3ps of sustainable marketing apr 2010

When it comes to sustainability and corporate social responsibility, marketerscan definitely add value, writes Adam Joseph.

in a company so it makes the most sense for them to apply these skills

internally. Indeed, the CIM thinks marketers can be “at the heart of the

triple bottom line process, acting as the contact point between all stake-

holders”. If this is the ideal, it’s certainly not the reality yet in Australia.

A recent survey by the Australian Centre for Corporate Social

Responsibility (ACCSR) showed that fewer than one in ten CSR managers

come from a marketing or public relations background.

In its most recent polling of Australian CSR managers, the second

highest priority issue for 2010 was furthering the understanding of CSR

within their own organisation, which came second only to reducing envi-

ronmental impact.

Marketers can definitely add value here. But first, let’s get to the bot-

tom of this bottom line business.

1. PLANET

As far as social movements go, the rise of environmentalism has been

nothing short of spectacular in the recent decade.

The implications for marketers are wide-ranging and far-reaching, and

30 | PROFESSIONAL MARKETING | April–June 2010

Feature CSR

Corporate social responsibility (CSR) is the responsibility of an

organisation for the impacts of its decisions and activities on society and

the environment.

As a business issue, CSR is not new. It’s been around ever since com-

merce began, with concerns about the corporate excesses of the East

India Company expressed as far back as the 17th Century.

A popular way of thinking about good corporate citizenship is in

terms of the “Triple Bottom Line”, comprised of People, Planet and Profit.

Marketers can think of this as the 3Ps of Sustainable Marketing,

another set of Ps to add to their treasured 7Ps collection.

In a white paper on Marketing and the Triple Bottom Line, the

Chartered Institute of Marketing (CIM) argued that marketers can make a

fundamental difference when it comes to championing CSR.

Marketers are the company employees closest to the consumer, and

much of the growing interest in sustainability is coming from customers.

These days the buyer wants to know what’s behind the label and where

you’re coming from.

The CIM argues that marketers are the lead external communicators

Sustainablemarketingand CSR:Just do it

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Focus on Nike

April–June 2010 | PROFESSIONAL MARKETING | 31

Nike was founded in Oregon, USA in 1964. By 1980 it had reached a 50% market share in the US athletic shoemarket, and in 1988 the term “Just Do It” was coined for an advertising campaign. Then came the 1990s. Among certain consumer segments, the wordNike came to be synonymous with the term “sweatshop”. Nike took flak in Naomi Klein’s 2000 book No Logo and on MichaelMoore’s documentary The Big One. According to one Harvard Business Review paper, Nike once claimed:“It’s not our job to worry about other countries’ labour conditions”,when faced with protesters rallying over sweatshop conditions in itsthird-world operations. Fast forward to 2010. Nike releases its latest CSR report, in which president and CEO Mark Parker states: “Sustainability is key to Nike’sgrowth and innovation. Making our business more sustainable benefitsour consumers who expect products and experiences with low environ-mental impact, contract factory workers who will gain from more sus-tainable manufacturing and our employees and shareholders who willbe rewarded by a company that is prepared for the future.”For Nike, more than a decade of intensive focus on CSR seems to haveproduced enormous benefits for the global brand. A recent report by Brand Finance puts Nike as the international bench-mark for the apparel category. It suggests that 71% of Nike’s totalenterprise value is contributed by its intangible brand value. On this, Kaye Meyers, Nike communications senior manager, based inthe United States, says: "There are numerous intangible elements thatadd to brand value and at Nike our work in corporate responsibilitywould be one contributing factor. “Nike has come a long way in its CSR journey and we nowvalue the work we do here as a source of innovation andgrowth for the company. “We’ve done a lot of work on the sustainability frontfrom reducing our CO2 footprint to producing moresustainable products across all our sporting cate-gories under the company ethos ofConsidered Design. “Importantly workers remain at theheart of our efforts when it comes toimproving conditions in contractfactories around the world" For Nike, what a differencea decade makes.

one thing worth mentioning here is “greenwashing”. The Oxford English

Dictionary defines this as “disinformation disseminated by an organisation

so as to present an environmentally responsible public image”.

On 1 January 2010 the Australian Association of National Advertisers’

(AANA) new Environmental Claims in Advertising & Marketing Code came

into effect.

