Sustainability Marketing – Daniel Lau's Blog

March 2, 2016March 12, 2016

How to Invest in Green Bonds

The time has come where it is not enough anymore for “green projects” to be solely funded by the government, cities, and environmental organizations alone. In order for the global temperature to remain within its two degrees threshold, the Global Commission on the Economy and Climate estimates that more than US$6 trillion worth of investment is needed to fund new low carbon initiatives each year. Furthermore, the U.N.’s Environment Programme (UNEP) estimates an additional US$150 billion per year required by 2025 to propel the climate resilience of existing infrastructure. Richer countries have also vowed to climate finance poorer countries but they still fall well short of their desired targets. If the public sector is not able to cover all the required investment, where exactly will all the additional funding going to come from? Green bonds, with emerging financing models picking up momentum in the private sector are helping to bridge this financial gap. Green bonds are becoming one of the most popular mediums for investors to directly support low carbon and climate change projects, with issuance expected to reach up to US$70 billion this year. According to the UNEP, The World Bank, and the Climate Bonds Initiative, the US$1 trillion mark in green bonds issued that will finance a large portion of the climate finance gap can be achieved by 2020. However, one key problem remains for investors in this nascent market: they are unsure about what they should expect to look for when choosing to invest in green bonds, which poses a few more complications.

So, what is a green bond? It is a climate-themed bond from a government, bank, or institution that is looking to raise money to fund climate-related projects. To address the investor’s problem of where and how their investments will be put to use, there have been many attempts to set standards for ensuring that investments will actually help tackle climate change such as the Climate Bonds Initiative – a certified “green” bond scheme that is designed to simply the process for pension trustees and investors to select investment products more wisely. These “green” bonds guarantee that investments will directly contribute to low carbon infrastructure or climate adaptation projects. However, what is the problem now if these “green” bonds exist and are ready to be invested in? A huge obstacle is that investors are sceptical about huge conglomerates that issue green bonds while contributing to the problem, climate change, itself. Investors still remain clashed on this issue but Manuel Lewin, head of responsible investment at Zurich, says that it is in fact these controversial companies that will help raise awareness in this emerging market. The very fact that not only “green” companies are partaking in this initiative but that traditional organisations such as banks and oil companies are also getting on the bandwagon is what will really make a difference. The question now is, how does the green bonds market welcome the bonds of high carbon companies?

Source: https://www.greenbiz.com/article/how-invest-green-bonds

March 2, 2016March 12, 2016

The “Awareness” Trap: Why most companies are failing to change Consumer Behavior

The “Awareness” Trap, are we even aware of it? For decades and since the movement towards a “greener” world, sustainability-driven businesses and organizations have been trying to achieve one goal and one goal only: to change consumer behaviour from purchasing and using traditional and conventional goods towards green or greener goods. Sille Krukow, founder of Krukow Behavior Consulting, asked these two questions: Do you want to live a long and healthy life? And do you want to leave behind a better world for your children? Most people would answer yes, but the real question is would they really follow through with what they say they will do? As expected, many people would agree that their behaviour does not always live up to their words. However, this is where company and organization brand plays a role in helping people connect the dots from their words to their actions.

Currently, companies and organizations have been measuring their success of converting people into “green” purchasers through “awareness” as they hope to reach out to consumers and help them to live more sustainable lives that correspond to their ideals. “Awareness” would be measured with questions such as “how many people saw our ‘green’ campaign? “How many hits did we get?” And “how many people liked our message?” At the end of the day, “victory” is only defined to the extent of motivation and imparting knowledge and is not enough to propel the “green” movement. The hidden root of the problem is that brands assume consumers to be “perfect”, and what they mean by that is that consumers will take the knowledge that they have received and act upon it. In reality, they do not follow through because they are distracted with numerous other tasks in life to care about one more thing. With businesses and organizations trying to help consumers switch to more sustainable behaviour purely through raising awareness, the outcome just becomes another form of green washing. But fear not, this is where behavioural economics comes in.

Behavioural economics deals with how choices are presented to consumers and examines the environments in which decisions are made. In traditional stores and supermarkets, choice architecture usually focuses solely on revenue maximization, ie. Products that bring the greatest profits are those that are in the “hotspots”, where purchases are most likely to occur. With behavioural economics, stores and supermarkets can explore opportunities to change their choice architecture and gear it towards the goals in sustainability, ie. Making it easier for consumers to differentiate and select sustainable options, changing store environment, layout, and design, and incorporating “nudges” such as associated smell, sound, or color. At the end of the day, behavioural consultants and green companies and organizations need to identify consumers’ underlying goals and use techniques such as a cost-benefit analysis to determine which nudges will instigate the greatest change and effect incurring the smallest expense. Only then will there be real change in consumer behaviour towards sustainability.

Source: http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/adam_gerschel-clarke/awareness_trap_why_most_companies_ar

February 16, 2016March 12, 2016

Start Now: The Benefits of Annual Impact Reporting from the Beginning

Impact reporting is not just a trend but is also becoming the tool and golden nugget that an increasing number of CEOs, such as those of Timberland, Nike and Lego, are demanding to be incorporated into their companies and investing human capital and resources into making sure that it is executed well. So exactly is impact reporting? IT is a comprehensive all-in-one account for a company’s social impact, environmental and sustainability progress, and financial performance. Thread, with a motto of “responsible fabric from Ground to Good”, has started to produce impact reports in the early stages of its business amongst many other “responsible fabric” companies alike that have developed a completely traceable and transparent supply chain with rich and robust data.

