Making Brands Matter

Report | Make the World Better, Faster | 47 Pages

OGILVY—SEPTEMBER 2019 Making Brands Matter for the Generations to Come Make the World Better, Faster By Stephanie Bakkum and Antonis Kocheilas

SUSTAINABLE “Real power and ENOUGH IS hope will come from NOT GOOD companies that execute ENOUGH on being more good—to make the world better, faster, not just worse (01) more slowly.” It’s 2019. Earlier this year 16-year-old Greta Thunberg was nominated for the Nobel Peace Prize due to her efforts surrounding climate change.(02) In March of this year, 1.6 million students in 300 cities around the world walked out of school to march for climate action.(03) While the youth of today continue to be catalysts in the drive toward environmental action, brands have been busy getting involved in environmental and other social good issues through ongoing or sporadic corporate social responsibility (CSR) initiatives — some faster than others. As consumers, we see many of these CSR initiatives come to life in the form of product and service initiatives that are often coined as sustainable: compostable food packaging, paraben free beauty products, pet food that’s void of artificial ingredients, computer components that are made ―William McDonough 2 3

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Sustainable enough is not good enough of recycled ocean plastic, jeans that use less water during This paper is intended to help brands understand the manufacturing process, takeback programs that offer to how they can help make the world, and their repurpose or refurbish items … In today’s world, the examples business, better faster by intentionally making are truly endless, and while all of these sustainable efforts may CSR efforts grounded in the brand’s core. chip away at the global climate crisis, we have to ask ourselves: is “sustainable” good enough? If you asked your partner if your relationship was sustainable, and they said “yes”—would that be good enough? What if you asked your customers today if your brand was sustainable— would “yes” be good enough?(04) While any “good” a brand does to help improve the environment or social well-being of people around the world is arguably admirable—it’s likely not good enough. For brands to quickly harness the power CSR can have on its organization and on the world, the efforts need to be deeply rooted in the brand’s purpose, positioning, and action plans. While offering recycled packaging or reducing water usage in a manufacturing process may absolutely be a good thing for the brand to do, these efforts need to stem from an ethos that’s lived and breathed by every aspect of the organization. Only then will initiatives like these harness their full potential both for the world and for business. 4 5

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CONTENTS Sustainable enough is not good enough 2 1. Navigating the CSR landscape today 9 2. The rise of the conscious consumer 27 3. Making brands better faster by embedding CSR in the brand’s core 41 4. Case Studies 46 5. Propelling beyond tomorrow—the future of CSR 81 Is your brand ready to make the world better, faster? 88 Endnotes 90

Making Brands Matter for 1. NAVIGATING the Generations to Come THE CSR LANDSCAPE TODAY

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Navigating the CSR landscape today How brands choose to be a force for good and a force for “We believe brands growth is entirely up to them. There is no mandated way to do corporate social responsibility. These decisions are often left to have a responsibility the CEO, a lean sustainability department, or generally anyone within the brand who has a passion for the cause. From a to be both a force for reporting perspective, while many companies do leverage best practice sustainable reporting guidelines, such as the Global Reporting Initiative (GRI), participation is voluntary. good and a force for This open-ended approach to CSR is one reason we experience growth.”(05) a plethora of different sustainable products, services, and environmentally-friendly claims flung at us from all corners of the branded world. Some of these initiatives are grounded in a larger purpose the brand truly believes in, others are one-off pet projects. So how are brands specifically getting involved with CSR? Generally, they start by hanging their hats on some well- known acronyms – the SDGs and ESG. ―Marc Pritchard, Chief Brand Officer Procter & Gamble 10

