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Airbnb Building Brand Value by Creating Authentic Connections with — and Between — Users

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This post is part of a series written by MBA and MPA candidates in Presidio Graduate School’s Managerial Marketing course, examining the role of marketing in advancing sustainability across all sectors.

Thoughtful content marketing strategies can help companies to promote their sustainability message, expand their customer base and build a loyal community around their brand. Airbnb has aligned smart content marketing with its mission, successfully connecting customer service and engagement with helpful and interesting content, which opens up different avenues for inbound marketing. Airbnb’s content marketing initiatives are a best-practice model for other brands trying to increase authentic connection with consumers.

The Internet has profoundly changed the way in which information is shared, and creative mission marketing has increasingly shifted to inbound techniques. To grow branding and audience, more businesses are finding success publishing original content rather than embedding advertisements within external content. Consistently creating valuable content through a variety of channels is a great way for companies to establish thought leadership and gain trust with customers. According to Forbes, content marketing will be the number one online marketing trend in 2014.

Airbnb, the community marketplace for listing and booking private accommodations around the world, last year expanded into the realm of content marketing with dedicated neighborhood guides and the creation of its Hospitality Lab. The Airbnb Neighborhood Guides provide destination-specific tips and information, which not only help advise users as they go through the booking process, but also extend Airbnb-consumer interaction. Users visit the site more frequently, before and after having made a reservation on the site. And the Hospitality Lab, developed by new Head of Global Hospitality Chip Conley, features an educational curriculum for Airbnb hosts consisting of offline workshops, online webinars and hospitality tips, with the goal of ensuring a level of consistency in guest experiences around the world.

The company also offers an informative blog, fun videos and recently introduced Airbnb Social Connections, which helps users to find a place to rent within their personal network.

Initiatives such as these can offer important insights for brands on how to build an innovative and authentic content marketing strategy:

  • Content is aligned with company’s vision and mission.Many marketers get so fixated on channels such as blogs and Facebook that they forget about the underlying mission of a company. However, the why must come before the what. Many marketers have no mission statement or core strategy behind the content they develop. According to Conley, Airbnb’s mission is not only to help users find places to stay, but also to connect people to unique travel experiences and even support cross-cultural understanding. The new content offered on the Airbnb site aligns with this community-driven mission.
  • The content creates real value. To develop a loyal following, content should involve relevant information that provides valuable insight or entertainment. According to Jay Baer, author of Youtility: “Smart marketing is about help, not hype.” Often, there is a temptation for brand marketers to use content channels to overtly promote the brand. When customers see just another commercial outlet, they are much less likely to trust the content, see it as a legitimate resource, or return in the future for more information.

In order to provide helpful content, it’s important to know the company’s core audience and make sure the information and resources address their specific needs, and Airbnb does a great job with that. The neighborhood guides solve several issues for users up front – they provide local information for an array of popular cities and help users make educated and informed decisions on choosing a neighborhood for their stay. Quality information about different neighborhoods also draws people who are not planning on booking a stay right now, but who might use the platform in the future.

  • Content and social media are inseparable. A company needs to create trust in order to leverage brand ambassadors. Social media, in the content-sharing sense, will only work if information and stories address customers’ pain points. If content is helpful, users will be excited to tweet it or share it on Facebook. Airbnb took this social currency and word of mouth a step further when it launched its Social Connections feature, which allows users to sync their Facebook accounts with their existing Airbnb account. Once connected, the tool shows if users' friends are connected to the host or have previously booked a place they are currently considering.

How Brands Can Get Under Our Skin

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There’s a house on Long Island that can keep you young. At least, that’s what the architects claim – and it’s no small matter in an aging world. If I asked you what you’d look for in your ideal home, you might reply ‘a space to unwind’ or ‘a little love and laughter.’ I’d be surprised if you came back with ‘rejuvenation’: a word used to sell face cream, not housing.

But perhaps we don’t give enough thought to the way in which our minds and bodies are constantly responding to the world around us. What an opportunity for brands! We may not know we want houses that keep us young, but it would make a great selling point in an estate agent’s window.

The Bioscleave House in New York was built by Madeline Gins, an American architect-artist, and her husband — the late Japanese architect Shusaku Arakawa. Undulating textured floors, curiously shaped rooms on split levels, windows where you wouldn’t expect and hard-to-reach light switches keeps residents on their toes, and an absence of closed doors forbids the sense of a private den. Comfort, its designers claim, is a precursor to death.

Vincent Stanley, Vice President of Marketing at Patagonia, agrees. “I think we’re too comfortable,” he told me, in an interview for my book, The Brand Strategist's Guide to Desire. “The opposite of comfort isn’t distress. We all know we feel better if we exercise, if we engage.”

Stanley wants people to associate the brand Patagonia with the stimulus of being in the great outdoors. “When someone walks into our store, I want them to feel a bit of relief from the street. I want them to feel that on the website, too.” You log on and find yourself gazing into a crevice with someone hanging off a cliff face. Scroll to the next clip and someone is plunging into a cool mountain pool.

If you’re in Paris before 9 March, there’s a show where you have to cycle vigorously to get a huge neon artwork to light up. It reads: “Actually doing the things I set out to do increases my overall levels of satisfaction.” Keep pedalling, a little harder, and it says, “Seek discomfort.” This is “The Happy Show” by Stefan Sagmeister, a companion exhibition to his film about the pursuit of happiness, which he sees more as an endurance sport than a destination.

Brands sometimes treat our sensory experience of the world as an afterthought: scented tissue paper to wrap your purchase, a colour that shouts out from the shelf. These little touches do make a difference, but do they go far enough?

Our aesthetics are incredibly important to us: They represent our mental and emotional engagement with our physical realities, and the desire for this to be a positive experience. One brand that is taking to heart the full sensory journey it can offer is the baby food specialist Ella’s Kitchen. It aims to help little people explore and expand their tastes from their very first meals — not just as each mouthful slips over their tongues, but in the colours, smells and even sounds of good, fresh ingredients. The website offers a range of playful ideas to help parents with the challenge of weaning — from making pasta-shape maracas to introducing new scents on bathroom sponges dipped in vanilla essence or lemon juice.

Another is the award-winning Indian interior design company Wrap. It caters to India’s growing upper class, which combines an appetite for contemporary design with a deep connection to ancient tradition.

“In India, we have old families with a very strong past that brings them from the villages to the urban centers,” founder Gunjan Gupta explains to me. “We believe in bringing their story to the forefront of the design process.”

She describes a renovation project that brought together pietra dura (artisanal stonework) from Agra and gilding from Jaipur, within the framework of vástu sástra— the Hindi science of construction to ensure rhythm and balance in life. At the heart of her design principle is the belief that everyone has their own aesthetic: If you’re able to get to this, she confides, then you can design something with longevity. “This is design for posterity, for future generations. It’s not a trend.”

Kids often get to know someone new by asking about their favourite colour. For brands looking to build relationships beyond the next season, it may not be a bad place to start.

This blog includes edited extracts from Chapter 3 of The Brand Strategist’s Guide to Desire by Anna Simpson, published this March by Palgrave Macmillan. Come to the book launch in London on 18 March!

Apple, SolarCity, San Diego International Airport Sign Climate Declaration

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Apple, SolarCity, San Diego International Airport, Sungevity and Sapphire Energy have joined with more than 120 California-based companies in signing the Climate Declaration, a business leader call to action that urges federal and state policymakers to seize the economic opportunity of addressing climate change.

Launched last year by Ceres and its business network, Business for Innovative Climate & Energy Policy (BICEP), the Climate Declaration has more than 700 signatories nationwide, including General Motors, Unilever, Gap, and eBay.

The California signatories added their own special message to the declaration for Washington:

“As the world’s 8th largest economy, California is a champion of clean energy progress and innovation,” states the declaration. “Thanks in part to its smart energy policies including its landmark climate law, AB32, California has been a global leader in job creation, clean energy investments and GDP growth.”

California leads the nation in renewable energy development, with more than 43,700 jobs in 2012 in the solar industry (one-third of all solar jobs in the U.S.) and more than 7,000 jobs in the wind industry. In 2013, the state doubled its solar rooftop installations, from 1,000 megawatts to 2,000 megawatts. It also ranks 48th in the country in per capita energy consumption, due in part to the state’s strong energy efficiency programs.

“The 140 plus California companies which have signed the Climate Declaration see the financial upside of tackling climate change today, both for their own bottom lines and the overall economy," said Anne Kelly, director of policy and BICEP at Ceres, a Boston-based nonprofit sustainability advocacy group. “We welcome them, invite others to come on board and applaud the state of California for its bold steadfast leadership on climate and energy policy.”

San Diego-based Sapphire Energy is pioneering an entirely new industry—Green Crude—that enhances and replaces petroleum-based products with a low carbon, renewable and scalable fuel. Unlike traditional biofuels, Green Crude products and processes are made solely from photosynthetic microorganisms (algae and cyanobacteria), using sunlight and CO2 as their feedstock. They are not dependent on food crops or valuable farmland, or use potable water. Sapphire has a research and development facility in Las Cruces, New Mexico, and is currently operating the first Integrated Algal BioRefinery in Columbus, New Mexico.

