THE ‘DOUBLE BOTTOM LINE’: VALUING PROFIT AND THE PLANET
Flooding. Droughts. Wildfires. Extreme rainfall. Tropical cyclones. While the exact outcomes will vary by geography, an August 2021 report from the United Nations Intergovernmental Panel on Climate Change (IPCC) made it clear nowhere on earth will be left unscathed by the coming wave of ecological disruption. At the time of writing, the COP26 summit in Glasgow is bringing world leaders together to try and stave off this disaster.
An overwhelming body of research has concluded that even with immediate action, upcoming environmental shifts could take centuries, if not millennia, to remedy. António Guterres, the UN’s secretary-general, described the situation in simpler (and scarier) terms as a “code red for humanity”.
As marketers respond to this crisis, they must reconsider long-standing models formulated around the paradox of achieving infinite growth on a finite planet. In short, a different kind of growth is urgently needed.
A useful framework to consider here is the ‘double bottom line’ (DBL), an approach giving equal weight to profits and the ecological impacts deriving from a company’s activity. Investors are increasingly sold on this idea, as they perceive firms with strong environmental, social, and governance (ESG) credentials as being well-positioned for the long term.
The environmental ‘bottom line’ is as complex as traditional balance sheets, as it covers a firm’s whole operations and the entire product lifecycle. It includes, for example, the materials required to make things, energy consumed when using digital services, emissions generated by ad campaigns, and reusing items that are no longer needed.
Marketers are well-placed to lead in this area, as they occupy a crossroads between multiple business functions that should be reassessed using an ecological lens, from product innovation and packaging to shaping brand propositions and transforming corporate culture.
They are, simultaneously, charged with engaging consumers, tracking performance and driving long-term growth. As such, if finance teams ‘own’ the profit-and-loss bottom line, marketers have their own essential role as guardians of a company’s (and, indeed, the planet’s) future by making sure environmental strategies are authentic, holistic, and deliver real change.
A BETTER WAY OF BUILDING BRANDS
KEY STEPIC DRIVERS
SOCIETY Most consumers want to act on climate change, and are looking for advice on how best to do so.
ECONOMY Models focused solely on driving growth are being questioned as the ecological impact of this mindset becomes clear.
INDUSTRY First-mover brands in the sustainability arena are establishing new standards which will soon become table stakes.
POLICY Lawmakers are developing new regulations that will have a major impact on businesses of every kind.
Consumers expect brands to step up on environmental issues. And for the DBL to have meaning, this action must be expansive and ongoing, or brands risk accusations of greenwashing if they don’t follow through on promises.
Some considerations for the environmental bottom line are:
DESIGN ‘Regenerative design’ is an approach that solves ecological problems from a product or project’s initial inception.
MANUFACTURING Technology like 3D printing can be eco-friendly and enable product customisation.
PACKAGING Alongside becoming more sustainable, packaging can be a marketing channel, and reusable resource, that prompts behaviour change.
ADVERTISING Internet usage generates the same greenhouse gas emissions as the airline industry, showing that marketers must quantify the impact of media buying, as well as the creative supply chain and ad production.
RETAIL E-commerce is an example of how wasteful purchases and returns, paired with volume-led, click-focused marketing strategies, yield unnecessary emissions.
NEW DEFINITIONS AND STANDARDS
The term ‘sustainability’ cannot adequately describe this work. Firstly, it sounds like a strategic add-on. Secondly, it applies to every conceivable green endeavour, meaning each brand sets (then grades) its own homework.
Third-party initiatives, like B Corp certification, standardise ways of tracking progress. And that comparability is especially valuable for shareholders, suppliers and distributors – audiences that are responsive to ads demonstrating real ecological commitment.
New research from Dr Grace Kite and Purpose Disruptors estimates that advertising adds 28% to the carbon footprint of everyone in the UK. Purpose Disruptors has set up a process where ad businesses can measure emissions to establish a baseline, and then track their performance in reducing emissions.
DELIVERING BUSINESS GROWTH
The DBL, of course, demands traditional growth alongside tackling ecological concerns. Several marketers have illustrated how this might be achieved:
Himanshu Sinha, VP, Digital Growth/E-commerce at sustainable shoe and clothing brand Allbirds, told WARC that consumers want brands to be green, but sustainability isn’t a purchase priority. “I still feel that, right now, it's not the primary consideration for a purchase”, he said.
One solution is reframing value. An example: Buy Better, Wear Longer, from denim brand Levi’s, encouraged people to invest in, then maintain, quality clothing for longer.
“NUDGE” CONSUMERS Dishwasher detergent Finish urged people to save water by not pre-rinsing dishes – a “green nudge” helping consumers overcome widespread confusion about what eco-friendly actions to take.
Learn more about the Skip the Rinse case study
SMALL STEPS Indian apparel brand Liva introduced “plantable” clothing tags that reduced waste while supporting rural women and organic farmers. Even these small victories can add up to lasting change which delivers environmental and financial benefits.
MINDSETS ARE MOVING IN THE RIGHT DIRECTION
The good news: the ‘double bottom line’ is now a reality for 46% of participants in WARC’s global survey of marketers, as they already afford the environment and financial growth equal importance.