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Navigating the CSR The Sustainable Development Goals landscape today — can serve as an anchor for brand’s CSR initiatives Leveraging the SDGs 1. No Poverty A common way brands connect their CSR initiatives to 2. Zero Hunger well-known global sustainable goals is by leveraging the 3. Good Health and Well-being Sustainable Development Goals (SDGs). Since the creation of 4. Quality Education the goals, The United Nations Global Compact was developed 5. Gender Equality as a group within the UN that’s specifically focused on working with businesses to help them adopt SDGs into their business 6. Clean Water and Sanitation practices. 7. Affordable and Clean Energy There are 17 SDGs that span the realm of: Affordable and 8. Decent Work and Economic Growth Clean Energy (goal 7), Life Below Water (goal 14), Gender 9. Industry, Innovation, and Infrastructure Equality (goal 5). The SDGs were adopted by all United 10. Reduced Inequalities Nations Members States in 2015. The United Nations 11. Sustainable Cities and Communities describes them as, “the blueprint to achieve a better and more 12. Responsible Consumption and Production sustainable future for all. They address the global challenges we face, including those related to poverty, inequality, climate, 13. Climate Action environmental degradation, prosperity, and peace and justice. 14. Life Below Water The Goals interconnect and in order to leave no one behind, it is 15. Life On Land important that we achieve each Goal and target by 2030.” (06) Each of the 17 goals has specific targets and the UN releases 16. Peace, Justice, and Strong Institutions annual reports on progress each year. The goals and targets 17. Partnerships for the Goals enable companies to get involved in specific areas that are most relevant to them – ideally in areas that are aligned to their core values. 12 13

Navigating the CSR ESG areas of focus, while started in the investment landscape today world, now serve as areas of focus for brands to align their CSR initiatives Leveraging ESG Another popular way brands have chosen to embark on CSR initiatives is to anchor their efforts to a well-known Environmental, Social, or Governance, (ESG) area of focus. Evironmental Social ESG started in the investing world decades ago when investors • Climate Change • Gender and wanted to avoid certain stocks because they went against their • Energy Diversity core values. (e.g. religious affiliations, tobacco etc.) Today, ESG Efficiency • Human Rights has become a common focus area from which brands can • Water Scarcity • Labor Standards align CSR initiatives, far outside the parameters of investing • Pollution and etc. strategies. Waste etc. “The practice of ESG investing began in the 1960s as socially responsible investing, with investors excluding stocks or entire industries from their portfolios based on business activities such as tobacco production or involvement in the South African (07) apartheid regime.” ―MSCI Governance • Bribery and Corruption • Politcial Contributions • Executive Compensation etc. 14 15

MIGRATING THROUGH Otto Scharmer’s Five Stages of THE STAGES OF Corporate Social Responsibility CORPORATE SOCIAL RESPONSIBILITY Stage 1 One-off projects ↓ Stage 2 Sustainability becomes part of organizational practices ↓ Emanating a CSR stance both internally and externally Stage 3 through consistent, relevant engagements creates Sustainability drives business sustained value for customers and the company—and innovation ultimately helps make the brand matter. ↓ Regardless of well-intended initiatives aligned with sanctioned Stage 4 goals like SDG or ESG, embedding genuine CSR into a brand’s An organizational culture of ethos doesn’t happen overnight. Otto Scharmer, Senior sustainability emerges Lecturer at MIT and cofounder of the Presencing Institute ↓ argues brands don’t become sustainably-driven businesses overnight, it occurs through step-by step-progression. He Stage 5 outlines this thought through five stages of corporate social The organization becomes a responsibility.(08) purpose-driven ecosystem 16 17

Five Stages of STAGE 1: STAGE 2: Corporate Social Responsibility ONE- OFF SUSTAINABILITY PROJECTS AS PART OF THE BRAND’S INITIATIVES "Many busi- One-off CSR projects are ever-present: from random 90% Many brands have sustainability initiatives, as evidenced by nesses pursue CSR activities donations, to haphazard Instagram posts about philanthropic 90+10M the “Corporate Social Responsibility” breadcrumb on the that can best be termed pet events, these projects are easy to spot. These projects tend to Nearly 90% bottom of their homepage. These efforts tend to come to life projects, as they of the world’s reflect the per- reflect the personal interests of senior leaders vs. the ethos biggest through a CSR or sustainability department that produces sonal interests companies are of individual se- of the brand. While initiatives like these are potentially reporting on their annual sustainability performance reports. However, the few nior executives. sustainability While these admirable, they are not connected to the core of the business performance, people running these engagements generally operate mostly activities may using metrics be presented established by with much noise and therefore have difficulty making an impact for the business the GRI.(10) (The autonomously and have limited exposure to influencing other and fanfare, they Global Reporting usually offer or the planet due to their inconsistent presence and lack of deep Initiative, departments throughout the business. While their remit is minimal benefits established in to either connection within the organization . October 2016) to report on the varied CSR initiatives in which the brand business or society."(09) ―World embarks, their overall presence in the organization is limited ―McKinsey Economic Forum 2009 2019. and certainly not central to the brand’s core. 18 19