Many of the signatories also are engaging further with policy makers, Ceres says. Seventy percent of the major company signatories (those with over $100 million in annual revenues) have expressed their views on the need for climate policy by lobbying on Capitol Hill, sending a letter and/or engaging with the public through social media.

“We see the dire impacts of climate change happening now,” said Hans Cole, Environmental Campaigns and Advocacy Manager, Patagonia, Inc. “California’s decreased snow pack in the mountains and corresponding water scarcity will affect everyone. But, there is an opportunity to spur innovation, shift policy and steer a different course. We will continue to support this movement and effective solutions at the state and federal levels.”

Last October, twenty major U.S. brands including Starbucks, Unilever and Mars, Inc. publicly called for the White House to follow through on climate change preparedness efforts outlined in the Climate Action Plan announced by President Obama on June 25. The letter’s corporate cited the economic impacts of severe weather events on business operations and called for ongoing and significant investments to be made in strengthening climate change resiliency both in the United States and the world’s most vulnerable countries.

Last year, leading scientists from around the world said they are now 95 percent confident that human influence is the dominant cause of global warming, according to the Fifth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC). Nevertheless, a 2013 Climate Policy Initiative (CPI) report said that global investment in climate change plateaued at $359 billion in 2012, around the same as the previous year. The International Energy Agency (IEA) says the world needs to invest at least $5 trillion by 2020 to limit the effects of global warming.

FSC Suspends IKEA's Certification After Discovering Use of Old-Growth Forests in Russia

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While Ikea has been leading the charge in its use of sustainably sourced cotton and promotion of LED lighting, it apparently should pay closer attention to its wood sourcing — the company recently got a slap on the wrist from the Forest Stewardship Council (FSC), which suspended IKEA’s certification after discovering that the Swedish furniture giant’s subsidiary, Swedwood, has been cutting 600-year-old trees in Karelia, Russia, near the border of Finland.

Environmental organizations have voiced their concern about IKEA’s logging of old-growth forests in Karelia for several years, according to Protect the Forest, Sweden (PFS), which apparently last year handed the company over 180,000 signatures and a joint statement with demands and suggestions for how it should transform its forestry practices and preserve valuable old-growth forests. Despite the withdrawal of IKEA’s FSC certification due to logging of key biotopes, insufficient dialogue, lack of environmental consideration and work environment issues, PFS says FSC is not addressing the core issues.

”The report raises several deficiencies, but does not describe the main problem, which is that pioneer exploitation, with fragmenting and breaking into the last intact forest landscapes and tracts, does not fit to FSC’s principles and criteria. Thus we believe that the FSC label is still far from being a guarantee for sustainable forestry,” says PFS' Linda Ellegaard Nordström. “Together with Russian environmental organizations we have suggested to IKEA that they, as an influential multinational corporation, should set a good example by announcing that they will no longer log or buy timber from intact old-growth forests, whether the forests are certified or not.”

Karelia is home to one of Europe's last old-growth forests and Swedwood has permission to log 700,000 acres in the region, provided it avoids old trees and does not clear steep slopes, which erode without tree cover, according to the Daily Mail.

An IKEA spokesperson told the UK paper: “'Our FSC certificate for Karelia has been suspended. We see the suspension of the certificate as highly temporary.

Wood is one of our most important materials and it is used in many of our products. For us it is important to offer home furnishing products of good quality to low prices. However, a low price must never be at the expense of quality of production conditions.

“A majority of the deviations have already been corrected and our full focus is now on correcting the remaining deviations and reinstating the FSC certificate urgently. And whilst disappointed we also believe that the certificate suspension shows that the FSC system working. We take our responsibility for the forests and the people who work there very seriously.”

Days after the announcement of the certificate's suspension, IKEA announced that it will shut down its operations in Karelia during 2014.

“We would have liked to see IKEA take responsibility and leave the old natural forests alone, and move their production to secondary-growth forests in Karelia, in consultation with the government of Karelia and other concerned stakeholders,” said PFS’ Viktor Säfve.

"Once we have transitioned our operations, we will continue to support the development of responsible forest management in Russia, which will also have positive impact on the Karelia region,” the IKEA spokesperson said. “We will do this through organizations such as the FSC.”

To learn more about how companies worldwide are cleaning up their supply chains, check out our editorial channel.

Study: Most Americans Prefer Female Leadership Styles

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A majority of American workers prefer executives that utilize newer, more collaborative leadership styles, and 7 out of 10 associate these leadership styles with women, according to a new study by Pershing LLC.

Conversely, some 77 percent of respondents attribute “traditional” leadership approaches, such as giving orders and employing the reward/punishment model, with men.

Though women make up nearly two-thirds of the US workforce today, men continue to outnumber women in key leadership roles, the study says. Both men and women agree there are not enough women in positions of power in the workplace, but when asked about women in specific roles and occupations, a majority of Americans fall back on traditional gender roles — despite the preference for management styles that people more strongly associate with women. This trend continues despite the fact that women are outpacing men in earning college degrees and a greater percentage of women are becoming the primary income earner in the household.

The survey found a correlation between age and attitudes toward women at work. While conventional wisdom says that young people are more open to new ideas, the results reveal that the older the individual, the greater the comfort with seeing women in leadership positions. The study suggests this pattern could be a result of real-life experiences in working with women in various occupations that have helped break down the traditional stereotypes.

“Good role models are the key to solving the gender paradox,” said Kim Dellarocca, global head of practice management and segment marketing at Pershing. “If exposure to individuals who defy stereotypes helps mitigate biases, then this could be a promising strategy for winning greater acceptance of women in traditionally male leadership roles.”

The survey was conducted online within the United States by Harris Poll on behalf of Pershing, from January 17-21, 2014, among 2,047 adults ages 18 and older.

Last year, Pantene Philippines launched a Labels Against Women campaign to illuminate the dichotomy by which certain gender characteristics are perceived. The video highlights examples where the same behavior can be perceived as a positive characteristic in men, but when exhibited by a woman is a negative trait.

Recent years have seen more and more women rising to positions of corporate power. In December, Mary Barra (pictured) became the first female CEO in GM’s history, and the first woman to lead a major automaker.

IBM, Kohl's, Sprint Honored by EPA for Climate Leadership

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IBM, Sprint, Boeing and several other brands were among this year’s winners of the EPA's Climate Leadership Awards. Nineteen awards were given to 15 organizations and two individuals in the public and private sectors for their leadership in addressing climate change by reducing carbon pollution.

The EPA says the awards recognize and incentivize exemplary corporate, organizational and individual leadership in response to climate change. Award recipients represent a wide array of industries, including finance, manufacturing, retail, technology, higher education and local government. The 2014 Climate Leadership Award recipients are:

Organizational Leadership Award: City of Chula Vista; Sprint; and University of California, Irvine

Individual Leadership Award: Sam Brooks, Associate Director, D.C. Department of General Services; Robert Taylor, Energy Manager, Washington Suburban Sanitary Commission

Supply Chain Leadership Award: Sprint

Excellence in Greenhouse Gas Management (Goal Achievement Award): Boeing, Caesars Entertainment, Cisco, Ecolab, The Hartford, IBM, Johnson Controls, Kohl's, Mack Trucks; and Novelis

Excellence in Greenhouse Gas Management (Goal Setting Certificate): Fruit of the Loom, Hasbro and Kohl's

“Our Climate Leadership Award winners have made great strides in reducing greenhouse gas emissions, and are providing leadership nationwide in many sectors of our economy,” said Janet McCabe, acting assistant administrator for EPA’s Office of Air and Radiation. "Their innovative approaches and commitment to reducing carbon pollution demonstrate that efforts to address climate change are repaid by saving money and energy, while supporting more livable and resilient communities, and a healthier, better protected environment now and for future generations."

“Communities and businesses are already experiencing the impacts of climate change, and we need to act now to protect both our environment and our economy,” said C2ES President Eileen Claussen. “These companies, organizations, and individuals demonstrate that we can save energy, reduce emissions, and take decisive steps toward a low-carbon future. We hope their accomplishments will serve as an example for others to follow.”

The EPA says the recipients exemplify what President Obama’s Climate Action Plan hopes to achieve, for the federal government to work with all stakeholders to take action to cut the carbon pollution that fuels climate change. Late last year, some 20 major U.S. brands including Starbucks, Unilever and Mars, Inc. called for the White House to follow through on the plan. The corporate signatories of the letter cited the economic impacts of severe weather events on company operations and called for ongoing and significant investments to be made in strengthening climate change resiliency both in the United States and the world’s most vulnerable countries. Many of the signatories are members of Business for Innovative Climate & Energy Policy — a group of businesses advocating for meaningful energy and climate legislation.

