Sustainability leaders gathered in Boston at the Sustainable Brands New Metrics '14 conference to crunch numbers, aggregate data sets and measure everything from social impact to organic food sales. They unveiled new scorecards, measurement models, data streams, web-based tracking tools and social progress indices. Practically the only thing they left to economists to figure out (and they are!) was how to measure happiness.
What did they find?
Companies are leading great environmental and social change in the world. Sometimes they are innovative and forward-thinking. But today, all it takes is having a marketing department that responds to sustainability-focused consumers, or a finance department that responds to sustainability-focused investors.
Two consumer segments in particular are driving the change: millennials, and a rising middle class in developing countries. Data cited at the conference showed consistently that brands associated with green, sustainability, and trust sell more products than brands that don't stand out as "good." And millennials not only are capable of seeing right through "greenwashing," or false promises; they actively punish "bad" brands or brands simply not doing any good.
A Nielsen study released in June 2014 showed that a global average of 55% of consumers surveyed said they were willing to pay more for products and services from companies committed to positive social and environmental impact. But the data point that should really make brands wake up was this one: the 55% figure represented a 10% increase over the same measure only three years earlier. "The trend is growing very fast," said Amy Fenton of Nielsen.
Entrepreneur Alexander Gillett and his brother Arthur, who founded the food ratings company HowGood, tested whether consumers really would pay more for products perceived as more sustainable. HowGood does research on food products, looking into ingredients, sourcing locations, food policy, environmental policy, labor rights and food processing. They give each product a score. On the highest scoring produce, rated 'great,' they noted an increase in sales of 26%, sustained over a four-month test period.
Tom LaForge, Director of Human and Cultural Insights at Coca Cola, said people choosing which brand to buy are now thinking, "The good I want to see in the world is possible if I partner with the right people." Trust has become fundamental, and companies can lose consumers' trust much faster than it took to earn it. Of course, it can be devastating for a brand to lose its reputation.
But corporate leaders are starting to realize sustainability needs to be a given, built into company strategy as much as quality or any other basic value. Time for everyone to get on board.