Five Stages of STAGE 3: STAGE 4: Corporate Social Responsibility SUSTAINABILITY SUSTAINABILITY DRIVES BUSINESS EMERGES IN INNOVATION CULTURE ~ 9,933 The UN’s Global Impact initiative has made great strides in 2,600 Brands that are known for “being green” or “being good” are companies (and enabling brands to be more sustainability driven by aligning businesses have recognized as so by their employees and consumers because their respective met the perfor- brands) from their CSR activities to a sustainable development goal, but there mance, trans- they have built end-to-end cultures of sustainability within the 160 countries parency and are currently is still more to do in these businesses. In these situations, brands accountability company. In these cases, many brands choose to outwardly members of requirements the UN Global may align one of their product lines to an SDG. For example, to become make their commitment known through certifications such Compact – Certified B Cor- an initiative a food company may align one of their product SKUs to SDG porations.(12) as becoming a registered B Corp. While these brands may launched to align Goal 2 – Zero Hunger — but then not connect any of their other ―Forbes incorporate sustainable metrics into their financial reporting, businesses’ strategy with products to the initiative. In these cases, brands have certainly they still have room to grow. At this point in the brand’s social goals, and to support the Sustainable made progress in embedding genuine CSR in their ways of journey toward genuine CSR, they may start to feel the tension Development Goals.(11) working, but there is still an abundance of opportunity across of inherent capitalistic drive – balancing profit maximizing ―World the entire portfolio to make systemic change. initiatives with additional CSR-focused efforts across their Economic Forum 2019 supply chain. 20 21

Five Stages of STAGE 5: Corporate Social Responsibility SUSTAINABLE ECOSYSTEM 16% 62% 16+84M 62+38M 16% of US businesses have adopted a circular economic framework, 62% say moving toward this is part of their (13) business strategy. ―ING report 2019 When a business adopts a circular approach to their operations they can truly become a purpose-driven ecosystem. “ The Ellen MacArthur Foundation defines a circular economy as: One that aims to redefine growth, focusing on positive society- It’s worth noting that the circular economy approach is wide benefits. It entails gradually decoupling economic activity relatively new. While many brands are involved in trying from the consumption of finite resources and designing waste to adopt circular products and operations, it’s the new out of the system. [A circular economy looks] beyond the current frontier in business models. Brands operating with this level take-make-waste extractive industrial model. Underpinned of commitment to CSR in their brand core are absolutely by a transition to renewable energy sources, the circular model trailblazing the future for brands to come. builds economic, natural, and social capital. It is based on three principles: • Design out waste and pollution • Keep products and materials in use (14) • Regenerate natural systems.” 22 23

As brands attempt to be better faster by becoming sustainably driven ecosystems, it’s important to note that they didn’t necessarily embark on these initiatives on their own accord. As Larry Fink says, “Companies that fulfill their purpose and responsibilities to stakeholders reap rewards over the long-term. Companies that ignore them stumble and fail. This dynamic is becoming increasingly apparent as the public holds companies to more exacting standards.” (15) The public is indeed holding brands to exacting standards which has given rise to CSR, but it wasn’t always that way.

Making Brands Matter for 2. THE RISE the Generations to Come OF THE CONSCIOUS CONSUMER

The rise of the conscious consumer “ThredUp predicts that the total sec- Marie Kondō’s popular book-turned-Netflix ondhand apparel market in the U.S. will “The question of what you grow to $51 billion by 2023, up from TV series – The Life Changing Magic of Tidying $11 billion in 2012, thanks to the grow- ing movement of conscious consum- Up: the Japanese art of decluttering and erism. If one in 10 Netflix subscribers want to own is actually cleaned out their closets, that would organizing – has caused a flurry of homeowners generate 667 million pounds of trash, (17) according to ThredUp’s research.” and apartment dwellers the world over to the question of how you ―AdAge meticulously clutch every item they own and self-reflect on the joy it brings them. This new want to live your life.” (16) and popular anytime approach to the proverbial spring cleaning has caused many people to throw out, give away, and otherwise reconsider how they want to own things in their life. But understanding why many of us are in the midst of “Marie Kondō-ing” our homes, scrutinizing ingredient labels, and buying from brands that aim to base their entire business model on being circular, requires us to take a short visit back in history… ―Marie Kondō 28