Apple, SolarCity, San Diego International Airport, Sungevity and Sapphire Energy recently joined with more than 120 California-based companies in signing the Climate Declaration, a business leader call to action that urges federal and state policymakers to seize the economic opportunity of addressing climate change. Launched last year by Ceres and its business network, Business for Innovative Climate & Energy Policy (BICEP), the Climate Declaration has more than 700 signatories nationwide, including General Motors, Unilever, Gap and eBay.

Greenpeace to P&G: Enough with the 'Dirty' Palm Oil

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Greenpeace launched another massive campaign this week, this time demanding Procter & Gamble end its role in rainforest destruction through its careless sourcing of palm oil.

A yearlong investigation into "P&G's Dirty Secret" by the corporate watchdog says the maker of dozens of everyday household and personal care products including Olay, Head & Shoulders and Pantene is sourcing palm oil from companies connected to substantial clearance of endangered orangutan habitat in Indonesia, the report also reveals that multiple traders supplying P&G with palm oil buy from a company implicated in a police investigation of numerous orangutan deaths.

“Procter & Gamble is making everyday Americans complicit in the destruction of rainforests by not responsibly sourcing palm oil, an ingredient in products like Head & Shoulders and Oil of Olay,” said Greenpeace palm oil campaigner Joao Talocchi. “Household names like L’Oréal, Nestlé and Unilever have already promised to clean up their supply chains. There’s no reason for P&G not to follow suit.”

While a relatively small user of palm oil — P&G says its use accounts for roughly 1 percent of palm oil and its derivatives — the oil is found in a variety of the company’s beauty and household care products, including detergents, shampoos, hand and body cleansers, bar soaps and color cosmetic products.

P&G dirty palm oil

Image credit: Greenpeace

Greenpeace says land used for palm oil cultivation owned by the BW Plantation Group, one of several companies connected to P&G’s supply chain, was investigated over the course of several field trips. Investigators documented an orangutan skull buried in a shallow grave within sight of Tanjung Puting National Park (which is famous for orangutan conservation) and further orangutan remains several months later. 

“Greenpeace has been warning P&G about the devastating effects of irresponsible palm oil production since 2007,” said Talocchi. “There are ways of producing palm oil that won't destroy the habitat of the last remaining Sumatran orangutans and tigers. As an organization that buys thousands of tonnes of palm oil each year, P&G can be part of the solution by insisting on palm oil that’s 100% free of forest destruction.”

In October, Greenpeace released the report A Licence to Kill, which linked a host of companies, including P&G, to the destruction of critical Sumatran tiger and orangutan habitats through their association to Wilmar International, the world's largest palm oil trader, which finally announced a No-Deforestation Policy in December following years of pressure. Similar recent commitments from Hershey and Kellogg continue to highlight the importance of a comprehensive approach to responsible sourcing of this ubiquitous ingredient.

“Progressive palm oil producers in the Palm Oil Innovation Group, along with ambitious commitments from big palm oil players Golden Agri-Resources and Wilmar, prove that there is a business case for responsible palm oil,” said Bustar Maitar, head of the Greenpeace Indonesian Forest Campaign. “There is no excuse for companies like P&G, as well as Reckitt Benckiser and Colgate-Palmolive to delay immediate action on deforestation.”

Palm oil production is the biggest driver of forest destruction; Indonesia's forests are disappearing at a rate of more than nine Olympic swimming pools each minute, according to Greenpeace. 

To learn more about how companies worldwide are cleaning up their #SupplyChains, check out our editorial channel.
For more examples of how NGOs such as Greenpeace are driving #BehaviorChange, check out our editorial channel.

The Green Tea Party Movement

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I have a keen appreciation for the challenges of convincing people to choose clean power over traditional fossil fuel energy. Clean energy has typically been seen as the choice of “liberals” (tree huggers) versus “conservatives” (drill, baby, drill!). Those days are over, just as gone as leaded gasoline — although you might not know it based on some of the dumb rhetoric still spewing from the ideological smokestacks in Congress. It turns out that time, technology and storytelling have shifted the tides in favor of the adoption of clean power by conservatives and liberals alike. 

For proof, sip some “Green Tea.” The New York Times reports that some elements of the Tea Party have joined forces with the Sierra Club to find common ground and support solar power.

This seems about as likely as Rush Limbaugh getting married to Al Gore (mental picture: photo of the happy couple kissing on the beach in Maui). What would make these two fall so desperately in love? It’s called “free market energy.” This is the successful reframing of the clean energy debate through a conservative lens. Utilities in some parts of America are trying to force solar energy users to pony up more money to help pay for the operation of the electric grid. To conservatives, this is seen as another kind of tax, perhaps the filthiest word in the English language.

Choosing solar and being more independent of the grid means freedom, the most lovable word in the English language. The icing on the Al and Rush wedding cake is that domestically produced energy translates into less imported fuel and, hence, greater American energy security. 

This shift in perception will help guide more effective directions for green marketing, including:

Flag waving. Ads for American-made cars have often featured flag-waving, a blatant plug to buy American that’s obviously designed to appeal to our patriotism. Even given the fact that so many solar panels are made in China, I suspect that we’ll see more of the red, white and blue associated with the freedom to choose our own energy.

Green is the new black. Clean energy will be seen as more fashionable, in the same way wearing nice Levi's is fashionable. The brand says “American” (so what if they’re made in Vietnam or wherever). So I’d expect more people to proudly wear their solar and wind choice on their sleeve, regardless of which party they belong to. 

Declare independence. More marketers will create overt appeals to our sense of independence and freedom. This will work even in places like New Hampshire, which isn’t exactly a bastion of environmentalism. Their state motto — “Live free or die” — is something they really live by (or die by since motorcyclists aren’t required by law to wear helmets). So picture a postcard direct mail piece for solar installation with the headline “Live free of your electric company.” Sign me up!

The wedding of conservative values with clean energy is great news for our country. Homeowners and businesses can save money on their electric bills; we can be free of centralized energy grids that charge extra fees; we can be more secure as a nation. And oh, by the way, it’s reducing the carbon pollution that’s causing climate change. Rush and Al, let’s have a toast and raise our cups of green tea together. May the sun always shine on your love.

This post first appeared on MediaPost on February 26, 2014.


Great Brands Never Have to 'Give Back'

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A recent headline, “JCPenney Releases 2013 Sustainability Report,” reads like the punch line to a bad joke. Apparently the struggling department store company, which is closing 33 underperforming stores and incurred a net loss of nearly $500 million in its last reported quarter, felt it was important to promote a report detailing its sustainability activities. What JCPenney probably intended as a reassuring message about the company came off more like an effort to distract people from the realities of its fundamental business problems.

This is only one of countless examples of the problem with most corporate social responsibility (CSR) efforts these days. A few years ago the West Coast hamburger chain Carl’s Jr. launched a “Pink Star Campaign” to raise funds for the National Breast Cancer Foundation. What sounded on the surface like a noble effort to show the company’s concern for women, however, failed to square with the chain’s long-standing advertising strategy of appealing to young men by portraying scantily-clad females suggestively eating its products.

Companies seem to be using CSR efforts to counteract or distract attention from the negative toll they exert on society through poor treatment of their workers, poor stewardship of the earth’s resources, poor management of investors’ dollars, or, even simply, poor customer service. It’s as if giving back could make up for taking something away in the first place.

Consumers aren’t falling for the trick. The Reputation Institute reports that the 100 companies which comprise its RepTrakTM index spend millions of dollars per year on CSR activities, but only 6 percent of consumers consider those companies to be acting as strong and good corporate citizens — and 60 percent of consumers say they’re not sure if the companies are to be trusted.

Even well-run, well-intentioned companies get it wrong. They choose to support external programs and to donate to charitable organizations instead of considering how they themselves could become a force for positive social change.

But a different development is emerging in the area traditionally known as CSR — one that is exemplified by efforts such as GE’s Ecomagination project, which involves developing alternative-fuel engines and other products that address today’s environmental crisis and drive economic growth. Or Starbucks’ community stores, which serve as hubs of community service and training programs for their neighborhoods. And Coca-Cola’s 5by20 initiative, which empowers female entrepreneurs in developing countries to operate neighborhood stores that sell its products and create an upward spiral of economic development.

These and other great brands are making positive social change without engaging in typical CSR activities. To make a significant, sustainable positive impact on society, they are re-examining their business models, redesigning their supply chains, reinventing products, and rethinking what they sell and how they sell it. They are looking for ways to create value for everyone who’s involved with their business customers, employees, suppliers, communities and shareholders. They’re redefining CSR as "CSV": creating shared value.

For great brands, CSV doesn’t simply draw upon the company’s innovation capabilities. CSV uses the power of the company’s brand to inspire change and produce an overall beneficial impact on society. Great brands seek to create shared value by establishing brand relevance in a diverse and increasingly resonant set of areas — from industry to community to target customer, brand positioning, and ultimately values. The outcome is increased brand salience and resonance on multiple levels with multiple stakeholder groups.

Doing well by doing good is not a new idea. What is new is the brand integrity with which it is now being pursued by leading brands. Great brands such as IKEA explore the societal and cultural relevance of their brands to identify ways to create shared value.