At press time, CEO Scott McClellan confirmed only one complaint had

been received by the Advertising Standards Bureau in relation to the new

environmental code – for an automotive manufacturer.

He also pointed out that: “Recently the ACCC cited concerns with the

advertising practices in the energy sector. The AANA is urging all

advertisers in this sector to follow the Environment Claims Code and

support industry self-regulation”

The marketing police are now well and truly working on the

Operation Greenwash case file.

2. PEOPLE

Good corporate citizenship means being nice to your actual flesh-and-

blood citizens – your customers, employees, suppliers, shareholders and

so on.

The popular term for this in CSR circles is “stakeholder engagement”,

an area where marketers often excel through their closeness to one group

– in particular, customers.

According to Leeora Black, managing director of the aforementioned

ACCSR, stakeholder engagement should be seen as the single most

exciting area of corporate social responsibility for marketers.

For marketers, this implies ever-greater dialogue and collaboration

with customers in terms of product and service innovation. Consumer

insights will be more important than ever, but whether in-house market

research people will ever become regarded as rock stars is yet to be seen.

3. PROFIT

The economist Milton Friedman once said the only social

responsibility of business is to increase its profits.

The final P from the 3Ps of sustainable marketing is profit, the original

and still the best. The job of the other two Ps is to keep this one honest.

The big question when it comes to corporate social responsibility is

whether being good is actually good for business.

The CIM puts forward a five-point business case for sustainability (see

page 33).

Leeora Black argues that while there is a strong business case for CSR,



there is no magic formula. “The benefits will be different for each organi-

sation and are also long term. The discussion about the benefits is in any

case yesterday's discussion. CSR is so central to the effective manage-

ment of organisations that the better question is what is the business

case for not doing it?”

In discussions of corporate citizenship, the terms ‘brand’ and ‘reputa-

tion’ are often used inter-changeably by analysts. This is because prob-

lems with a corporation’s reputation can quickly tarnish the organisa-

tion’s brands, like hungry termites eating away inside the company’s

brand architecture.

There is no doubt that a brand can successfully differentiate itself

from competitors through embracing the principles and practice of CSR.

The Body Shop and Nike are obvious examples.

Tim Heberden, managing director of Brand Finance (Australia), is an

expert on brand valuation. He argues: “CSR can increase corporate value.

To be effective, social responsibility needs to be closely aligned to the

brand identity and carried out consistently.

“This can influence the perceptions and behaviour of a range of

stakeholders, including customers, staff, government officials and

investors. If favourably influenced, these stakeholders can influence

demand, productivity and even the cost of capital.”

However, Heberden concedes that companies who add value through

CSR are the exception – many utilise it in an ad hoc rather than

strategic manner.

THE BEST KIND OF VICE – ADVICE

So what’s a professional marketer to do?

Many marketers view CSR activities as a way to win trust and build

goodwill with consumers, so getting the message right is critical for

brand reputation.

Getting the message or tone wrong means consumers are likely to be

sceptical and cynical towards your brand.

Hailey Cavill, founder and director of Cavill+Co, a leading Melbourne

consultancy, advises brand guardians to keep it real.

According to Hailey: “Authenticity is the key when it comes to con-

sumer perceptions. My advice to companies wishing to generate

goodwill in this space is first, find a cause that fits with your brand and

makes sense to consumers.

Second, stick with it over a long period – at least three years but the

longer the better. And third, don't talk about how much money you are

investing. Consumers don’t care: they want to know what difference

you're making.”

This advice is backed up with insights from a major research project

commissioned by Cavill+Co, entitled Real Not Spiel.

As part of this study, Australian consumers were asked which brands

they thought were leaders when it came to CSR issues.

While about two-thirds could not name one single brand, the most

mentioned by the other third of consumers were McDonalds and Westpac

with 3% each.

The presence of McDonalds might surprise some people, given the

negative publicity about fast food in the ongoing debate about obesity.

But the answers lie in the McLegends of the brand’s heritage. The

most recent CSR report from McDonald’s Australia states how founder Ray

Kroc was a man passionate about community issues from the start.

Evidence of this ethos at work Down Under can be observed in the

Ronald McDonald House Charities, which has an Australian history since

the 1980s.

