Judging from its branding and the griping of its competitors, Apple customers are hip, aware, and enlightened, yet its shareholders recently defeated resolutions to make the company more environmentally responsible and affirmed instead their uncool unconcern about anything other than profits.
There isn't just a disconnect here, but an entirely topsy-turvy arrangement:
- Companies that should embrace sustainability (or another tenet of social corporate responsibility, or "CSR") don't seem interested. Apple is the latest example; another would be ExxonMobil, whose shareholders defeated such behavior a few years ago.
- Conversely, companies that have no apparent reason to be "green" -- Walmart and Dow come to mind -- are aggressively active leaders in areas of which its end-users aren't even aware.
Why Isn't the Connection Obvious?
Consumers prefer to buy environmentally responsible stuff, if you believe what they say in surveys and polls, and subsets of them are all but committed to "natural category” products and services. Such observations have prompted brands to spend many millions on CSR campaigns in support of various environmental and/or social causes. The problem is that they don't sell anything:
- Consumers still rank price as the overriding factor in their purchase decisions, and recent history has shown us that it overwhelms every other brand attribute. There are exceptions, of course -- Toyota's Prius comes to mind -- but the premise that individuals are willing to pay a surcharge for doing right by the world remains unproven. Qualitative evidence of consumer interest in sustainability is like asking them if they support world peace.
- There's no correlation between sustainable activities and stock price or shareholder value; in fact, according to data in Dr. Nir Kossovsky's upcoming book "Mission: Intangible -- Managing Risk and Reputation To Create Enterprise Value," companies often escape any penalty for engaging in non-environmentally-friendly activities, and can be penalized if they do CSR-approved things!
- Doing sustainable things as marketing campaigns has contributed to a backlash, often called greenwashing, that tends to make consumers both more aware and justifiably suspicious of company’s that purport to do the "right" things for dubious or outright "wrong" reasons.
Why Does the Connection Work for Some Brands?
I'd put money on the likelihood that Walmart and Dow care about the planet like you or I care about keeping our refrigerators stocked with good beer; the Earth is a resource to be consumed and otherwise ignored. Yet these companies are doing more to preserve said resource than you could imagine: Walmart has practically invented the consumer florescent lightbulb business by requiring them to be stocked on its shelves (and likely doesn't pay a thousandth of a cent extra for doing so); Dow has a substantive multiyear commitment to become a better steward of the resources it uses (and probably cut some new deals thereby). Sustainability makes money for them:
- Walmart and Dow get accused, some would say fairly, for destroying the economies of communities and their environments, respectively, so investing in behaviors that avoid those pitfalls is simply good business strategy. I wonder how many good things the companies do in order to avoid getting regulated into them anyway?
- Profligate waste is dumb business, so these companies have made the connection between "sustainable" and "profitable" and are instituting programs that would be considered smart if they were named "Fred." Can reducing a carbon footprint be actually good for operations? I think Walmart and Dow are figuring out that the answer to such a question is yes.
- It's an investment in the future. Let's say there's another oil shock (all but certain), or the count of health issues that emerge from socially-damaging business practices increases (whether economic or biological)...and that there are companies that can sell sustainable products and services at the same prices as their wasteful competitors. This could be a true competitive advantage if they choose to market it sometime down the road.
I think that the CSR movement overall has done a real disservice to the causes it claims to support and the businesses it presumes to influence. By focusing on qualitative measures of consumer perceptions and relying on ephemeral brand associations, we marketers have misled the conversation into the realm of, well, conversation and good intentions, instead of putting it in the operational reality where it belongs.
We shouldn't be surprised that Apple’s shareholders could defeat a sustainability plan. The company seems to be running itself pretty damn sustainably already (and said it's already doing the right things for the right reasons), and I'm told that the shareholder resolution thing is a racket anyway, so perhaps it's not itself a directionally relevant indicator.
But until doing the right thing gets out of the hands of marketers and the good works lobby and into the fabric of real business strategy, sustainability deserves a down vote.
Image source: xotoko