From its humble beginnings in post–World War II Sweden, IKEA has been on a brand mission to improve people’s lives. Widespread accessibility through low prices is a key element of fulfilling this mission. So instead of using design to justify higher prices as most companies do, IKEA operates in exactly the opposite way. IKEA designers start their design process with a functional need and a target price and then use innovative, low-cost manufacturing processes to create the products. IKEA’s design philosophy extends to distribution, where it designs products so they can be transported and stored in flat packs, which lowers prices even further. And its self-serve stores save labor costs. By innovating throughout many aspects of its operations, IKEA fulfills its brand vision of providing products can be purchased and enjoyed by as many people as possible.

Like other great brands, IKEA doesn’t think about adopting socially beneficial practices as obligations, activities that every respectable business is expected to do. It seeks out opportunities, strategies it wants to implement because they are good for everyone involved in the business. And it uses a different decision filter about how to make a positive impact, from taking on responsibilities— discrete initiatives that are to be completed — to achieving relevance— ways to nurture and sustain valuable connections with all its stakeholders.

Great brands are ushering in a new age by aligning their social efforts with their brand strategies and business operations. That way, they don’t need to take with one hand and give back with the other.

This post first appeared on the HBR blog on February 4, 2014.

Beyond Apparel: Creating Sustainable Value Chains in Other Industries

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This post first appeared on CSRwire's Talkback blog on January 21, 2014.

Part IV in the Creating Sustainable Apparel Value Chains series; see parts onetwo and three.

Alunorte is the world largest alumina refinery. Strategically located near high-grade bauxite deposits in Brazil, it accounts for 7 percent of global alumina refining capacity, producing roughly 6Mt of alumina per year following a $2.2 billion renovation in 2008. After heavy rains in April 2009 exceeded Alunorte’s capacity to retain the red mud, bauxite residue spilled into a neighboring river. Alunorte was subsequently fined $10 million.

The extractive industry, which is comprised of companies such as Alunorte, is just one example of the many industries that make heavy use of finite natural resources, energy, and low-skilled labor. While Creating Sustainable Apparel Value Chains focuses on the global textile and garments industry, its systems approach that utilizes different levers of intervention to collectively achieve industry transformation can also be applied to other industries.

Common to all of these industries is the need for increased resource productivity and a shift to a circular economy model. Society is sandwiched between the unfolding effects of climate change and resource depletion, even as resource needs continue to grow. Estimates indicate that food caloric consumption could increase by 24 percent, food spending by 57 percent, packaging by 47 percent, and end-of-life materials by 41 percent from 2010 to 2025. The implications of this trajectory under the current population growth scenario are staggering, and will require a redesign of value creation and resource use processes to meet the demands of our future, reconciling finite resources with unlimited wants.

From a One-Way Street to a Circular Economy

The framework presented in Creating Sustainable Apparel Value Chains shows how pulling a number of key levers — including fostering total resource productivity and transparency across the entire supply chain, (impact) investing to upgrade industry infrastructure, improving working conditions, and replicating best practices — could help to hasten the ascent to industry transformation in the global apparel industry.

But in response to growing resource constraints, production in a variety of industries (beyond just apparel) is now gradually shifting to a circular model (i.e., from cradle to cradle instead of cradle to grave). This means that attention is increasingly focused on the total resource productivity of the factors of production, including materials, product and process innovation, and the avoidance of unnecessary waste (e.g., in packaging, as well as the reuse of waste and extension of the product lifespan).

Included here are a number of industries.

  • Fast-Moving Consumer Goods: Fashion and other fast moving consumer goods (FMCG) industries are expected to move in the near term from the current model where 80 percent of consumer goods are not recovered (and 18 percent recovered for decomposition, and 2 percent for reuse), to a model where non-recovery drops to 50 percent. With this development, the shift to a circular economy will result in a $595-705 billion cost savings opportunity, of which 10 percent will be in clothing. Some countries have already made progress in this regard and have high collection rates of used clothing (i.e., the UK with 65 percent).

    Two circular models show particular promise in apparel: optimizing end-of-use by raising collection rates and recycling, and identifying ways to have clothes circulate longer via collaborative consumption models; radically greater resource efficiency in the production process could serve as a third circularity model. This logic can be applied to any fast moving consumer good.

  • The Electronics Industry: The electronics industry covers everything from computers, mobile phones, and televisions to name just a few products, and is set to reach $1.4 trillion in turnover by 2015. Next to poor working conditions in many producer countries, electronic waste is a growing issue because of the use of toxic chemicals and low current rates of recycling. Global consumption of electronics results in 50 million tons of electronic waste annually. Instead of being recycled in main consumer markets, two-thirds are exported to developing countries, including to places where informal workers separate out valuable metals such as copper and aluminum under unsafe working conditions. Enhancing resource productivity is a logical next step.
  • The Commodities Industry: The situation in the commodities industry is even more acute. Valued at nearly $900 billion in 2010, the extractive industry provides the foundation for the products that shape our lives. But the environmental impact of the extractives industry cannot be underestimated. Working conditions are often unsound, particularly as mining has migrated in many instances from high-cost locations (with high-labor standards) in advanced economies to emerging markets. Operations are often located within close proximity to environmentally sensitive areas. Geostrategic tensions resulting from the attempts of the world’s main powers to guarantee preferential long-term access to vital commodities further complicate the picture.

Nevertheless, a social and environmental agenda is possible for commodity businesses, as outlined in a corresponding study by a co-author of this blog post. The work of the International Council on Mining and Metals (ICMM) and the set of 10 Sustainable Development Principles it adopted in 2003 to provide a strategic framework for industry upgrading offers one route for improved practice.

Adjustment and industry upgrading will require up-front investment, but can also drive resource efficiency and social performance dividends. As we covered in a previous series for CSRwire, impact investing has the potential to be one of the mechanisms to finance innovation in the production of goods and services with the longer-term perspective required to transition to sustainable economic growth.

Sheikh Zaki Yamani, Saudi Arabia’s former oil minister and the face of the Organization of the Petroleum Exporting Countries’ (OPEC) oil embargo in 1973, famously argued that the “Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.” As the report shows, a systems perspective that strategically pulls key levers for industry transformation is our best shot at a sustainable future.

First Lady Proposes Canning Junk Food Marketing in Schools, Unveils Updated Nutrition Labels

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It’s been a busy week for Michelle Obama, as the First Lady unveiled proposals that would change the way we learn about food — both bold moves that would involve sweeping changes that would prove “a big deal” if implemented.

To celebrate the fourth anniversary of her Let's Move! initiative this week, Michelle Obama made further strides in her efforts to eliminate the marketing of junk food to children. Following recent victories in which Let’s Move! partnered with “Sesame Street” to use the likenesses of its characters to promote fruits and vegetables, and a partnership with Subway to promote healthier food to kids, Mrs. Obama proposed on Wednesday new “school wellness guidelines” that include a ban on ads for sodas and unhealthy snacks in public schools. 

"Our classrooms should be healthy places where kids are not bombarded with ads for junk food," Obama said during the White House event. 

Joining Mrs. Obama for the announcement, US Agriculture Secretary Tom Vilsack elaborated by saying the new rules eliminate marketing for products that can’t be sold in schools. "If you can't sell it, you ought not to be able to market it," he said. Vilsack noted that food and beverage companies spend $149 million a year marketing their wares to kids in public schools, with candy and snack food manufacturers and fast-food chains being the biggest spenders, some going so far as to offer coupons for items such as pizza for reading books. As of now, California and Connecticut are the only two states that have banned the sale of soda and junk food from public schools.

Then on Thursday, Mrs. Obama unveiled the first updates in 20 years to food nutrition labels. The proposed updates include bolder calorie listings, eliminating and adding certain nutrients with daily value percentages, dropping the requirement to list “calories from fat,” making serving sizes larger (considered more reflective of how Americans actually eat), and separately listing added sugars on top of naturally occurring sugars. She also presented an alternate label, which if implemented would indicate specific nutrients that people should avoid overconsuming and others that people should get minimum daily amounts of, along with the corresponding percentages that food would contribute.

During the announcement, the First Lady touted the changes as “a big deal, and it's going to make a big difference for families all across this country.” 

Not surprisingly, reactions to the proposed changes already run the gamut. “The Grocery Manufacturers Association and other industry groups have said they are committed to working with the administration to help Americans make healthier diet choices,” Ariana Eunjung Cha writes in the Washington Post. “However, as the new labels were being developed, they expressed strong objections to some of the FDA’s ideas, especially the addition of a line for ‘added sugars.’”

On the other hand, Cha says, “health advocates who have been asking for the changes for over a decade said they were generally pleased with the FDA proposal, but said there was more work to be done.”

Once the FDA reviews the proposed updates and makes a final ruling, food companies would have two years to implement the new labels.

"Everyone in the industry is going to be affected," said Regina Hildwine, senior director of science policy and labeling and standards at the Grocery Manufacturers Association told Politico. "Everyone in the industry is going to have to change their labels. It’s a very big deal. It’s very expensive."

