Consumers are not fools
– Greenwashing and its business impact

It all started with a towel back in the 80s.

A student was looking for a towel back at a hotel in Fiji. He found a note asking guests of the hotel to help the environment by reusing them. This action would help to reduce the ecological damage of laundry on the island’s fragile ecosystem and coral reefs, which the resort claimed to care deeply about. That student was Jay Westerfield, a young environmentalist who noticed the irony in its ask.

How corporates marketed and highlighted “eco-friendly” and “green” projects of little or no real impact, to either distract consumers from less sustainable practices or boost profits.

Credit: HelpScout.com

Four decades later, the term greenwashing populates about 17,500,000 results. Its top stories involve brands and celebrities being called out for greenwashing. Conveying a false impression or providing misleading information about how a company’s products are more environmentally friendly through unsubstantiated claims. On Google trends, the term has grown 400x compared to 5 years ago.

Reading between the lines - Greenwashing vs Green Marketing

It is a slippery slope for brands.

Recently Mercedes-Benz was called out for greenwashing by sustainability review platform, Wherefrom, in a campaign to promote its line of electric cars, Mercedes-EQ. The ads were visually outstanding, drawing images from Mother Nature, a rose, veins of leaves, a honeycomb, and lightning with an equally powerful message “Nature or Nothing”. On the flip side, the reality of climate change with images of drought, oil spills, fires, and broken icebergs reads “Nothing or Nature’. These ads were praised for being “clever” and “simply brilliant”, before a sustainability group hijacked the campaign, to expose the automaker, as a serious polluter.

Mercedes-EQ-Nature-or-Nothing-Ad

Credit: Marketing Interactive

They were not strong enough to take the flak. The truth was, Mercedes and its parent company Daimler, have been sued multiple times, for cheating on emissions tests in Mercedes diesel vehicles, and agreed to a $1.5 billion settlement with the Department of Justice in 2020. London-based Wherefrom recreated the ads with a striking emblem “Stop the wash” and rewrote the copy, “Climate change. It’s already here” instead of “The new electric vehicle generation. It’s already here.” Mercedes then distanced itself from the controversy created by Leo Burnett Mexico claiming that the ads were not approved to run globally.

Credit: Yahoo News Singapore

Not all hope is lost.

Patagonia, Inc. founded by Yvon Chouinard in 1973 and based in Ventura, California has recently made headlines for giving away the company to help fight the climate crisis through environmental trusts. Simply put, all company’s profits hereon, go into saving the planet. The decision was not at all, a tough one.

“Instead of ‘going public’, you could say we’re ‘going purpose’. Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all wealth.”

Even before ESG was a thing, Chouinard and Patagonia have been known for environmental activism through its brand. Patagonia is one of the earliest companies to become a B Corp, certification for meeting certain environmental and social standards. Since the 1980s, Patagonia started with the commitment to donate 10% of its profits each year to small groups working to save or restore habitats. In 2002, they upped the ante to 1% of sales, profit or not. The mid 80’s was also a time when steps to reduce their role as a corporate polluter began, from looking at recycled-content paper for catalogues to assessing whether the dyes used were free of toxic metals and sulphides. In 2007, Footprint Chronicles was launched, taking their accountability public, for both the good and the bad.

Every step, move, and decision made, even bad ones, were honest, transparent, authentic and based on legitimate environmental positives.

Consumers are not fools – more so in a post-pandemic world

Mercedes and Patagonia, Inc. are great brands built on vastly different purposes. The question is, what is the impact of brand value on the consumer front? More so, who are the consumers of tomorrow, beyond COVID-19?

Without a shadow of a doubt, living through the crisis has reshaped consumers with new expectations, new needs and defining what really matters to them. In the latest edition of the EY Future Consumer Index, priorities have shifted in the five consumer segments since October 2021. “Planet first” consumer segment, which is (1) highly aware of consumption impacts, (2) favours locally sourced products and (3) expects transparency, rose to first place before sliding to second place 6 months later.

EY Future Consumer Index

Credit: EY.com

People are more willing to make a stance on their newfound values by living a more sustainable lifestyle and understanding that there is an opportunity cost between “Planet First” and “Affordability First”.  