Fifty-one percent also reported that sustainability is incorporated into business decisions. From a qualitative perspective, Pete Markey, CMO at UK retailer Boots, summed up this task: “Everything we do in our end-to-end customer experience has to be increasingly sustainable”, he told WARC.
HOW BRANDS ACT AND MEASURE
There was a three-way tie when it came to how brands and agencies are responding to environmental concerns, as approximately 38% are:
- changing manufacturing, packaging and distribution;
- making public commitments they will be accountable for;
- and encouraging green consumer behaviours in their messaging.
There is still work to do on measurement, as 25% of respondents, the largest single group, viewed sustainability as a “general goal” rather than using specific metrics. Other strategies include pursuing goals based on external standards or developed with third-party experts (20%), varying measurement by location (20%) and using hard internal metrics (18%).
ENVIRONMENTAL FOCUS IN COMMUNICATIONS
The danger of greenwashing remains very present for the 32% of contributors who agreed there was a gap between their company’s statements and its actions.
More broadly, some 51% of marketers were emphasising their sustainability commitments in communications. And, as Robbie Millar, VP, Global Marketing at brewer Carlsberg, told WARC, not every brand should automatically leverage this approach.
“We don't want all of our brands to suddenly jump on and start talking about sustainability, because that really would be inappropriate. There are some brands where that positioning connects”, he said.
SUSTAINABILITY AND PURPOSE ARE NOT THE SAME
Marketers have tended to subsume all their environmental initiatives – large or small, long term or one-off – under the banner of sustainability. In this sense, the concept is similar to brand purpose, another idea with a loose aim of doing good, but often without meaning (or action) beyond that.
Against this backdrop, a standout finding from WARC’s survey was that 58% of participants agreed sustainability and purpose initiatives ought to be distinct, whereas only 21% said the opposite.
Further nuance in these areas can help marketers ensure their programs are both authentic and capable of making a lasting impact.
ABINBEV: CONTRACT FOR CHANGE
AGENCY FCB Chicago
ADVERTISER Michelob ULTRA
MARKET United States
Michelob ULTRA Pure Gold, a brand owned by Anheuser-Busch InBev, was developed as America’s first mass-market organic beer. But it soon learned only 1% of US farmland was organic, making it hard to source necessary ingredients like barley.
Farmers were under pressure to maximise production, leading to greater reliance on chemicals harmful to the agricultural ecosystem. Achieving organic status, however, required a three-year transition, during which income and yields generally declined.
Michelob ULTRA’s Contract for Change initiative saw the brand offer to: help with in-depth training; pay a 25% premium for crops grown in the transition period; and be a farmer’s first post-transition customer.
- In all, 175 farmers signed up for the program.
- The amount of organic barley acreage in the US will potentially triple by 2023.
- Michelob ULTRA Pure Gold sales rose by 18%, with further rapid growth predicted.
- Solving real ecological problems will generally rest on a long-term commitment, not a short-term approach.
- Rethinking old business models, like partner relationships based on commoditisation and maximising efficiency, is likely to be a necessity.
- An upfront investment may be required by marketers if they want to achieve an enduring shift in vendor habits.
- Positive environmental and financial impacts can result from these efforts.
THE CMO VIEW
"Our sustainability report is published annually. It's very transparent and externally audited. On things that Carlsberg brands might highlight, such as reduction of water use, it will be factual. If we're using greener inks, it's factual. If there's less plastic in snap-packs, it's factual. We want to make sure that what our brands get involved with is true."
ROBBIE MILLAR VP, Global Marketing, Carlsberg
"We’ve learned how efficient things can be in terms of sustainability in advertising production. Our creative agency works with a sustainability expert to ensure when we go on set that we're as sustainable as we possibly can be."
CLAIRE LOW Marketing Director – Confectionary, Cadbury, Halls and Trebor
"Today, consumers expect brands to do what they say, have the right values, and be able to tangibly show what they're doing to make a positive impact in communities and on the environment. It's our duty to be true to our word, and to make sure that we find the right mechanisms to show progress we're making towards those goals."
MARTHA VELANDO CMO, De Beers
THE ‘DOUBLE BOTTOM LINE’ IS NOT A QUICK FIX OR A ONE-AND-DONE SOLUTION
Like the traditional bottom line, it demands constant attention, continuous improvement, and commitment from an organisation as a whole. Marketers have the ability to spearhead these efforts given their position at the intersection of numerous business disciplines with a major environmental impact.
MODELS BASED ON ACHIEVING FINANCIAL GROWTH ALONE WILL NOT BE ABLE TO SURVIVE THE SCRUTINY OF SHAREHOLDERS, CONSUMERS OR COMMUNITIES IN THE LONG TERM
Even if sustainability is not a top priority in many buying decisions at present, inertia or inaction is not a valid approach for brands seeking to be ready for the challenges of the future.
COMMUNICATIONS RELATED TO SUSTAINABILITY SHOULD BE CAUTIOUS ABOUT OVERSTATING WHAT BRANDS ARE DOING
If appropriate, they can also reframe some of the central tenets of marketing – whether that involves how to think about value, the principles behind media buying, and how the product lifecycle might better be considered as a circle rather than a funnel.