In August, members of the Grocery Marketing Association and the Food Marketing Institute, with the help of BBDO, Edelman and FoodMinds, launched a $50 million revamp of the 2011 Facts Up Front campaign to highlight nutrition information by moving it to the front of food packages. Major food companies including General Mills, Kraft Foods Group, Mondelez International, Kellogg and Hershey signed on to participate in the program, which GMA estimates was projected to include 70 to 80 percent of products from participating companies by the end of 2013.

 

UPDATE: Long John Silver's Sustainable Fish Campaign Not a Fish Tale After All

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As part of a recent brand relaunch, Long John Silver's (LJS) — the largest seafood restaurant chain in the US — is on a mission to get more US consumers to "Think Fish."

The new campaign promotes seafood as a dining option that’s healthy for people and for the world at large: Two new TV spots point out advantages of fish over meats such as beef and pork, while a third, called "Final frontier," shows cows confined on a farm while a narrator asks, "Anyone ever heard of free range? Get your next meal from the real frontier — fish sustainably harvested from the wildest place on earth."

The sentiment behind the message — promoting seafood as a more sustainable protein source than land-based meats — is true in the best-case scenario, where the fish is responsibly sourced, and one that is smart to push to American consumers, who eat much more meat than fish.

In a post last week, I noted that on the “Think Fish” campaign page on its website, LJS asserts that all of the fish that it serves is “sustainably caught and harvested.” Specifically, the chain says it gets its wild-caught fish from “the deep waters of the Bering Sea” and harvests its lobster from “the icy shores of Northern Europe,” and a spokesperson told Ad Age that “non-core items such as shrimp are farmed.”

No further supplier information is available, but the site goes on to assert: “We continually look to partner with certified and sustainable suppliers in order to provide the best tastes the ocean has to offer. In 1989, we were the first fish house to adopt Alaska Pollock to curb over-fishing in the Pacific. Plus, we championed the 1998 American Fisheries Act that served to create quotas for commercial fishing.”

In my piece last week, I took LJS to task for the lack of transparency in the face of what is essentially its effort to draw the public’s attention not just to the health and sustainability benefits of seafood in general, but to LJS’ offerings in particular. The ambiguity of the messaging and apparent lack of certifications to back up LJS’ sustainability claims raised some red flags, especially since a growing number of  retailersbrands and suppliers have recently committed to sustainable fishing practices, many of them through certifications or partnerships with organizations such as the Marine Stewardship Council (MSC) and FishWise. Even McDonald’s has committed to using only MSC-certified Pollock in its Filet-o-Fish sandwich and Fish McBites. I asserted that certifications, while not always a guarantee of best practice, provide a level of oversight that consumers trust; by touting its sustainability and not providing any information on its supply chain, LJS is setting itself up for additional scrutiny.

In response, a representative from the restaurant chain promptly contacted me to inform me that the company’s two primary suppliers — Trident Seafoods and American Seafoods Group — are MSC-certified, which an MSC representative was kind enough to confirm. And a subsequent look at the types of fish being sourced against the Monterey Bay Aquarium's Seafood Watch list confirmed that all of LJS' primary fish varieties fall into the list's "Best Choices" or "Good Alternatives" categories.

LJS CMO Charles St. Clair also had this to say: “Think Fish is a communications platform through which we can communicate about the many changes happening at Long John Silver’s. Sustainability of our seafood is a topic that consumers have become more interested in recently and we’re pleased to share information with them. All our wild caught fish, clams and crab cakes, which represent the majority of our seafood products, are sourced only from suppliers who are certified by the Marine Stewardship Council (MSC). The fisheries where our Alaska Pollock is wild caught are managed fisheries, which ensure the viability of the fish stocks, prevent overfishing and protect other species of fish. Our shrimp only comes from sources that meet the certification requirements from either the Aquaculture Certification Council or the Best Aquaculture Practices (BAP).”

St. Clair recently admitted to Yahoo! News: "Our fish has always been sustainable, and we really haven’t told that story sufficiently to our customers in the past." Between a significant upward trend in environmentally conscious eating and the growing consumer demand for corporate transparency, I suspect more discerning foodies will appreciate readily available information on responsible dining options, especially in places such as Long John Silver’s, where you might not expect to find them.

New Report Maps Size, Scope, Disruptive Potential of Sharing Economy

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Crowd Companies, a brand council primarily focusing on the collaborative economy movement, and Vision Critical, a consultancy that specializes in helping companies glean pertinent stakeholders insights, have partnered on a new report, Sharing Is the New Buying: How to Win in the Collaborative Economy, which for the first time maps the size and characteristics of the movement.

Based on responses from more than 90,000 Internet users across the US, UK and Canada, the report, released today, concludes that sharing online through sites such as Airbnb, Über and Yerdle is growing, mainstream, pragmatic and satisfying, and as a result, has become a competitive threat to large corporations.

Also known as the sharing economy — the sharing or trading of goods and services between customers, enabled by a new set of websites and applications — is growing rapidly, with an estimated 40 percent of the American adult population taking part. As this new generation of customers continues to grow and challenge established businesses, companies will increasingly need to turn to their customers for valuable insight and collaborate with them to make more informed and customer-centric decisions.

“The collaborative economy is no longer a niche phenomenon, and it’s quickly growing. Some areas will have double-digit growth, like used goods. As a result, this will disrupt traditional retail and other customer-driven organizations,” said Jeremiah Owyang, founder of Crowd Companies. “Through this deep-dive report, we now have a very clear picture of how many people are sharing and who these people are — and they look a lot like the mainstream population. It is time for companies to start planning for a new era in which their customers are also producers and want to do business with brands who get the value of sharing.”

“What’s striking is not just how many people are sharing, but how much the collaborative economy is poised to grow,” said Alexandra Samuel, vice president of social media at Vision Critical. “Not only because sharing is widespread among the younger population, but because a lot of people plan to try new types of sharing in the next 12 months. Word of mouth drives most sharing, and buyers in particular are so happy with their experience of sharing sites, that we are going to see a virtuous circle in which sharing drives recommendations, and recommendations drive more sharing.”


Jeremiah Owyang, keynote speaker at Sustainable Brands 2014 San Diego

The rapid growth and proliferation of sharing sites including Airbnb, Über, Kickstarter, Lyft, Rent the Runway, Lending Club, Citi Bike and LiquidSpace has resulted in increased competition for large, traditional businesses, including hotel chains, cab companies and financial institutions, particularly among 18- to 34-year-olds.

The report not only found that 40 percent of 200 million American adults already participate in the sharing of goods and/or services online but that the intent to share is on the rise: About 50 percent of people have used a sharing site in the past 12 months. Sharing has also proven to be more convenient, cost-effective and higher quality to users — attributes previously associated with established businesses.

The report’s authors looked at five major categories of sharing: goods, services, transportation, space and money. About 15 percent of the US and Canadian adult population, known as “re-sharers,” now only use sharing sites to buy and sell used goods on sites such as eBay and Craigslist. In the UK, this group accounts for 29 percent of the population. Another quarter of the population is “neo-sharers” — those who use sharing services to find vacation homes, locate professional services and borrow money.

Sharers

Click for full infographic.

The report highlights the following four major findings that counter common perceptions of the sharing economy today:

Sharing is growing

  • In every category of sharing except buying and selling pre-owned goods, at least as many people intend to share in the next 12 months as have shared in the past 12 months.
  • Neo-sharing could double in the next year. In all neo-sharing categories, there are roughly equal numbers of recent and prospective users.
  • Buying and selling pre-owned products is a gateway to other forms of used sharing with about 15 percent of non-sharers planning to try a re-sharing site in the next 12 months.

Sharers are mainstream

  • Americans, Canadians and Brits participate in neo-sharing at nearly the same rate, but re-sharing is more widespread in the UK.
  • Women are more likely to participate in re-sharing (55 percent), but both men and women actively share across re-sharing and neo-sharing sites.
  • Neo-sharers are more likely to be between 18 and 34 years old (50 percent) and are somewhat more affluent.

Sharing is pragmatic

  • Sharing is driven by practical considerations like convenience (cited by almost 75 percent of neo-sharers) and price (55 percent of neo-sharers).
  • Product or service quality (cited by nearly 50 percent neo-sharers) and the ability to find something that is not available elsewhere (40 percent of neo-sharers) also come out on top as reasons for sharing.

Sharing is satisfying

  • Over 90 percent of sharers say they would recommend their most recently used sharing service to a friend or colleague.
  • Three in four buyers are very or extremely happy with their experience in using a sharing site.

#SustyGoals 7: How Biogen Uses Context-Based Sustainability to Set Environmental Goals

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In January 2014 at the World Economic Forum in Davos, Corporate Knights unveiled its annual Global 100 Most Sustainable Companies rating, with biotechnology company Biogen Idec placing second. What's behind this strong showing? One likely reason: Sustainability Context, an approach to corporate management Biogen has embraced by measuring its performance “in the context of the limits and demands placed on environmental or social resources at the sectoral, local, regional, or global level,” according to the Global Reporting Initiative (which coined the concept in 2002).