Though short-lived, it is evident that consumer values and their priorities have changed, living through the pandemic. It’s a tough fight. We win some and lose some, but overall, with consumers preferring conscious consumption over material status symbols, we are on the right trajectory.

There is no looking back.

The post-pandemic world has gotten even the baby boomers leading the change towards a more sustainable lifestyle, contrary to general perception. The OCBC Climate Index 2022 study found that people between the ages of 58 and 65 scored the highest when it comes to awareness and adoption of greener lifestyles and are also putting their sustainable behaviour into action and advocating them.

In another study conducted by Accenture (NYSE:CAN) and the World Wide Fund for Nature (WWF) Singapore, consumers in Singapore are unable to consistently make green choices because of the lack of options. With 80% of consumers saying that they care for the environment, 32% would make purchasing decisions based on the environmental impact and how sustainable the product is. A further 35% are willing to pay up to 10% more for sustainable alternatives.

With many businesses using sustainability as a buzzword, 23% of Singapore consumers are saying that they do not trust businesses’ sustainability claims, and a third of consumers (30%) find such claims confusing, leading to them being sceptical and resulting in trust issues with many businesses.

The Business Impact – or Opportunity?

The phrase – “value for money” has certainly evolved. Today, consumers are in search of “Best value for money”. Defined as “the most advantageous combination of cost, quality and sustainability to meet consumers’ requirements”. In this context, cost means consideration of the whole life cost while quality means meeting a specification which is fit for purpose and sufficient to meet the customer’s requirements.

193 parties have joined the Paris Agreement. With commitments from all countries to reduce emissions and collaborate to adapt to the impacts of climate change, it is imperative for businesses to recalibrate and take a hard look at their current position using three core essentials: people, process, and product, to continue to thrive.

The rise of ESG ratings has helped to shift the balance from shareholders to stakeholder capitalism.

A broader concept by considering everyone that is involved in a company’s action – from employees, suppliers, activists, consumers, local communities, and environmental context – and factor these parties into their strategy and choices.

Speco is one such example. Founded as Spic & Span Pte Ltd in 2017, it is a social enterprise to provide marginalised Singaporeans with stable jobs in the cleaning industry. Focused on inclusive hiring, it is a small company with a big heart, as Business Times wrote. Staffed by ex-offenders, displaced workers, persons with disabilities, or come from marginalised families, founder Benjamin Chua believes the main purpose of running a company is to be able to create more jobs that can provide good value to the economy.

Speco - Brand Story - People, Planet and Profit

It was not enough. Its in-house R&D division produced a new form of antimicrobial agent that can last for months when applied over a wide surface area, unlike traditional cleaning products which kill bacteria on application. Fast forward five years later, Speco is now certified B Corp and has transformed from tech adoption to an innovation-driven social enterprise committed to triple bottomline: Good for People, Good for Planet, Good for Profit.

A business that creates long-term value, competes on trust and responsibility and is transparent and accountable for its actions and inactions.

This is the kind of business that consumers will be seeking out in the near future.

When environmental impact is unavoidable due to the business nature, how can the business do better?

For instance, the power sector contributes close to 40% of overall emissions in Singapore. How can the chief offenders mitigate the impact?

In Senoko Energy’s case, it gets itself ready by incorporating the ESG framework into the brand DNA. #TakeCharge, a master campaign was launched to orchestrate a concerted effort in initiating change and effecting changes along the value chain. Recognising the importance of a phased approach, Senoko Energy started with targeted B2B marketing by tapping on its circle of influence to call for change. With the groundwork set, the campaign officially kicked off with #CycleForChange, which injected purpose into the cycling boom, rallying everyday businesses and consumers to take charge of everyday actions as a collective.

The call for change garnered 5.99 million impressions, over 2.2k cyclists and 17 like-minded businesses and more. The inaugural virtual cycling event concluded with more than 1.1k cars taken off the road. The B2B2C strategy also won the recognition of the marketing industry; Silver for Best Event Branding and Bronze for Best Integrated Event Campaign at the recent Marketing Events Awards 2022 by Marketing Interactive.

Find out how your business can get started with the expertise of an ESG-centric creative consulting agency. Engage us in a conversation at hello@staging.dataflows.co.

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