This story first appeared in Huffington Post February 16th, 2012
Morten Schroder of Van Houtte Coffee knows something about being a sustainability leader.
In fact, Van Houtte has a long, proud history of adopting sustainability measures, even before a clear ROI matrix has been established. (The latest example is Van Houtte’s implementation of Renewable Natural Gas, a product I helped position and market).
“We believe in making decisions based on the bottom line, of course. But we also have a very clear agenda to reduce greenhouse gas emissions” said Schroder. “What surprised us is that our sustainability decisions – without fail – have all paid off financially. Even when they were based on investing in new ideas.”
Schroder is not the only trailblazer reaping the rewards of acting on ideals.
As reported recently in Sustainable Brands, new research on the world’s 50 fastest growing brands found a cause-and-effect relationship between a brand’s ability to serve a higher purpose and its financial performance.
The research, from Millward Brown and Jim Stengel, cited companies like Method, Seventh Generation and Stonyfield Farm. All companies that have elevated ethics and sustainability to leading operating principles.
The study forms the backbone of Stengel’s book GROW: How Ideals Power Growth and Profit at the World’s Greatest Companies.
So are ideals the next brand differentiator? Is acting ethically the best way to engage jaded consumers? Or does it all come down to common sense?
A Practical, Successful Shift: B Corp
B Corp gained prominence a few years ago as a business sustainability certification program.
One of the things that made B Corp different was, in hindsight, incredible common sense. The program provided a template for companies to incorporate longer term payback – often key to sustainability initiatives – right into their corporate charter.
This simple, yet profound shift away from short term ROI made it possible for companies to invest in ethical, sustainable improvements without the fear of having their programs axed for lack of short term payback.
On Friday, February 3rd, B Corp announced it had over 500 US companies on board, and had just signed up its first 39 Canadian companies. A success that Houston Peschl of DIRTT, one of the largest Canadian corporations to sign on, attributes to finding a common sense way to validate ethical behavior. As Peschl says, “DIRTT understands that it requires a different approach to be successful, the old business practices of manufacturing are archaic. Through innovative product design, amazing work force culture, and revolutionizing how to manufacture environmentally friendly products within a local economy, B Corp allows us to capture many of the intangibles of our unique approach and show the world what we are doing to change manufacturing in North America.”
Futureproof Brand Lesson: Reconsider The Business Model
If there’s one thing to be learned from Van Houtte Coffee and B Corp, it’s that the old business model for measuring performance needs to be tweaked.
Quarterly returns are fine. But the consistent long term gains seen from sustainability measures – gains like customer loyalty, staff motivation and improved efficiency as energy use is reduced – take time to manifest.
It can be likened to the returns on brand investment. Brand building is a slow process, but accepted as invaluable to companies.
While we’re looking at the business model, attention needs to be paid to the ROI measures used. New, exciting sustainability initiatives often have hidden benefits, or hard to measure benefits. For example, the Renewable Natural Gas program that I worked on offered incredible marketing benefits that easily outweighed the operational costs – but those marketing benefits needed to be brought into the ROI measurement before the business case made sense.
Finally, if you want to build a futureproof brand, you need to lead. That said, your leadership needs to be based on strong insights into market trends and consumer demands. As Henry Ford and Steve Jobs understood, leaders can create products that people need – even before people know they need them.
Just ask Morten Schroder or B Corp.