You see, four years ago Corporate Knights shifted its Global 100 methodology toward a context-based approach(as I pointed out at the time) by embedding a screen calling on companies to increase their resource efficiency by a factor of four (400%) over 2 decades, or about 6% per year. In other words, the Global 100 uses a proxy of Sustainability Context as one of its primary criteria, so it makes sense that a company such as Biogen using this approach would score highly. And the ratings world is only heading further in this direction, as the Global Initiative for Sustainability Ratings (GISR) recently codified ‘SustyContext’ as one of its 12 Principles, and a just-released survey in the SustainAbility Rate the Raters series asks if ratings are “appropriately considering sustainability context.”

So, what's the story behind Biogen Idec's adoption of Context-Based Sustainability? And more importantly for advancing the #SustyGoals series, exactly how is Biogen using CBS to set its sustainability goals and targets?

To find out, I spoke with Hector Rodriguez, Senior Director of Global EHS & Sustainability at Biogen Idec, which generated about $6 billion in sales in 2013 from medicines that address diseases such as multiple sclerosis, non-Hodgkin’s lymphoma and rheumatoid arthritis. As well, I spoke with Mark McElroy, Executive Director of the Center for Sustainable Organizations (CSO), which is helping Biogen with this work. My dialogue with both follows below.

Bill Baue: How did Biogen decide to employ Context-Based Metrics to set its sustainability goals and targets?

Hector Rodriguez: Our first exposure to context-based metrics was in 2008 when we started thinking about how to set goals. As with most companies, we were simply struggling with the question of what goals to set and how we should set them. We wanted to avoid setting fixed or arbitrary goals such as reducing our energy use by 10%, water by 15%, waste by 20%, simply because the numbers sound good. We saw that as being a kind of uninformed way of setting goals, and so what we did back then was employ a variant of Context-Based Sustainability.

Baue: A variant of CBS — how so?

Rodriguez: We set goals in what we referred to as an Environmental Index. We took the position that as we moved on into 2009, 2010, and beyond, we would only invest in those projects that had the greatest potential benefits from an environmental perspective. And while none of the underlying environmental investments was fixed, the overall Index was. Specifically, we wanted to target a 15% reduction in our environmental footprint by 2015. But how we got to that target was not prescribed. 

It was then that we heard Mark McElroy speak when he was at Deloitte while attending a training program there, which is where we gained a fuller appreciation for CBS. It helped us to think about how best to allocate our 15% target to specific areas of impacts. Then and now, of course, we feel it’s the most appropriate and correct form of sustainability metrics, because it takes into account local conditions and ecological thresholds.

Baue: How does CBS take local conditions into account in ways that align with Biogen Idec's needs?

Rodriguez: In our case, the environmental variable of greatest importance to our company is water, because we use tremendous amounts of it in making our products. So we started by looking at our manufacturing facilities in Denmark, North Carolina and Massachusetts, and quickly recognized that in Denmark and Massachusetts, water wasn’t much of an issue. In North Carolina, however, particularly in the area where our plant is located in the Research Triangle Park (RTP) area, water had become a significant issue, especially in the recent past.

To us, that was context right there why should we be investing in water-saving initiatives in Massachusetts and Denmark, when it was in North Carolina where we were facing water scarcity issues? Of course we were and still are investing in improving our efficiencies in all of our facilities, but the question was, why prioritize those two facilities when the issues or concerns or problems were most likely to come out of our facility in RTP?

Baue: So, the way CBS focuses on local conditions helped you identify the North Carolina facility as the highest priority in terms of using water more sustainably. And that required setting context-based sustainability goals and targets by modeling future social, environmental, and economic conditions. Turning next to Mark, then, how does CBS handle these intertwined challenges?


Bill Baue, speaker at Sustainable Brands 2014 San Diego

Mark McElroy: Well, first, practitioners and managers are left to their own devices to forecast their future environmental impacts, surrounding social conditions, their revenue, GDP, etc. Once these projections have been made, context-based metrics make it possible to determine whether or not future scenarios will be sustainable, as well as what future scenarios would have to be in order to be sustainable. Once future scenarios have been modeled, CBS then makes it possible to translate context-based performance into conventional terms, such as carbon intensity, total water consumption, etc. It is in this way that CBS not only supports goal-setting from a sustainability perspective, but also target-setting from an operational perspective. Conventional target-setting, by contrast, supports the latter but not the former. Indeed, unless context-based metrics are being used, there is no way to tell if even the most aggressive intensity or absolute targets will lead to sustainability. Only the use of context-based metrics makes that possible, while also expressing results in conventional terms.

Baue: Ok, I want to delve into the details of just how you're enacting this modeling at Biogen Idec, but first, can you explain this distinction? How is it that context-based metrics enable sustainability goal-setting and operational target-setting, whereas conventional intensity and absolute targets can't discern sustainability performance and therefore can only be used for operational target-setting?

McElroy: Well, the answer lies in your question. Conventional intensity and absolute targets are devoid of limits or thresholds, and thereby do not express sustainability targets at all. To say that an impact target is lower or less intense than some other level is not to say that it will be sustainable at all. Rather, it's just different from the status quo and only begs the question. Sustainability targets must be expressed relative to social and environmental conditions on the ground, as it were. That is what context-based targets (and metrics) are designed to do. They describe what impacts would have to be in order to be sustainable, because they bring contextually relevant social and environmental thresholds explicitly into play. They tell us what a sustainable rate of water consumption would have to be, for example, by comparing actual or target rates of use with actual rates of availability— in other words, they compare levels of demand with allocations of supply. Intensity and absolute targets do no such thing.

What's more, once context-based targets have been set at levels that are empirically sustainable, we can then express them in conventional terms. It is in that way that context-based target setting allows us to finally answer the question of how much is enough, or how much is not enough, when attempting to set goals in conventional terms. Every level of impact that is sustainable in context-based terms, that is, has its corresponding levels of absolute and intensity performance. But we must first determine the former before we can define the latter, assuming it is sustainability performance we're talking about.

Baue: So that tees us up to dig into the details. Walking us through step-by-step, how specifically do you go about determining threshold-based models for future impacts – how do you then express those as context-based goals and targets; and how do you translate those context-based targets into conventional metrics that managers can implement?

McElroy: First, context-based metrics, like performance metrics in general, are more or less time-independent. In other words, they can be applied to the past, present or future at a practitioner's discretion. Future applications simply require projections for the data values of interest. In the case of GHG emissions, for example, our context-based carbon metric calls for an organization to project or estimate its future emissions, and also its revenue and gross margins. We use the financial data to help set thresholds for what an organization's thresholds or allowable emissions should be in future years, and to also express performance in relative or intensity-based ways. From there, the metric then calculates performance in the same way it does for years in the past, except of course with forecasted data we're calculating performance in the future.

Next, by modeling different combinations of values for future emissions and financial data, we are able to determine what the right combination(s) would have to be in order to score or perform sustainably from a context-based perspective. Once we have done that, we simply observe what the corresponding measures are from an absolute or intensity perspective, since our metric simultaneously calculates performance in those terms as well. 

The first step, then, is to model a future scenario that is sustainable. For areas of impact like water use or GHG emissions, a "sustainable" context-based score is defined as any value of 1.0 or less, since it would mean actual water use or GHG emissions are no more than a maximum allowable level according to a science-based standard. Exceeding such a threshold would produce a score of greater than 1.0 (a bad thing), since it would mean that water use or emissions are actually above sustainable levels.

So the most conservative (worst) case would be to model future performance such that the score achieved in a given year is 1.0, and then simply observe what the corresponding measures would be in conventional terms (absolute and intensity). This would make it possible for organizations to say something like, "Well, in order to achieve a minimally sustainable score (1.0) in the year 2020, our absolute emissions would have to be no more than 'X tonnes' and our emissions intensity would have to be no more than 'Y tonnes per dollar of revenue,'" or some such.

Forecasting performance in context-based terms thereby makes it possible to determine what maximum allowable emissions can be (in conventional absolute and intensity terms), while still being sustainable. Targets can then be expressed in such terms (absolute and intensity) for use by managers at the plant and operational levels. It is in this way that context-based metrics can be used to both set and validate targets in conventional terms, and at the same time answer, in definitive ways, the questions of how much is enough or how much is not enough.

Baue: And Hector, this is precisely what drew you to CBS, right?

Rodriguez: Exactly!Context-based sustainability is logical, it’s rational, it demands some thought, it demands analysis, and to us it’s the smart way of setting goals. My only wish is that it was easier to explain to internal and external stakeholders, because once you understand it, it’s plainly obvious that it’s the only way to go.

Other installments of the #SustyGoals series of dialogues:

6 Incubators Breeding Better Businesses to Rebuild Detroit

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It takes a village to raise an entrepreneur. So, what happens in a city whose population shrank by more than half in the last 50 years? For many can-do entrepreneurs, the deserted city is now a clean canvas where they are free to experiment. At the same time, a number of business incubators in Detroit are stepping in, offering budding entrepreneurs training, shared office space and other resources to pursue their dreams. And for many of these incubators, the triple bottom line is an integral part of their identity and Detroit’s revival.