The rise of the 18TH–20TH LATE 20TH conscious consumer CENTURY: THE RISE CENTURY: OF CONSPICUOUS INTRODUCING CONSUMPTION ENVIRONMENTAL AND PHILANTHROPIC CONSUMERS “Consumption The Industrial Revolution of the 18th and 19th centuries 20M Americans Environmental Consumers is the sole end participated in and purpose of brought the technological power for mass production the first ever In the 1960s the environmental conversation among (18) all production.” Earth Day on through a shift in manufacturing processes across Europe April 22, 1970.(19) consumers was ignited in large part thanks to Rachel Carson’s ―Adam Smith, The Wealth of and the United States. In the U.S., the Great Depression, ―Earth publication of Silent Spring in 1962 – a startling book that Nations 1776 followed by World War II, created conditions in which people portrayed the effects of chemicals on the natural environment. could support the “American Way” by buying goods. The This book helped rally an already civically-minded group of production boom in the U.S. following the war, coupled with citizens around the world, particularly in the U.S., to start the eventual advancement in chemicals and other inputs into asking questions about corporate behavior particularly as the production process — as well as the increase in marketing it relates to its impact on the environment and humans. For efforts — resulted in an American way of life that was heavily decades, booming mass manufacturing had been providing focused on buying the latest, greatest, and biggest. This era goods and services to the conspicuous consumer, but now created a consumption mentality of “more is better” and set questions were being raised as to how their operations in the tone for what’s come to be known as Keeping Up with the making all of those products and services were actually Joneses. impacting the planet. 30 31

The rise of the conscious consumer By the early 1970s, the world was in action mode with: Philanthropic Consumers Philanthropic giving as part of corporate operations dates • The founding of the U.S. Environmental Protection Agency back to post-WWII, when the economy in the U.S. was (1970) resurging. During this time, some of the U.S.’s most prominent • The establishment of the Clean Air Act (1970) business pioneers started getting involved in philanthropy. The • The establishment of the Clean Air Act of 1970 (1970) establishment of the Ford Motor Company Fund in 1949, • The founding of Greenpeace in Vancouver, Canada (1971) AT&T’s Western Electric Fund (later the AT&T Foundation) • The establishment of the Clean Water Act (1972) i n 1953,(21) among others, are a few of the early leaders in • The adoption of the EU’s first Environment Action the philanthropic space. These efforts sought to enable Programme (1972) corporations to get involved in local community efforts through organized giving and charitable involvement. In more The environmental momentum generated in this period recent years, companies like Estée Lauder took on breast enabled sustainably-minded consumers to become vocal cancer through the Estée Lauder Companies’ Breast Cancer participants, both through protest and purchasing power. Campaign; founded in 1992.(22) Driven by their shared values, “environmental” consumers banded together to bring continued environmental pressure to The most recent philanthropic movement has allowed industries for decades to come. consumers to physically get involved in the cause through things like pink ribbon products and colored bracelets. However, as these cause marketing initiatives gained popularity, terms like “pink washing” began to emerge; no longer was a colored ribbon enough to know that the brand was doing good on the whole—consumers started to demand tangible proof that brands were doing good. 32 33

The rise of the TODAY: THE RISE FUTURE STATE: conscious consumer OF CONSCIOUS AFFORDABLE AND CONSUMPTION ATTAINABLE CONSCIOUS CONSUMPTION I like to call this new system creative At the 2008 World Economic Forum in Davos, 69% of high- The story of the conscious consumer would not be complete capitalism—an approach where govern- net-worth ments, businesses, and nonprofits work Switzerland, Bill Gates introduced the concept millennials if income inequality were not part of the conversation. together to stretch the reach of market place greater forces so that more people can make a of “Creative Capitalism.” The concept outlined a importance It’s arguably easy to be a conscious consumer when one’s profit, or gain recognition, doing work in investing (23) that eases the world’s inequities. new approach to capitalism where incentives go in companies discretionary income unlocks access to products and services showing a high ―Bill Gates, 2008 beyond profits and include recognition as a proxy level of corpo- that enable a sustainable lifestyle. For example, consumers rate social re- for profits. sponsibility than with access to investment portfolios are able to diversify their considering the wider society, investments based on their ESG interests. Yet many citizens compared to 59% in 2017.(24) Since 2008, numerous groups and organizations the world over don’t have the financial buying power to make ―US Trust have been involved in developing alternatives 2015 their voices heard through their purchase decisions. People to the current economic system. “Creative who struggle to provide food for their families don’t have the capitalism” and “circular economy” thinking has luxury of diversifying their brand selections in the checkout enabled consumers to move beyond just being line, when sustainable products are out of their budget. environmentally-minded, to being values driven consumers who are demanding entirely new approaches to business and the economy as a whole. 34 35

