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Friday, January 30, 2009

PepsiCo Outreach to Suppliers

Earlier this week I attended PepsiCo's Supplier Outreach Sustainability Summit at their beautiful New York campus. In addition to hearing about PepsiCo’s approach to sustainability, much of the overall event was given over to not-for-profit organizations such as Carbon Disclosure Project, EPA and Rainforest Alliance to present their wares to the audience. I presented a breakout session on using ICT technologies to reduce carbon footprint.

I was impressed with the event:

· Nearly 100 of their most significant suppliers attended.
· Senior level executives from PepsiCo, their Chief Procurement Officer and VP of Procurement Operations, gave substantive and compelling sustainability presentations, addressing the hurdles as well as the easy parts of implementing sustainability initiatives.
· PepsiCo described how they have addressed the intersection between their core business and sustainability issues. In addition to energy and water conservation targets, their objectives include rebalancing their product profile to reflect a much higher proportion of nutritional and healthful products (I think it was 50%) and reformulating many of their other products for improved nutritional profile. These are real core business initiatives.
· And this was all underpinned with a comprehensive approach from PepsiCo on how they are going to engage with their suppliers on improving sustainability. I even met a PepsiCo employee, a professional environmental operations engineer, whose job is to work with their suppliers as a free consultancy resource to help the suppliers improve the environmental sustainability of their manufacturing processes.

Of course, for a vendor this adds yet another item to the requirements that have to be met to serve PepsiCo. Moreover, PepsiCo is a major customer for many companies – so the need to follow their lead is not insignificant. This is the sort of leadership role that is required from large corporations. As long as this supplier outreach dimension of their sustainability strategy is consistent with the other dimensions of their strategy and as long as it doesn’t compromise equally important, but perhaps different sustainability objectives of their vendors, I welcome it.

Tuesday, January 27, 2009

Issue Advertising and the Role of the Sustainability Officer

In the DC Metro earlier this week , I saw the adverts that Marc Gunther refers to in his excellent blog post, Washington’s Coal Wars. Marc describes the advertising wars between the American Coalition for Clean Coal Electricity (ACCCE) and the ‘This is Reality’ coalition. These adverts add another category to the intersection between corporate sustainability and advertising. In this case ‘issue advertising’.

In these issue-based situations, the company or trade association wants to articulate the best possible sustainability perspective on its commercial position. The activist organization, ‘This is Reality’ coalition, wants to present the strongest possible sustainability counter arguments. And hopefully government is the honest arbiter, making decisions based on the best overall interests of the country.

What is the role of the corporate sustainability officer in these issue-based debates and within the context of our adversarial-based decision making system?

Some sustainability professionals are drawn to the social justice component of the role –while others perhaps want to be honest brokers and take an arbitration position. Many other sustainability departments sit within marketing or government affairs, suggesting more of a role of acting as a checkpoint and helping articulate the best sustainability position possible. In practice, I am sure that most of us have some of each in our role. Going further in defining the answer to this question will contribute significantly to external recognition of what it means to be a sustainability professional.

Friday, January 23, 2009

Sustainability in Corporate Advertising

Rather than Sustainability in Advertising, I should have titled my previous post Sustainability in Product Advertising.

The contrast is particularly evident if you look at the corporate level advertising in the Washington Post on Inauguration Day yesterday, targeted I am sure at the new Administration. There are many more corporate adverts than product adverts and they feature sustainability credentials much more heavily. For example, Nordstrom (Scholarship Program), Exxon Mobil (energy, environment and poverty), Lockheed Martin (national security and economic stability), Energy (energy availability), Monsanto (water and irrigation), IBM (environment, health, food…).

I am wondering if the focus on sustainability in corporate advertising, relative to the lower weighting in product advertising indicates a perception on behalf of companies that consumers really don’t care much. Or does it indicate that companies perceive that government cares a lot? Leadership in this area should come from companies and government equally, so on balance I think it is a good sign. Hopefully, consumer awareness will continue to grow in response.

Thursday, January 22, 2009

Diversity on the Mall

I went to the National Mall for the inauguration on Tuesday. For the record, despite having no ticket and no special connections, I got there, saw the whole thing on a big screen from the middle of the Mall and enjoyed the experience and camaraderie immensely. Just as I was thinking how exciting it was to see such a richly diverse group of Americans celebrating the event I realized that to some people I was part of the diversity too. The realization hit when someone asked to have their picture taken with me because they were so excited to find a Brit there. It was a great lesson in the different perceptions of diversity!