With a plethora of numbers and statistics complemented by appealing graphical figures, it is very easy to dismiss these claims as a marketing gambit or a feel-good factor tool despite them being backed by raw facts and data. However, Thread has been able to overcome this common misconception by making sure that its impact report give insight into the way that it runs its business and measures its success, strongly believing that what they measure is what matters. Impact reporting only becomes stronger and more credible as years and decades pass by because not only will a company be able to scale its operations to become more efficient and sustainable, there will also be historical data that will allow readers of the impact report to discover and recognize its trends and see the bigger picture behind a company’s story.

At the end of the day, impact goals are tied to financial goals, production, and sales targets amongst other components of a company in this chain effect, which ensures what Kelsey Halling, the Impact Director of Thread, calls “buy-in across the entire organization”. The impact report ultimately reflects a triple bottom-line company in the truest sense and has grown into a powerful marketing and sales tool that has appealed to investors and consumers. Impact reporting is power.

Link: http://www.sustainablebrands.com/news_and_views/startups/kelsey_halling/start_now_benefits_annual_impact_reporting_beginning

February 4, 2016March 12, 2016

Green Is the New Black: Levi’s, Nike Among Marketers Pushing Sustainability – Responding to a Consumer Behaviour shift

According to Natural Marketing Institute’s shades of green, I would most probably fall under the “conventionals” category describing myself as someone who is aware and for the environment but does not always uphold sustainability because of laziness and costs, which play into my lifestyle choices and purchasing power. Personally speaking, with this mentality I am only most likely to purchase sustainable products if the masses start adopting and purchasing these new green products as trendsetters. In parallel but on the supply side of the story, the same chain effect is happening with companies in the consumer goods and services market.

Companies are responding to consumers’ behaviour shift like a trend. Conglomerates like Levi Strauss, Nike and J&J amongst many of the big players out there are adapting to the new market of green products and adopting this new emphasis on green products. Levi’s claims that its jeans are made from just about eight recycled plastic bottles and Nike claims that its knitted sneakers cut manufacturing waste by 88 percent. As evidenced by a survey conducted by brand consultancy BBMG in 2013, “more than a third of global consumers, including 40 percent of millennials, view style, status and environmentalism as intertwined”. To these consumers, sustainability has changed from being “the right thing to do” to being “the cool thing to do”, shifting the emphasis of valuing the need to do it to the want to do it. Based on this new change in perspective, for companies it is really not about offering a niche green product but rather offering a green band through building sustainability into the bloodline of the company in every single process no matter how big or small.

Companies are slowly but gradually shifting their segmentation, targeting and positioning from offering products that fall under the “feel-good factor/transient” quadrant that encompasses altruism and an external locus of control to the “value parity/green differentiation” quadrant that encompasses economic motives and an internal locus of control. Offering green products to the market is not enough to gain a competitive edge over competitors anymore, the new era of consumer preferences are now demanding companies as a whole to become green and this in fact is the new way to gain a competitive edge over competitors.

http://www.adweek.com/news/advertising-branding/green-new-black-levi-s-nike-among-marketers-pushing-sustainability-153318

January 21, 2016March 12, 2016

The Problem with Sustainability Marketing: What’s in it for me?

Have you ever wondered why selling sustainability is still so hard? You have seen the news, you have read the reports and you have probably experienced this firsthand when you go into a supermarket and stumble across social and environmental credentials as you scavenge for the foods that you want to purchase. It is an all too familiar scene and people have obviously long known that sustainability is the way to go if future generations are to even have a chance at survival. But the real question is, even with consumers that actually care about sustainability, why has not substantial action taken place all this time? Yes, the world has been promoting initiatives and yes, there has been a multitude of people who have been convicted to act on these initiatives. But how do we convince the rest of the world, specifically those falling under the “confused” and “conflicted” shades of green to care about and act on sustainability?

According to a study conducted by National Geographic, the number of global consumers who have expressed a deep concern for the environment amount to approximately 61%, though actual sustainable purchasing behaviour has been decreasing. This explains the so-called “value-action” gap between what consumers report in surveys and what they actually do. Think about some of your sustainable purchases or any sustainable products that you might have stumbled across, what do the labels or captions say on the product? More likely than not they probably prompt you to take action through perhaps persuasion, pressure or guilt-trips, all for the greater purpose of sustainability. Stop for a second and think, how does that make you feel? After seeing this type of sustainable product, you probably have another reason not to make this sustainable purchase on top of a premium price. You are probably wondering, would I really buy a sustainable product if this were how it is marketed to me? All in all, there is actually nothing wrong with the values that these sustainable products uphold but rather it is the value that these sustainable products offer.

Up to now, sustainable products have only been offering to consumers what these products can do for the world but not what these products do for them. As consumers typically look for three attributes when making a purchase, functional benefits, emotional benefits and social benefits, it is important for companies to keep in mind that they cannot shy away from what the consumer cares about. The question that needs to be posed apart from “what can this product do for the world?” is “what can this product do for the consumer?” At the end of the day companies need to remember that marketing sustainable products needs to be a two-pronged approach, one that involves not just corporate social responsibility (CSR) but also creating shared value (CSV).

Would this encourage or change your purchasing behaviour towards sustainable products?

Article Link:
http://www.theguardian.com/sustainable-business/behavioural-insights/2015/mar/09/problem-sustainability-marketing-not-enough-me