CIRCULAR ECONOMY IN BRIEF N. 19 | Environmental sustainability as a driver of corporate reputation

July 11, 2018

CIRCULAR ECONOMY IN BRIEF N. 19 | Environmental sustainability as a driver of corporate reputation

Our current cultural and historical epoch has a leitmotif of promoting a constant dialogue between business and consumers. This dialogue also encompasses the relationship between environmental sustainability and brand reputation, placing it in a position of prime lever to generate profitability over the medium and long-term. Why? Because sustainability issues count among the main drivers of brand reputation, second only to product quality. This is new: historically the two most important things for business reputation were the company’s prestige and its capacity to innovate

The reason behind the change lies not solely with the ever-shifting regulatory environment, but rather is consumer-demand led, sign of a marketplace which is ever more attentive to environmental issues. Between 2003 and 2010, the environmental sustainability index rose from 63% to 70% and the number of people declaring themselves “very aware” of environmental themes increased by 17%. In this way, sustainability has come to play a leading role in customers decision-making, whereby these people make great efforts to evaluate brand offerings, seek out information regarding a product’s green heritage and continue to be more and more selective in their choice of purchases.

This “informed consumer” is, by definition, demanding though on the other hand, is also inclined to spend more if she finds a product and brand more closely aligned with her values.

In Italy, for instance, 56% of consumers declare they are prepared to spend more if the product they are interested in has environmentally-friendly design and packaging. These “Green Economy” consumers are both offline and on, making use of both e-Commerce platforms for their purchases as well as the now ubiquitous social media networks, where they can share and request further information both among friends and connections as well as directly with the brand itself. This feature of the modern Green Consumer can itself be an opportunity to help cement the brand reputation.

To make the most of this opportunity, however, it is fundamental that communication initiatives be real, authentic, clear and believable. “Green Washing”, an infamous practice from the depths of the 1980s was an attempt to pervert and exploit customers’ growing environmental consciousness, however, the minute that customers notice a discrepancy between what the brand says and what it does, the negative effects far outweigh any potential benefits the scheme may have had.

Rather than one-off initiatives, such as installing solar panels, differentiated waste-collection, re-using waste paper and so on, genuine and successful Green Marketing should be based on a wide and integrated vision of the company’s entire business approach, that places sustainability at the center of the company’s values, beliefs and operations.