Wednesday, January 14, 2009

Sustainability in Advertising

How a company positions sustainability in advertising its products is likely to predominantly reflect the marketing team’s perception of how its customers rate sustainability in their buying decision. But corporate sustainability officers should be involved in how their company’s advertising portrays their approach to sustainability.

A look at the corporate adverts in Newsweek’s new year issue provides a great view of the spectrum of approaches.

Right up front with a paradigm changing approach, putting environmental sustainability front and center is an advert for Masdar City in Abu Dhabi, intended to be “the worlds first zero carbon, zero waste, car-free city powered by entirely renewable energy sources”.

ConocoPhillips and Shell have ads on clean energy. ConocoPhillips mentions carbon but has no reference to climate change. Shell’s ad takes more of a leadership position, talking specifically about climate change.

Sharp’s ad for Aquos TV and Toyota’s ad for the Camry lead on other product benefits, but include clear references to energy reduction and corresponding words and visual references to the environment in their marketing messages.

Interestingly, not least of all because many of them have plenty to say in this space, none of the tech company ads; Nokia, Bose, AT&T, Dell, Kyocera, Intuit, HP, contain any reference to environment or energy efficiency.

In the social sustainability space, Target has a four page ad focusing on traditional community investment and highlighting their significant employee, financial and in-kind contributions to local communities.

Bank of America takes a more contemporary approach to social sustainability. Rather than referring to their community service record, they highlight the dependency of the wellbeing of the company on the long term wellbeing of its customers ‘we care as much about helping to keep customers in their homes as we do in helping to get them there. If they don’t succeed, neither do we’.

None of the pharmacy ads (from Pfizer and Eli Lilly, Astra Zeneca) include sustainability angles. I am sure partly because the ads are more focused on product rather than company and because of the significant amount regulated information that has to be covered. Nevertheless, an interesting contrast.

Involvement from the sustainability team in advertising at the very least will ensure coverage of sustainability is consistent with CSR strategy. More ambitiously it will help drive a leadership role in sustainability rather than one that simply reacts to the market.

Friday, January 9, 2009

Ethical By Association

Does who we hang out with rub off on our image and should we take that into account as a customer criteria ?

I saw a TV ad recently for a heater called the HeatSurge . The ad featured that the heaters are Amish built. A bit more research established that the Amish make the fireplace surround, not the heater itself. But the vendor of the product clearly finds the Amish part of the story compelling enough to make it their prime USP. I guess the theory is that the Amish are good and trustworthy and focus on the basics of life, so this product that they are involved in making must meet the same criteria. Ethical by association.

But this works in reverse too. In this case have the Amish chosen their customer well and are they doing their own image any favors by association? In this discussion on Yahoo Answers a questioner asks about the HeatSurge heater unit itself. After a very comprehensive response, the questioner comments “I always thought Amish was God fearing people. It looks like they will scam you just like the News Papers and the Internet.”

Whether or not the questioner’s interpretation is correct, I doubt that the Amish are responsible for the overall sales message about the efficiency of the machine – they are only the supplier of the fireplace surround. But they have clearly been deemed guilty by association.

Coincidentally I heard an item on NPR a couple of weeks back about a mortgage loan officer in Amish country. “In this year of financial crisis, of storied old banks collapsing in hours, Hometowne Heritage has had its best year ever”. The bank had not suffered at all in the credit crunch because Amish culture sees defaulting on a loan as shameful so they only take out loans that they are confident they can pay back. A great example of the business benefits of bringing sustainability concepts into choosing your customers as well as your vendors!

These themes are relevant to large corporations as well. Stakeholders do judge companies partly by who we associate ourselves with. This can be an opportunity as well as a risk. And it applies not only to the suppliers we select, but to our customer relationships too. The idea of including sustainability credentials as a criteria in customer segmentation might be a bit exotic, especially in the current economic environment, but it can be a tool for driving sustainability improvement just like supplier criteria can be. It can also bring direct business benefit like the mortgage loan example illustrates and, who we hang out with does rub off on our image.