under debate — brands implement them either because they genuinely care, as a means of conforming to stakeholder expectations, to comply with regulations or a combination of all. However, these investments often fall short on quality. From my ongoing conversations with people managing luxury brands, I gather that the quality of these investments depends on the perceived economic value of a well-executed sustainability strategy.

At the same time, the demand from younger, more affluent, environmentally aware and socially conscious consumers are creating the conditions for a necessary evolution in sustainability management: from surface-level differentiating factor to all-encompassing competitive advantage. In this context, high-quality sustainability investing rises above as a key priority in creating economic value for modern brands.

While this is by no means an account of how brands can do sustainability right, the following principles underpin the thinking behind what constitute efficient brand sustainability investments:

1. Taking a stance can help widen the scope of the addressable market

Keeping an aloof attitude in the face of events that matter to humanity is one effective way to stay irrelevant. From climate change to social justice, taking a stance can propel a brand into the domain of culture and increase its chances to be part of consumers’ initial consideration set. By taking a stance that reflects its brand values, a company can reach consumers who wouldn’t normally consider its products. Further, increasing the perceived value of products is a prerequisite for expanding the size of any brand’s addressable market. This increase can be accomplished by adding emotional resonance and a symbolic dimension to a brand. For instance, socially and environmentally minded consumers don’t buy products. They buy the social, emotional and functional stories behind products. All in all, once consumers have embraced a set of values and a lifestyle, they are less likely to think of a product as an interchangeable commodity and more likely to be loyal to the brand.

2. Long-term thinking is a competitive advantage in itself

If the benefits of a given sustainability initiative fail to justify the investment on economic grounds, brands typically turn to initiatives that signal short‐term results. For instance, a brand might choose to prioritize making a charitable donation to a forest conservation project over optimizing its production lines for environmental efficiency. But in sustainability management, long-term thinking is a competitive advantage in itself, and oftentimes, the cost-effective thing to do. For example, in addition to reducing the carbon footprint of a brand’s operations, optimizing production lines will eventually result in cost savings from reducing energy consumption.

Related: The 4 Principles of Sustainability Innovation for Modern Brands

3. Sustainability can help de-risk the business

From a sustainability standpoint, brands de-risk the business by focusing on developing customer loyalty. By leveraging social listening to understand the tangible importance of sustainability on brand value, a company can increase the success rate of launching new products and services in alignment with the social and environmental priorities of its customers. A combination of quantitative and qualitative analysis will help brands in assessing the impact of their sustainability initiatives on consumer morale.

4. In the business of sustainability, to be proactive is to win

Brand-led sustainability infuses a brand’s essence into every stage of the supply chain. Ensuring that investments in sustainability deliver relevant, measurable and scalable results for a brand’s strategy and business is essential. Through a data-driven approach, it is possible to map a brand’s desired sustainability portfolio and activities along the entire supply chain. Brands proactively focused on sustainability initiatives capable of generating the greatest social and environmental impacts, but also the greatest long-term business growth and brand value are set to win in the marketplace.

An uninformed approach to sustainability puts brand identity at risk and will rarely lead to meaningful supply chain improvements. In an effort to pursue ever-higher standards, many brands are approaching sustainability in undifferentiated ways. Assuming activist roles in spite of their business models and multiplying investments with little to no social returns. To leverage the business opportunities of sustainability, uniquely available to luxury markets, brands must seek alignment between brand identity, impact potential and growth priorities; implement initiatives proactively and communicate sustainability efforts in a characterising way.

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