The rise of the On a rainy day in New York City conscious consumer in April 2019, the following items were priced as follows: $5.50/day just In the U.S., the markup for organics can vary from 122% $4.99 under half the (26) world’s popula- for eggs to 43% in pasta sauce. While retailers know that fast fashion tion – 3.4 billion white t-shirt people – sub- consumers are willing to pay more for sustainable products, sisting on less than $5.50 a how much is too much? Given the boom of eco-friendly day, which is the World Bank’s products in the last decade, consumers are starting to ask new poverty line for extreme questions about what constitutes sustainable, and if the price poverty in up- per-middle premium is worth it. $6.95 -income coun- (25) tries. organic juice shop orange ―Oxfam 2019 “Consumers who see organic store brands on shelves next to juice pricier brand name organics of the same product type have $2.19 started to ask themselves what ‘organic’ means to them...The convenience store orange definition of organic can vary greatly between product categories, juice leading consumers to consider overall sustainability messaging, versus automatically accepting that they need to pay more (27) specifically for ‘organic’ labels.” — Sarah Schmansky, Vice President, Nielsen Fresh/H&W Growth & Strategy, Nielsen $18 True Conscious Consumption will only be achieved at scale radically transparent when citizens from small towns to large cities the world over white t-shirt can adopt sustainable products, services, and experiences at price points within their discretionary spending power. Prices reflect retail prices on of 4.15.19, tax not included. 36 37

“The US focus on sustainability is intensifying: Nearly twice as many US firms are embedding sustainability in strategic deci- sion making in 2019 as we saw (30) in 2018. ” ―ING 2019 The progression of consumers’ interest and “The US focus on sustainability oversight in how brands operate from a corporate social responsibility standpoint, is intensifying: Nearly twice as from Conspicuous Consumption to Conscious Consumption, has an absolute impact on why many US firms are embedding businesses are choosing to make their brands purposefully sustainable ecosystems. As brands sustainability in strategic continue to listen to consumers and migrate with them toward a future where circular decision making in 2019 as we consumption is the rule instead of the exception, (28) how they go about embedding their CSR strategy saw in 2018.” into their strategic decision making will be critical for long-term success, both for their business and the planet. ―ING 2019

Making Brands Matter for 3. MAKING BRANDS the Generations to Come BETTER FASTER BY EMBEDDING CSR IN THE BRAND’S CORE

Making brands better faster by embedding CSR in the brand’s core Brands that matter, and will continue to matter, are harnessing “Many businesses their power to make the world better faster through intentional CSR. talk soothingly about When CSR emanates from the brand’s core it feels corporate social authentic for both customers and employees. The alignment between intention and action can be felt both responsibility, impact in the hallways among employees and in the shopping aisle by consumers who consciously choose the brand; and it creates and social purpose, a shared “ethos” that unites all stakeholders and becomes the catalyst that enables brands to do better faster. but very few put these While SDG and ESG initiatives offer great opportunities at the core of their for brands to align their CSR efforts, selecting which (29) opportunities to align with should be a meticulous decision- operations.” making process based on the brand’s purpose. Brands that articulate how their brand is authentically connected to an overall CSR point of view set themselves up to align with a cascade of appropriate CSR initiatives. Stephen A. Greyser and Mats Urde’s outline of the corporate brand identity matrix is a useful tool for understanding how a core that’s rooted in a company’s CSR goals can emanate throughout the rest of the ecosystem internally and externally. ―Mariana Mazzucato 42 43

