CorpComms Magazine

According to a recent survey from Defra on consumer understanding of green terms, awareness and understanding of green language is evolving rapidly. Research from Futerra in 2007 found that the term 'carbon footprint' was unfamiliar to most consumers and poorly understood. But in February 2011, 74 per cent of Defra's 2,000 respondents said they were familiar with the term.

The rise in awareness is due, to a great extent, to the influx in messages over the past few years from environmental groups - as well as businesses looking to bolster their brand by presenting a 'green' sheen to their reputations. But with understanding on the rise - and the fact that business is directly responsible for 65 per cent of the UK's emissions - what are the risks and opportunities for brands?

One of the key risks for brands in communicating their climate responsibilities lies in the severity of the issue of climate change within the minds of consumers. According to research commissioned by the Carbon Trust Standard, the majority of us believe that climate change represents the greatest environmental threat facing the world today. More than half (56 per cent) of the 1,000 adults surveyed are more concerned than they were five years ago about the impact of companies on the environment.

Talking but not walking

Marketers have long seen the reputational value of promoting environmental credentials. However, some brands haven't backed their communications strategy with a robust action plan. As a result, corporate 'greenwashing' has jaded the public into an atmosphere of cynicism. Just seven per cent now believe company claims of action on climate change and 66 per cent question whether companies are genuinely cutting their emissions when they make claims to have done so.

It's clear that the public are in a very uncomfortable place regarding corporate climate change. They understand the significance of the issue - they realise business is a major emitter - but are unclear as to the full extent, and are unsure what real corporate climate action looks like. In terms of brand loyalty, confusion leads to inquisitiveness and, given time, will lead to a backlash against corporates that fall short. It is no longer okay just to sit back with good intentions. If you don't stand for something, you stand for nothing.

But what impact does this mistrust have on brand value, and can companies achieve growth by taking action on climate change and winning back consumer trust?

The Carbon Trust research found the answer to be 'yes'. At a basic level, firms which measure their impacts, and commit to reducing them over time are at an advantage: 61 per cent of people are more likely to buy from companies with good reputations.

With the shop 'til you drop, credit fuelled consumer binge days past, and cash harder to come by, consumers are more discerning now about the brands they buy from. Brand loyalty isn't just about making a sale; it's inspired by long term engagement.

Reducing corporate climate impacts provides a key touch point in the customer journey, and sends a clear message. As the survey shows, 56 per cent of people are more loyal to brands that can show, at a glance, evidence of environmental actions. And 54 per cent want to work for companies which can clearly demonstrate their commitment to reducing their impacts on climate change.

BrandZ, the annual quantitative brand equity study run by Millward Brown for the last six years, echoes the Carbon Trust's findings. It found a direct correlation between firms that make it into the Top 100 Global Brands and businesses with a good reputation for environmental responsibility. On average, around 80 per cent of sales are generated by the product brand itself; comprising pricing and quality etc. And around 20 per cent of sales are directly linked to corporate reputation. In breaking the Corporate Reputation category down further, BrandZ found that, at least two per cent of sales are attributable directly to environmental reputation. This may not seem like a large percentage but for many companies this represents millions in sales.

Tapping into carbon literacy

Many leading brands are using sustainability to develop and differentiate new products and services. For example, customer feedback from the 11 million guests that visit Whitbread's hotels and restaurants annually showed a marked interest in the carbon footprint of the food they eat and the places they stay. So much so that Whitbread placed sustainability at the heart of its strategy and is striving to make its Premier Inn hotels the lowest carbon venues of their kind.

Similarly, in the transport market, Eurotunnel complements its reputation for providing low carbon channel crossings by independently auditing carbon performance and committing to year-on-year reductions. By displaying its achievement of the Carbon Trust Standard on their home page, they're consciously tapping into the mindset of carbon savvy business customers.

Walking but not talking

From a reputation perspective, there's another key pitfall beside 'greenwashing': that is investing in action on climate change which is not communicated or recognised by customers. Six out of ten respondents to the Carbon Trust survey said they need to see independent verification from a respected climate change body before trusting environmental claims; followed by 53 per cent only trusting scientific or academic endorsement. The greatest concern is that firms simply make one-off improvements to win publicity and then return to business-as-usual. The Carbon Trust Standard is only awarded to organisations that pass a rigorous assessment of their data, which proves that their carbon impacts have been reduced over a three year period. With this kind of credibility, businesses are in a strong position to market themselves over a long period to carbon conscious consumers.

Sustainability spreads

Over the last five years the pace of recommendation of brands by consumers has speeded up exponentially, partly due to the rise of social media. It's right for firms to crystallise their environmental actions on an annual basis in company sustainability or corporate reputation reports. But in the web age it is also vital that these positive actions are disseminated around the social web. The first place consumers turn for information is not company websites, but search engines, which provide a range of sources.

With the advent of social media, the actions of firms going 'above and beyond' to reduce their climate impacts are highly likely to be published online by consumers. One in three are more likely to opt into company news and announcements by 'following' or 'friending' businesses that can prove positive environmental performance. And one in five would blog, or write about them in web forums. A proactive approach to promoting environmental success online as well as monitoring to understand consumer sentiment about a brand's environmental behaviour is critical.

Brand owners are too often kept out of the loop on corporate environmental action until there's a one-off story to promote. However, given the need for businesses to win consumer trust, it's imperative for marketers to play a stronger role in driving change. CSR directors and environment managers are already lobbying boardrooms for greater investment in carbon reduction programmes from a cost and efficiency point of view. It's now up to marketers and communications directors to join them in influencing organisational change. After all, although business is responsible for 65 per cent of the UK's emissions, the reason they are emitting is to deliver products and services to consumers. Unless brands can prove they are reducing their impacts, they will not be able to educate consumers as to our collective responsibility for limiting climate change, or receive the recognition that real action deserves.

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