🛍️Principles of Marketing Unit 19 – Sustainable Marketing: A New Approach

What's Sustainable Marketing?

• Integrates environmental, social, and economic considerations into marketing decisions and practices
• Aims to meet the needs of current and future generations without compromising the ability of future generations to meet their own needs
• Focuses on creating long-term value for all stakeholders (customers, employees, shareholders, society, and the environment)
• Requires a holistic approach that considers the entire lifecycle of a product or service from sourcing to disposal
• Involves transparency and accountability in communicating the environmental and social impacts of marketing activities
  • Includes disclosing the carbon footprint of products and services
  • Requires reporting on the social and environmental performance of the company
• Emphasizes collaboration with stakeholders to address sustainability challenges and opportunities
• Requires a shift in mindset from short-term profits to long-term value creation

Why It Matters Now

• Growing consumer demand for sustainable products and practices
  • 66% of global consumers are willing to pay more for sustainable brands (Nielsen)
  • 73% of millennials are willing to pay more for sustainable products (Nielsen)
• Increasing regulatory pressure to address environmental and social issues
  • Paris Agreement on climate change requires countries to reduce greenhouse gas emissions
  • EU Green Deal aims to make Europe climate-neutral by 2050
• Investor pressure to integrate sustainability into business strategies
  • $30.7 trillion in assets under management are invested in sustainable strategies (Global Sustainable Investment Alliance)
• Competitive advantage for companies that embrace sustainability
  • Unilever's Sustainable Living brands grew 69% faster than the rest of the business in 2018
• Risk mitigation by addressing sustainability challenges proactively
  • Reputational risks from negative environmental or social impacts
  • Supply chain risks from resource scarcity or social unrest
• Opportunity for innovation and growth in sustainable products and services
  • Global market for low-carbon products and services is estimated at $5.5 trillion (World Bank)

Key Principles of Sustainable Marketing

• Lifecycle thinking considers the environmental and social impacts of a product or service from cradle to grave
  • Includes sourcing of raw materials, manufacturing, distribution, use, and disposal
  • Requires collaboration with suppliers and customers to minimize negative impacts
• Stakeholder engagement involves ongoing dialogue and collaboration with stakeholders to understand their needs and expectations
  • Includes customers, employees, investors, communities, and NGOs
  • Helps to identify sustainability challenges and opportunities and build trust and credibility
• Transparency and accountability involve disclosing the environmental and social impacts of marketing activities and being accountable for them
  • Includes reporting on sustainability performance using recognized frameworks (GRI, SASB)
  • Requires setting measurable sustainability targets and reporting progress towards them
• Circular economy thinking aims to keep resources in use for as long as possible and minimize waste
  • Includes designing products for durability, repairability, and recyclability
  • Requires new business models based on leasing, sharing, or product-as-a-service
• Social responsibility involves contributing to the well-being of society and addressing social challenges
  • Includes supporting local communities, promoting diversity and inclusion, and respecting human rights
  • Requires aligning marketing practices with social values and expectations

Green vs. Greenwashing

• Green marketing promotes products or services based on their environmental benefits
  • Includes using eco-labels, environmental claims, and green packaging
  • Requires substantiation of environmental claims and avoiding misleading or false claims
• Greenwashing is the practice of making false or misleading environmental claims to promote a product or service
  • Includes using vague or unsubstantiated claims (eco-friendly, natural, biodegradable)
  • Can damage a company's reputation and erode consumer trust
• Avoiding greenwashing requires transparency, honesty, and accountability in environmental claims
  • Includes using recognized eco-labels (Energy Star, USDA Organic) and providing evidence to support claims
  • Requires educating consumers about the environmental benefits of products or services
• Regulatory oversight helps to prevent greenwashing and protect consumers
  • FTC Green Guides provide guidance on environmental marketing claims in the US
  • EU Unfair Commercial Practices Directive prohibits misleading environmental claims

Sustainable Marketing Strategies

• Product design strategies focus on designing products that are environmentally and socially responsible
  • Includes using sustainable materials, designing for durability and recyclability, and reducing packaging waste
  • Requires collaboration with suppliers and customers to optimize product design
• Pricing strategies aim to reflect the true environmental and social costs of products or services
  • Includes using lifecycle costing to account for externalities (carbon taxes, social costs)
  • Requires balancing affordability with sustainability to ensure access for all consumers
• Promotion strategies communicate the environmental and social benefits of products or services to consumers
  • Includes using eco-labels, environmental claims, and sustainability reporting
  • Requires educating consumers about the sustainability features and benefits of products or services
• Place strategies aim to minimize the environmental and social impacts of distribution and logistics
  • Includes using sustainable transportation modes (electric vehicles, rail), optimizing routes, and reducing packaging waste
  • Requires collaboration with logistics providers and retailers to optimize distribution
• People strategies involve engaging employees and stakeholders in sustainability initiatives
  • Includes training employees on sustainability, incentivizing sustainable behaviors, and engaging stakeholders in sustainability dialogues
  • Requires leadership commitment and a culture of sustainability throughout the organization