The first RMcD house was opened in 1981 at the Royal Alexandra

Hospital for Children in NSW. There are now more than a dozen houses

in Australia with hundreds of rooms available every night for families in

Your futureis our futureThe larger an organisation, the greater its responsibilities to customers, communities and the environment.

Westpac has been recognised by the Dow Jones SustainabilityIndex as one of the world’s ‘Most Sustainable Companies’ for the seventh year running. This year, we also receivedAustralia’s top award for sustainability at the Banksia Awards.

Why does Westpac have such a focus on sustainability? Because your future is our future.

westpac.com.au

THE BUSINESS CASE FOR SUSTAINABILITY

• REPUTATION IMPACT: COMPLIANCE WITH SUSTAINABILITY REDUCES

THE RISK OF PUBLIC DISILLUSION, BOYCOTTS AND NEGATIVE PRESS.

• STIMULATE INNOVATION AND FIND NEW SOLUTIONS IN R&D.

• CREATE COMPETITIVE ADVANTAGE THROUGH CUSTOMERS

WANTING TO BUY FROM, OR INVEST IN, ETHICALLY-MINDED

COMPANIES.

• GENERATE COST SAVINGS: LOCALLY SOURCING PRODUCE SAVES

TRANSPORTATION COSTS; CREATING A CULTURE OF REDUCING

USAGE AND WASTAGE LOWERS COSTS.

• COMPANIES THAT REDUCE THEIR ENERGY BILL BY 20% COULD ADD

THE SAME AMOUNT TO THEIR PROFIT AS A 5% RISE IN SALES.

CHARTERED INSTITUTE OF MARKETING “THE GOOD, THE BAD & THE INDIFFERENT” 2007

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The Body Shop’s first store was opened in 1976 in Brighton, England,by founder Anita Roddick and her husband Gordon. The Body Shop opened with the mission statement: “To dedicate ourbusiness to the pursuit of social and environmental change.” In 2006 The Body Shop was bought by cosmetics giant L’Oreal,prompting Roddick to say it was the best 30th-birthday present for thebusiness. The Body Shop has five core global values – against animal testing, support community trade, activate self esteem, defend human rightsand protect our planet. These values drive the business and havealways done so. To get the local view on a global brand I spoke to Adam Valvasori, values manager for The Body Shop Australia. In terms of the five corevalues, climate change is presently the top priority locally. Adam says: “Climate is the one issue that underpins everything we doand care about. We publicly participate in the big-picture debate forAustralia to adopt much more responsible emissions reductions targets. I think most Australians trust that we’re not jumping on any green-wash ‘brand wagon’ here, because we’ve shown our genuine commit-ment to Protect our Planet throughout our entire history”.Defending human rights in the region is another key priority for Body

Shop Australia. As Adam explains: “Another important and ignoredhuman rights abuse we’re focusingon is the sinister trafficking ofwomen and children for the com-mercial sex trade. It affects everycountry in the world and Australiansex tourists are certainly responsible for contributingtowards the demand.” In Australia, The Body Shop isincreasingly harnessing socialmedia. The Body Shop Activist Blog athttp://blog.thebodyshop.com.au/was established in 2007 as a platform to raise awareness ofcampaigns.

Adam says: “We started havinga bigger social media presence –Twitter, Facebook and YouTube –in order to tap into different audi-ences and to support other greatorganisations, causes and cam-paigns out there and facilitate dis-cussion about important social orenvironmental news.”

For The Body Shop, beinggood is good for business.

34 | PROFESSIONAL MARKETING | April–June 2010

Feature CSR

Brand focus: The Body Shop

CONTINUED FROM PAGE 33

need. When it comes to corporate citizenship, Maccas certainly doesn’t

clown around.

However, in my mind the ‘poster child’ for Australian blue-chip busi-

ness is Westpac, one of the first Australian companies to develop and

implement an organisation-wide approach to CSR. With banking in

mind, I’d now like to turn the spotlight on this particular industry sector.

CSR & BANKING

The Australian banking sector is very interesting when it comes to corpo-

rate social responsibility.

The big banks all produce impressive sustainability reports packed

with compelling stats and evidence they are good corporate citizens.

Australian financial organisations feature prominently in the

Australian Centre for Corporate Social Responsibility’s latest annual best

practice capability ratings (see box at right).