TechTown Detroit is perhaps the oldest and most established of these incubators. As its website boasts, “We were startups before startups were cool.” TechTown started in 1999 when Wayne State University president Irvin D. Reid negotiated partnership agreements with General Motors and Henry Ford Health System to sponsor a business accelerator for technology businesses, especially university spin-outs. Today, it also supports retail and wholesale enterprises for a more holistic approach to economic development.

TechTown Detroit offers tech startups training through its 12-week Venture Accelerator program. A summertime version of the accelerator called Launch Detroit is offered to student-led startups. TechTown’s Retail Boot Camp and SWOT City programs help aspiring retail and wholesale enterprises capitalize on Detroit’s greatest opportunities while growing essential businesses in underserved neighborhoods. TechTown also enables more established entrepreneurs to mentor or invest in its startups.

In 2004, TechTown opened its doors to a renovated facility, which featured the addition of the co-working space Junction 440 and a kitchen where aspiring food entrepreneurs can serve their dishes and test their market.

Speaking of food entrepreneurs, a group of them have come together via an organization called FoodLab Detroit, to share resources, experiences, and ideas in hopes of making new models of business more sustainable and just. The mission: to create a diverse ecosystem of triple-bottom-line food businesses as part of a good food movement that is accountable to all Detroiters. Fair wages and democratic workplaces are on the agenda of many of the businesses. Members participate by going through a startup training program and supporting each other as they learn and grow.



Join us for a panel on the revitalization of Detroit at Sustainable Brands 2014 San Diego.

Hatch Detroit was built on an idea called “Crowd Entrepreneurship,” where average citizens have a role in voting for the type of retail they want in their community, and determining the winner of the annual Hatch Detroit Contest (such as 2013 winner, Batch Brewing Company). Now in its third year, Hatch Detroit has expanded its retail role into six local neighborhoods as part of the Detroit Lions’ Living for the City Initiative. Hatch will be partnering with local Community Development Corporations (CDCs) to determine an area of focus that works within the community’s master plan for its retail strip.

In 2008, Tom and Peggy Brennan purchased a historic building in Midtown Detroit that once served as a showroom for Ford Model Ts. With the help of a community of over 200 individuals, they renovated the former showroom into a net-zero energy building, and the Green Garage opened in the fall of 2011. Green Garage’s principal business focus is the development and nurturing of its triple-bottom-line businesses-in-residence (including Food Lab Detroit).

The New Economy Initiative, a special project of the Community Foundation for Southeast Michigan, launched in 2008 with $100 million in grants from foundations. This year it received more than $33 million in new funding to continue operations, making it the largest economic development initiative of its kind working to build a network of support for local entrepreneurs and small businesses. The Initiative’s goals include 1,000 new or renewed enterprises, 20,000 new jobs, and $1 billion invested into the entrepreneurial ecosystem, all with a long-term goal of building a dense, vibrant and connected Urban Innovation District in Detroit that attracts diverse resources and talent.


Google, eBay, Adobe Innovating to Save Water in California Drought

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Amid one of the worst droughts in California history, Google, Adobe, eBay and several other technology companies are embracing innovation to reduce water consumption, the Guardian reports.

Google is considering installing new technology such as urinal cakes containing enzymes that calcify urine so that toilets only have to be flushed a few times each day. This could save around 500,000 gallons of water a year.

The Guardian says the tech giant also is looking at ways to reduce water used to maintain the landscaping at its corporate campuses, including "hydrozoning"— grouping together plants with similar water needs and installing sensors to monitor irrigation use and detect leaks. Last year, the company saved 9 million gallons of water at its Mountain View, Calif. campus through water recycling.

"Since we know we have more people using facilities like showers and washing machines than most corporate campuses, we've always been aware that we have the unique opportunity — and responsibility — to help them do so with as little waste as possible," Anthony Ravitz, the green team lead for Google's real estate and workplace services, told the Guardian.

Adobe says it has cut water consumption in its San Francisco Bay Area buildings by 62 percent since 2000 by installing low-flow faucets, waterless urinals and using drought-resistant native plants and drip-irrigation systems. The company also has switched off fountains at its San Jose headquarters that taps recycled groundwater, redirecting it to help improve flows to the nearby Guadalupe River.

Data centers are some of the largest water hogs, and several Silicon Valley firms are implementing water-conservation programs. Adobe is looking into how to change its climate-control systems to use recycled water for cooling.

"Additionally, we are looking at ways to recapture rain water, reclaim our own waste water, and use recycled water (if available) from the cities where we have operations," Adobe told the Guardian.

Likewise, eBay has installed cooling fans among the rows of computer servers while switching to passive cooling systems. In 2013, the company began using recycled water on part of its Mountain View campus landscaping, saving 9 million gallons of water. The company already employs smart irrigation systems that respond to changes in the weather.

Solar panels consume large quantities of water, largely for cleaning purposes. SunPower now uses robots to reduce the water used to clean hundreds of thousands of solar panels installed at the photovoltaic power plants it develops. Last year, SunPower acquired Greenbotics, a company that makes Roomba-like robots that glide over solar panels at night, cleaning as they go — the system has cut water consumption at one California photovoltaic power plant by 90 percent.

SunPower says it is looking at additional strategies to cut corporate water use to meet California's voluntary 20 percent target in addition to a company commitment to cut water use at its worldwide facilities by 10 percent every year.

Many scientists agree that California’s severe drought is being exacerbated by climate change. Apple, SolarCity, San Diego International Airport, Sungevity and Sapphire Energy recently joined more than 120 California-based companies in signing the Climate Declaration, a business leader call to action that urges federal and state policymakers to seize the economic opportunity of addressing climate change.

In related water news, Levi Strauss recently announced that it has developed a process for using 100 percent recycled water in parts of its jeans production — an industry first — to reduce its impact on the world's water resources. The process is the result of a new third-party water recycling verification that aims to reduce the impact of garment production on freshwater resources. It is being used in one of the company’s primary Chinese factories, which bleaches, dyes and stonewashes garments to achieve particular looks or feels.

Recipe for a Healthy Beauty Industry: Tata Harper on How Her Line Changes the Paradigm

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One of the most well-known and loved eco-friendly beauty brands out there, Tata Harper has made a mark on the beauty industry with one eye on sustainability and the other on consumer health and wellness. Hailing from her organic farm in Vermont, Harper’s ingredients are all sustainably sourced and her products as close to “farm-to-medicine cabinet” as you can get. We talked with Harper about how she disrupts — and in some cases elevates — standards for production in the beauty industry.

Tata HarperWhat makes your farm "sustainable"?

Our farm is certified organic, so we don't use any synthetic chemicals in our farming activity. All of the animals that live on the farm (cattle, horses, sheep) are grass-fed year round; in the winter, they're fed hay that we harvest in late summer. We have bees on our property for local pollination and we grow as many of the ingredients for our skincare products as possible on our farm — the climate in Vermont is the only obstacle to using our own ingredients 100 percent of the time. We process all ingredients on the property, too; we try to keep as many activities as vertically integrated as possible to cut down on the size of our environmental footprint. 

How does the Tata Harper brand integrate sustainability? Is it a high priority to communicate Tata's mission to the consumer?

What's really unique about how Tata Harper Skincare operates as a beauty brand is that we are our own product manufacturers. All research and development, batching, packaging, order fulfillment and marketing takes place in-house. Typically, beauty companies outsource production so things are shipped all over the world before they wind up with the customer. Doing it all under one roof means the carbon footprint of our finished product is pretty small! We're also careful about the sustainability of our packaging choices and our paper and energy use. 

As far as communicating our mission to the consumer, it's definitely a priority. We're part of a larger movement toward natural, healthy lifestyles and we do our part to spread awareness about the importance of having a safe, non-toxic beauty and personal care routine. That's really the core of our mission; a lot of people see the green-product movement as being driven by a concern for the environment, which is definitely a big part of it and very important. But it's also about our health, as people and consumers, and that's what we're really passionate about.

What are the primary concerns in choosing packaging materials?

Product compatibility is always a primary concern, but from there our goals are to source the most eco-friendly material possible, and we try to use glass wherever possible for recyclability.

What is Tata’s R&D process like?

It is definitely a long, extended process that begins with coming up with an idea for the finished product: What results do we want it to deliver? How do we want it to feel on the skin? And then we begin the R&D process! There are usually many, many iterations and various types of tests and trials that each one goes through, both in-house and through third parties. Finally, we arrive at a finished formula that meets our standards for being 100 percent natural and non-toxic, while being high-performance, cruelty-free and GMO-free, and then it's good to go. It can take years! 

Since launching the brand, what has been the most satisfying piece of feedback you've received about your business model and/or sustainable agriculture practices?

It's always humbling and inspiring to receive emails from customers who are happy to find a beauty company whose business practices they believe in, and whose products deliver results they love. Plus, there's always a lot of enthusiasm that we hear from customers and from the press about the fact that we're our own manufacturers and that we grow many of our ingredients here. 