Measuring Sustainability in Marketing

• Lifecycle assessment (LCA) is a tool for assessing the environmental impacts of a product or service throughout its lifecycle
  • Includes measuring energy use, water use, greenhouse gas emissions, and waste generation
  • Requires collecting data from suppliers, manufacturers, and customers to assess impacts
• Carbon footprint is a measure of the total greenhouse gas emissions associated with a product or service
  • Includes direct emissions from manufacturing and distribution and indirect emissions from supply chain and customer use
  • Requires using recognized methodologies (GHG Protocol) and reporting standards (CDP)
• Social impact assessment (SIA) is a tool for assessing the social impacts of a product or service on stakeholders
  • Includes measuring impacts on employees, communities, and society (job creation, health and safety, human rights)
  • Requires engaging stakeholders to understand their needs and expectations and assess impacts
• Sustainability reporting involves disclosing the environmental and social performance of a company using recognized frameworks
  • Includes using GRI, SASB, or other frameworks to report on sustainability indicators and targets
  • Requires external assurance to ensure the credibility and reliability of sustainability data
• Sustainability metrics are specific indicators used to measure and track sustainability performance over time
  • Includes energy efficiency, water use intensity, waste diversion rate, and diversity and inclusion metrics
  • Requires setting measurable targets and tracking progress towards them using data and analytics

Challenges and Opportunities

• Balancing sustainability with profitability can be challenging for companies
  • Requires investing in sustainable practices and technologies that may have longer payback periods
  • Opportunities exist to create shared value by aligning sustainability with business strategy and innovation
• Changing consumer behaviors and lifestyles to be more sustainable can be difficult
  • Requires educating consumers about the environmental and social impacts of their choices and providing sustainable alternatives
  • Opportunities exist to create new markets for sustainable products and services that meet changing consumer needs
• Collaborating with stakeholders to address systemic sustainability challenges can be complex
  • Requires building trust, aligning incentives, and sharing risks and benefits among stakeholders
  • Opportunities exist to create collective impact by leveraging the strengths and resources of different stakeholders
• Measuring and communicating sustainability performance can be challenging due to lack of standardization and transparency
  • Requires using recognized frameworks and methodologies and providing credible and reliable data
  • Opportunities exist to differentiate and build trust with stakeholders by demonstrating sustainability leadership and performance
• Integrating sustainability into all aspects of the organization can be a complex and ongoing process
  • Requires leadership commitment, employee engagement, and a culture of sustainability throughout the organization
  • Opportunities exist to create long-term value and resilience by embedding sustainability into the core business strategy and operations

Real-World Examples

• Patagonia is a leader in sustainable marketing, using recycled materials in its products, offering repair services, and advocating for environmental causes
  • Donates 1% of sales to environmental organizations through its 1% for the Planet program
  • Encourages customers to buy only what they need and to repair and recycle their products
• Unilever has set ambitious sustainability targets as part of its Sustainable Living Plan
  • Aims to halve its environmental footprint and improve the health and well-being of 1 billion people by 2030
  • Its Sustainable Living brands (Dove, Lipton, Hellmann's) grew 69% faster than the rest of the business in 2018
• Tesla is disrupting the automotive industry with its electric vehicles and sustainable energy solutions
  • Its mission is to accelerate the world's transition to sustainable energy
  • Has built a network of Supercharger stations to enable long-distance travel and reduce range anxiety
• IKEA has set a goal to become climate positive by 2030, reducing more greenhouse gas emissions than its value chain emits
  • Uses sustainable materials (FSC-certified wood, recycled plastic) in its products and packaging
  • Offers buy-back and resale programs for used furniture to extend product life and reduce waste
• Seventh Generation is a pioneer in sustainable household products, using plant-based ingredients and recycled packaging
  • Its products are certified by the USDA BioPreferred program and the EPA Safer Choice program
  • Advocates for environmental and social causes, such as climate action and ingredient transparency