Making brands better faster by The corporate brand embedding CSR in the brand’s core identity matrix(30) The core: EXTERNAL Value Relationships Positions proposition Where brands need to articulate how they are inherently What should be What is our What are our the nature of our intended connected to an overall corporate social responsibility key offerings, relationships position in the and how do with key market and we want them customers in the hearts to appeal to and other and minds of customers stakeholders? key customers As brands take heed from circular-driven, conscious and other and other consumers and employees (who expect brands to take a stance stakeholders? stakeholders? on environmental, social, and governance issues), brands have begun to embark on reframing their core to reflect their modern values. Newer brands that have come of age in the last INTERNAL Expression Brand Core Personality /EXTERNAL few decades, during the rise of conscious consumers, are off to What is What do we What distinctive promise and combination about the what are the of human a faster start because they have inherently built their business way we core values that characteristics communicate sum up what our or qualities core to reflect their CSR initiatives. and express brand stands forms our ourselves for? corporate and makes it character? possible to On the other hand, legacy brands—those who have been recognize us at a distance? around for generations and perhaps even predate the rise of the environmental consumer—have taken actions over the last few decades to be more purpose-driven and sustainable, while only a handful have truly reframed their brand to make CSR INTERNAL Mission and Culture Competences Vision initiatives rooted in their core. What are our What are we What engages attitudes, and particularly us (mission)? how do we work good at, and What is our and behave? what makes us direction and better than the inspiration competition? (vision)? 44 45

4. CASE One Off Projects STUDIES The following examples outline how various brands have embarked on CSR initiatives with varying levels of intentional connection to their brand core… These are classified by the authors following Otto Scharmer’s Five Stages of Corporate Social Responsibility referenced in Page 17. Ogilvy does not work on the following brands. Analysis derived strictly from public observation.

Case Studies CSR AS A Balenciaga COMMON DISCONNECT Their core: How their core manifests: Why it matters unclear - not explicitly stated on their website In 2018 Balenciaga partnered On their parent company’s website with Farfetch to create a line that’s — Kering — Balenciaga is listed as a (32) (33) entirely free from leather and fur. “couture and leather goods house.” Creating a one-off line free from leather and fur to obtain trend seeking luxury consumers is a short- term approach to something that, at the end of the day, is not grounded in who they are. 48 49

Case Studies Sustainability As Part Of The Brand’s Initiatives

Case Studies CSR AS PRODUCT Dell ALIGNED, CORE ADJACENT Their core: How their core manifests: Why it matters: Dell empowers countries, communities, customers Dell is embarking on creating While there’s a direct connection to and people everywhere to use technology to realize the first commercial-scale global plastics and the material packaging their dreams. Customers trust us to deliver ocean-bound plastics supply of Dell’s computers, the initiatives technology solutions that help them do and achieve chain. The initiative aims to keep feel a bit adjacent to the brand’s more, whether they’re at home, work, school or 16,000 pounds of plastic out of the core. Outside of a write-up on their (34) ocean. Plastics retrieved through website that was housed under anywhere in their world. ―Dell website the process will be reused in the “Corporate Social Responsibility”, packaging system for the XPS 13 the ocean plastics initiative doesn’t 2-In-1 laptop. Dell also created a seem to be grounded in Dell’s core Lonely Whale VR experience that day-to-day operations. enables users to see what it’s like underwater for whales when they are surrounded by plastic.(35) 52 53

Case Studies CSR AS LOCAL Sam’s Club INVOLVEMENT Their core: How their core manifests: Why it matters At Sam’s Club, we’re committed to becoming the Sam’s Club (a division of Walmart While Sam’s Club is involved in membership you love most. We will do this by Inc.) focuses its CSR initiatives in CSR efforts through the local providing excellent products and services – in clubs, the communities it serves. On its communities it serves, these efforts online and through mobile devices – across the U.S. website Sam’s Club says it offers, feel outside of its core product (36) offering—products and services. and Puerto Rico. ― Sam’s Club website “local nonprofit organizations funds through our Community Grant While volunteer hours and local Program. These grants are available donations can certainly help year-round and range from $250 support its membership base, firmly to $2,500.”(37) developing sustainable products Sam’s Club also gives back through volunteerism of its and services, at an affordable employees, donations of meals, and price, would better deliver on the recycling efforts. aggressive CSR goals its parent company has set. 54 55