For more examples of brands using sustainability as an #innovation imperative, check out our editorial channel highlighting #BrandInnovation.

Unilever, IFAD Form Public-Private Partnership to Benefit Smallholder Farmers Worldwide

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Unilever recently announced a public-private partnership with the International Fund for Agricultural Development (IFAD) aimed at helping to improve the livelihoods of smallholder farmers around the world.

The goal of the 5-year global agreement — the first of its kind by IFAD with the private sector — is to help improve food security through:

  • raising agricultural productivity
  • linking farmers to markets
  • reducing risk and vulnerability
  • improving non-farm rural employment
  • making agriculture more sustainable.

IFAD president Kanayo Nwanze said, “It is not enough to focus narrowly on boosting agricultural productivity. Instead, a broader approach that also supports the establishment of viable linkages between rural producers and markets is essential.

“IFAD recognises that the right types of investments in agriculture are essential to food security for a growing population. That is why partnerships like the one we have signed today with Unilever are so critical”.

Scoping exercises have already begun looking at ways to leverage IFAD’s knowledge and expertise in working with small-scale farmers and rural enterprises with Unilever’s ability to integrate farmers into markets and its expertise in sustainable agriculture. These have included a joint field mission to review an IFAD-supported project that took place in the Vidarbha region of Maharashtra, Western India in January 2014, focused on spices and onions.

About 1.2 billion people live in poverty, 76% of whom live in rural areas; and 200 million are unemployed, according to IFAD. This will be exacerbated as the growing population demands more food — a 70 percent increase in global agricultural production will be essential to feed a projected 9 billion people by 2050, as we’ll need to produce as much food between now and then as we have done in the last 10,000 years. Unless higher small and large crop yields can be reached, many people will remain hungry and trapped in poverty.

According to the World Bank, investment in agriculture is 2-4 times more effective in raising incomes among the very poor than growth in other sectors.

“Now, more than ever, the world needs to increase investment in agriculture and this investment must come from both the public and private sectors to effect truly scalable transformational change,” said Unilever CEO Paul Polman. “Both smallholder and large-scale agriculture are necessary to boost productivity and produce enough food to feed the world’s poor. In order to move from subsistence to commercial farming, 1.5 billion people who rely on small farms need access to knowledge, assets, credit, markets, and risk management that can come from larger-scale business enterprises.”

The partnership seems a natural fit for the two organizations, which have similar geographic footprints and countries (including China, India and Indonesia) that are key to development and growth, and are both guided by similar goals and principles, including commitments to improving livelihoods of smallholder farmers and eradicating poverty.

Through a program of loans and grants supporting over 256 projects across 97 countries, IFAD is helping 78.7 million rural people receive services to move out of poverty. Women in particular are targeted, accounting for about 50 per cent of participants in projects in 2013.

And since November 2010, Unilever has been making headway on its Sustainable Living Plan, a ten-year journey towards sustainable growth – with the aim of helping more than a billion people take action to improve their health and well-being, sourcing all its agricultural raw materials sustainably by 2020, and decoupling its growth from its environmental impact. Supporting these three big goals are seven pillars including three focusing on enhancing livelihoods, sustainable sourcing and nutrition.

Unilever says it has increased the number of smallholders trained in sustainable practices to roughly 450,000 since the end of 2010.

For more examples of game-changing multi-sector and -industry #collaboration to solve some of the world's most pressing problems, check out our editorial channel.

Walmart Implements Policy to Remove Harmful Chemicals from Consumer Products

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Walmart has informed dozens of product manufacturers throughout its supply chain that it is now implementing its new policy to phase out hazardous chemicals from its consumer products, announced late last year.

The Policy on Sustainable Chemistry in Consumables provides a description of what it calls "priority chemicals"— substances with certain hazardous properties that can affect human health, and/or the environment. The policy defines these as chemicals that meets the criteria for classification as a carcinogen, mutagen, reproductive toxicant, or is persistent, bioaccumulative, and toxic; or any chemical for which there is “scientific evidence of probable serious effects to human health or the environment.”


Rob Kaplan, Walmart's director of
product sustainability,
speaker at
SB'14 San Diego

The policy covers consumer products such as health and beauty aids, pet supplies, cosmetics and skincare, baby care products and household laundry and cleaning products.

“Walmart and Sam’s Club believe that customers/members should not have to choose between products that they can afford and products that are better for them and the environment."

Walmart and Sam’s Club worked to develop its company on sustainable chemistry for consumer products with NGOs such as the Environmental Defense Fund (EDF), along with suppliers, academics, government, and industry stakeholders.

Walmart isn't the only heavyhitter to enact stricter guidelines with regard to the chemical safety of the products it carries: In October, Walmart rival Target announced the Target Sustainable Product Standard, which the retailer developed in partnership with industry experts, vendors and NGOs to establish a common language, definition and process for identifying what makes chemically intensive products more sustainable. In November, Target began using GoodGuide’s UL Transparency Platform to collect information from vendors representing 7,500 household cleaners, personal care and beauty, and baby care products to complete the assessment.

At the state level, Washington and California recently took action to protect consumers from potentially harmful chemicals in the products they use and buy. Washington’s focus is on products meant for children; California’s law spotlights cosmetics. Both states require companies to submit information on specific known or suspected carcinogens, reproductive toxins and developmental toxins; Washington specifically adds endocrine disruptors. They have published the resulting databases on their state websites — with much of the information previously unavailable.

And Greenpeace has elicited commitments from 20 major fashion brands and retailers — most recently Burberry and Primark— to eliminate toxic chemicals from all of their products and production processes by 2020. The organization also has called out luxury brands including Versace, Louis Vuitton and Dolce & Gabbana for using the same hazardous chemicals used in the manufacturing of fast fashion to produce children’s clothes.

GE Renews Ecomagination Initiative, Commits $25B to CleanTech R&D by 2020

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GE has announced the renewal of its ecomagination commitment, the company’s sustainability initiative that seeks to find technology solutions that save money and reduce environmental impact for its customers and operations.

Since its 2005 launch, GE says ecomagination has generated more than $160 billion in revenue. The company’s own operations have seen a 34 percent reduction in greenhouse gas (GHG) emissions since 2004 and a 47 percent reduction in freshwater use since 2006, realizing $300 million in savings.

"Ecomagination is one of our most successful cross-company business initiatives,” said Jeff Immelt, chairman and CEO of GE. “Bold investments in ecomagination research and development have resulted in strong returns for shareholders and improved cost and emissions savings for our customers."

GE's new ecomagination commitments include:

1. Investing $10 billion in cleaner technology research and development by 2020. To date GE says it has invested $12 billion in ecomagination R&D, on track to meet the commitment of $15 billion through 2015. GE has announced the continuation of its R&D investment committing to $10 billion additional to reach a total investment of $25 billion by 2020.

The new investment will advance research in:

  • Natural Gas: develop alternative technologies to replace water in the hydraulic fracturing process
  • Renewable Energy: reduce the cost and increase the output of GE wind turbines to lower wind power generation costs
  • Power Plants: innovate and advance solutions to increase power plant efficiencies

2. Reducing GHG emissions, freshwater use and improving energy efficiency of GE operations. GE says it has reduced GHG emissions by 34 percent since 2004 and freshwater use by 47 percent since 2006. Building off this success, GE is committing to reduce GHG emissions and freshwater use by 20 percent, from the 2011 baseline, by 2020.

As part of the new ecomagination commitment to research and development, GE also announced two new collaborations that each address critical natural gas challenges:

  • Statoil and GE are working together to evaluate whether CO2 can be economically used as an alternative to water, potentially reducing the large amounts of water required for hydraulic fracturing. While the use of CO2 to fracture shale rock formations occurs today, it is not an economically viable option for large-scale use due to its high costs. The goal of GE and Statoil's new research collaboration is to evaluate whether a system can be designed to capture CO2 produced from emissions; reuse the CO2 to fracture rock formations; and then capture it again for reuse on the next well.
  • With the number of new oil and gas wells in remote areas increasing, many operators have been forced to flare unused natural gas as the infrastructure needed to capture and transport the gas economically is too far away. In a new collaboration between Ferus Natural Gas Fuels and GE — previously flared natural gas is captured and natural gas liquids, such as propane and butane, are removed to then be sold. The remaining methane is compressed using GE Oil & Gas' CNG In-a-Box system and loaded onto Ferus's specially designed compressed natural gas (CNG) storage trailers to be transported to the final point of use. There, the CNG can be used to power field operations on remote wells, thereby replacing higher-cost and higher-emissions diesel fuel. The first commercial application of the Last Mile Fueling system is currently at work with Statoil at a site in North Dakota.

    GE Power & Water announced in November it is developing a technology with South African chemical and energy company Sasol that cleans wastewater while producing biogas as a by-product. The technology, known as Anaerobic Membrane Bioreactor Technology (AnMBR), will be further developed at a new demonstration plant at Sasol's R&D Campus at its Sasol One Site in Sasolburg, the companies say.

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