2020 was undoubtedly the year of the environmental target. News such as the UN reporting that commitments to net zero doubled in less than a year and the thousandth business signing up to the Science Based Target Initiative gave hope that businesses and governments alike are taking commitments to the environment more seriously.
However, I’d like to see 2021 evolve in to the year of environmental vision. The point is that environmental targets and vision are two side of the same strategic coin, but 2020 saw a disproportionate focus on setting targets at the expense of articulating visions.
While environmental targets are an important and effective way to drive accountability, manage risk and engage investor and regulatory audiences, environmental vision is the tool by which businesses can inspire action internally, engage their customers and market externally to unlock new growth.
Briefly, to avoid any doubt, when I refer to an organization’s environmental ‘vision’ I’m referring to the underlying purpose the business or brand has set itself with regards to the environment. This might take the form of articulating what future the business or brand wants to create or conserve (such as SAP’s vision of a ‘plastic free ocean’), or it might take the form of articulating a positive change that will benefit the planet (like KLM’s vision to ‘fly less’). This is different to when a business or brand says it has a ‘vision’ to be net neutral by 2030 – in real terms that is a target to achieve KPI X by date Y. A true vision is motivating, purposeful and exists beyond a set of metrics and KPIs.
I want to make clear that I am not against businesses and brands setting environmental targets. Quite the opposite – they are really important. However, some brief analysis of the world’s top 25 most valuable brands’ sustainability and ESG reports shows the scale of the disparity between the focus on target-setting versus the focus on vision setting in their strategies.
This is where the problem lies. Businesses and brands are taking an unbalanced approach to their environmental strategies. Across the 25 brands analyzed there was an aggregate 9:1 difference in the number mentions of ‘targets’ or ‘goals’ versus the number of mentions of ‘vision’ or ‘purpose’.
For as long as businesses and brands focus disproportionately on climate targets at the expense of climate vision, they will struggle to bring their people, consumers or market with them on the journey, thus missing the growth opportunities that are there for the taking.
Briefly, here is a summary of why I believe climate targets alone aren’t suitably engaging. Firstly, climate targets feel abstract – it is hard for the average person, be they consumer or employee, to understand (or care) what terms like ’net-neutral’, ’scope 3’ or ’offsetting’ mean (beyond a vague sense of ‘less carbon equals good’), nor the effort it might require to achieve such targets. I was on a call with a client recently who put it succinctly when they said: “In the last few years we’ve doubled the number of data centers we operate, but kept emissions flat, it’s been a huge achievement – but we can’t talk about it because no one will care.” Quite.
Secondly, the timeframes involved are meaningless – telling me you’ll be net-neutral by 2050 feels so far away as to seem likely, sure, but only because by 2050 I also expect to have a robotic butler, a hoverboard and be living on the moon. It’s too far away to feel relevant or real to the issues of today. Furthermore, in recent conversation with Geoff Kendall, CEO of think tank Future-Fit Foundation, he also raised the organizational challenge that these targets require “multi-decade investment, but this becomes difficult when leadership changes hands so often” – in effect, who actually has responsibility or accountability for such long-term targets?
Thirdly, the sheer number of environmental commitments from brands in the last 12 months has made it near impossible to cut through. Even those trying out variations on the theme to differentiate by talking about ’carbon positivity’, ’historic carbon removal’ or ’carbon innovation funds’ all feel like much of a muchness. I’ll save us both the indignity of making a ‘carbon-fire of the vanities’ joke here.
Finally, no one bloody believes the targets anyway. As Edelman’s trust barometer will tell you, trust in businesses (as well as governments, NGOs and media) is low, with none successfully being regarded as both ethical and competent – something you’d argue are prerequisites for setting climate targets: competent enough to achieve them and ethical enough not to fudge them. So, setting targets is just another thing consumers think businesses will weasel out of through a combination of doublespeak, dodgy carbon offsets and outright lies.
So, rather than telling consumers, employees and your market what your brand’s commitment is through a target they won’t understand or believe, show them your brand’s commitment through a clearly-articulated vision they can engage with.
The evidence suggests that when a brand sets a clear environmental vision it can be an engine for growth. For example, Patagonia’s ‘Don’t buy this jacket’ campaign to promote a vision of ‘slow fashion’ resulted in a 30% sales increase the following year. More recently, Adidas’ clearly-articulated vision of plastic-free oceans, supported via its partnership with Parley, helped drive a 10% increase in revenue to $6.4bn in 2019, leading CEO Kaspar Rorsted to state that sustainability is “one of the biggest, if not the biggest growth opportunity for us in the years to come”. And of course, we have all seen the evidence from Unilever about its sustainable living brands – those with clearly articulated visions linked to environmental and social change – delivering 75% of the businesses growth.
Interestingly, when we run the same analysis on these three companies’ ESG reports, we can see a significant difference in the delta between mentions of ‘targets’ or ‘goals’ versus ‘vision’ and ‘purpose’.
Adidas manages a modest 8:2 improvement in its ratio of mentions of ‘targets’ or ‘goals’ versus ‘purpose’ or ‘vision’ relative to the top 25 shown earlier; while Unilever achieves an impressive 6:4 split; and Patagonia remains a radical outlier talking more about its purpose than it does its targets.
Perhaps it is a self-fulfilling prophesy, but intuitively it makes sense that businesses more actively starting from – and actively talking about – their climate vision are the ones that are benefiting from growth connected to it.
A clearly-articulated environmental vision is also a key tool in talent attraction and retention. Evidence abounds for the importance of providing purpose and meaning for employees as a means to attract and retain them. And recent research goes as far as to suggest that 70% of employees are more likely to choose to work at a company with a strong environmental agenda. The age of the employer brand has reached a tipping point.
As I said at the start, setting targets is important, and the progress made last year in the sheer number of businesses making ambitious and far-reaching commitments is brilliant. But the hard work for marketers starts now. 2021 needs to be the year we begin turning these from numerical imperatives that describe what the business wants to achieve in to a purpose that inspires consumers, employees and the market.
Matt Rebeiro is a future strategist at Iris.