However, it should be pointed out these ratings are based on self-

assessment by management rather than independent ranking by con-

sumers. At the risk of losing friends in the banking sector, I think there

are two key issues where banks still more often than not deserve horns

rather than halos.

NUMBER ONE, CORPORATE GREED

The big Australian banks make some of the healthiest profits to be found

on the ASX, emerging from the global financial crisis in rather rude

health. Advocates of capitalism would argue what’s wrong with that?

And to many investors and analysts, profit is just profit.

At the heart of this debate is the issue of ‘good’ versus ‘bad’ profits.

Grahame Dowling, a professor at the Australian School of Business in

NSW, explains it this way: “Bad profits are those that people think are

STATE OF CSR 2009 - TOP SCORING ORGANISATIONS

• AXA AUSTRALIA

• COCA COLA AMATIL

• LIHIR GOLD LIMITED

• NATIONAL AUSTRALIA BANK

• RIO TINTO

• SENSIS (WHOLLY OWNED SUBSIDIARY OF TELSTRA)

• WESTPAC BANKING CORPORATION*



made at the expense of exploiting employees

or customers. Good profits are made without

this perception.

“Bad profits adversely affect the reputa-

tion of the company. Broad-based corporate

social responsibility programs will not negate

this effect.”

The Commonwealth Bank of Australia

(CBA) provides one example.

A recent report pointed out CBA had lift-

ed its market share of home loans from 23%

to 26%, one of several contributing factors to

its huge profit figure.

This is more likely to be viewed as a “good” profit by cynical

consumers because it was driven by CBA being more competitive in

the marketplace.

Winning market share from rival banks, while keeping interest rates

in line with the market, delivers on the “determined to be different”

brand promise.

However, Westpac – CSR poster child – provides a contrasting

example. Last year Westpac enraged the nation by raising its variable

mortgage rate by 20 basis points above the Reserve Bank of Australia’s

cash rate rise.

This prompted Kevin Rudd to say “I think Westpac should have a

long hard look at itself”. It was a gesture of greed against the backdrop

of the GFC.

Behaviour like this is highly likely to be viewed by increasingly cynical

consumers as driving “bad” profits.

The patronising banana smoothie analogy – which picked up the

Mumbrella ‘Marketing Disaster of the Year 2009’ award – didn’t help the

cause either.

NUMBER TWO, GREEDY CEOS

Excessive executive remuneration is a big issue across all blue-chip

Australian companies, but the big banks are an especially soft target.

According to consulting firm Guerdon Associates, the leaders of all

but one of the big four banks feature in the list of the 10 highest-paid

Australian CEOs.

The ANZ’s Mike Smith is in fifth place with a total remuneration

package of $10.9 million; Westpac’s Gail Kelly

is in seventh with $10.6 million; while CBA’s

Ralph Norris is eighth with an annual package

$9.2 million.

The term “responsible lending” is some-

thing we’ve come to hear and read a lot

about as a result of the GFC. But what about

responsible paying?

The ultimate brand guardian within any

organisation is the CEO. This being the case,

what if this Brand Jedi embodies excessive cor-

porate greediness?

I think this is a growing reputational chal-

lenge for CEOs and organisations.

BRAND FUTURE-PROOFING

The 3Ps of sustainable marketing are people, planet and profit. The

triple bottom line is an important consideration for brand equity in the

future.

Earlier this year in the UK the Marketing Society published a report in

conjunction with Business in the Community entitled “How can marketers

build sustainable success?”

One of the contributors to this was Gavin Neath, senior vice presi-

dent of global communications for FMCG giant Unilever.

He poses a very interesting question – is CSR the next stage in the

evolution of brands?

In the beginning, brands were marketed on functional needs. For

example, “Persil washes whiter!”. Modern brands are marketed on func-

tional and emotional needs – “Persil - tough but gentle”.

“Future brands” as Neath calls them, will increasingly be marketed

on functional, emotional and societal needs. The holy trinity of

brand equity.

As Persil expresses it, “Better things now come in small packages”.

I think this is good advice for all marketers across all sectors.

Adam Joseph is readership director at the Herald Sun, Melbourne.

He twitters at http://twitter.com/adamjoseph1.

“Bad profits are... madeat the expense of

exploiting employees orcustomers.”

Professor Grahame Dowling