Case Studies Sustainability Drives Business Innovation

Case Studies CSR AS A STANCE Costa Rica FROM AN ENTIRE COUNTRY Their core: How their core manifests: according to the degree to which With a 95% share of renewables in its electricity While the government has migrated their operation approaches a matrix and solid achievements to prevent the country to renewable energy sustainability model, in terms of deforestation―52 % of the national territory is and set strong carbon emissions management of natural, cultural covered by forests―the Central American nation targets, they’ve invited others — and social resources.(39) of Costa Rica is already a world leader in terms locals and tourists — to join in of environmental sustainability. However, Costa their journey. “Ecotourism” has Why it matters: Rica wants to go further and be an international become popular in Costa Rica in Who said corporate social example of climate action and ambition. Costa Rica large part due to the structured responsibility was only meant has adopted a plan to achieve a zero net emissions system around it. The CST (or El for corporations? Costa Rica is economy by 2050, in line with the objectives of the Certificado para la Sostenibilidad demonstrating how a government’s (38) Paris Climate Change Agreement. Turística) is a program of the strong stance on sustainable goals ―UNFCC 2019 Costa Rican Tourism Institute and mandates can trickle across the (ICT), designed to categorize and country into local economies and differentiate tourism businesses businesses. 58 59

Case Studies CSR AS Salesforce TAKING ON TECH Their core: How their core manifests: follows a 1-1-1 philanthropic model Together, we’re creating a future of new A leader in CRM for decades, leveraging its technology, people, and opportunities. Trailblazers don’t fear change, we Salesforce has also garnered resources to support social sector embrace it. We harness new technologies to entirely accolades for being a leader in initiatives through volunteerism, transform our companies, our careers, and, sustainability. On their website donations, education, grants, and (40) pro bono projects. In 2018, Salesforce hopefully, our world. they say: ―Salesforce website launched the Philanthropy Cloud, At Salesforce, we consider the which allows Salesforce users to environment to be a key stakeholder activate, launch, and monitor their and we are committed to harnessing own 1-1-1 philanthropic initiatives (41) our culture of innovation to improve within their own companies. the state of the world. We leverage the power of our people and our Why it matters: products to reduce the impact Salesforce modeled its mission that we and our customers have within the walls of its own company on the planet. Salesforce achieved first and then used its technology net-zero greenhouse gas emissions platform to inculcate philanthropic globally and delivers customers a behavior within the organizations carbon neutral cloud. Salesforce of its clients. 60 61

Case Studies CSR AS MAC ROOTED IN ONE PRODUCT Their core: How their core manifests: Why it matters M·A·C is the world’s leading professional makeup MAC Cosmetics (part of the MAC’s multifaceted core enables authority because of our unrivalled expertise Estée Lauder organization) has a them to execute CSR initiatives in in makeup ARTISTRY. M·A·C celebrates multifaceted core that touches on various areas that are meaningful diversity and INDIVIDUALITY – we are various elements of CSR. From to them. While MAC has arguably for All Ages, All Races, All Genders. M·A·C is being a brand for “all ages, all rages, emphasized their CSR efforts in a proud COMMUNITY of professional all genders” MAC has always rallied the Viva Glam product line, there makeup artists working together to bring artists and individuals from all are likely additional business our vision to life. M·A·C is at the forefront of walks of life together to bond over opportunities across additional fashion TRENDSETTING, collaborating with individual expression through the product lines where they could leading talents from fashion, art and popular use of vibrant colors and products disseminate their CSR initiatives culture. Our Artists create trends backstage at form across their various product to create a more holistic culture fashion weeks around the world. M·A·C believes lines. In 1994, MAC created the focused on these efforts. in SOCIAL RESPONSIBILITY, with initiatives M·A·C AIDS Fund, and made such as VIVA GLAM and the M·A·C AIDS Fund HIV/AIDS organizations the (42) at the heart and soul of our unique culture. beneficiaries of the company’s focus, – MAC website most predominately made possible through the VIVA GLAM lipstick line.(43) 62 63

Case Studies A culture of sustainablity emerges

Case Studies CSR AS Danone OVERHAULING A LEGACY Their core: How their core manifests: Why it matters: Bringing health through food to as Danone’s North America business Danone is a multinational (44) many people as possible. received B-corp status in 2017. conglomerate that has been around ―Danone website CEO Emmanuel Faber aims for all since the early 1900s. Its pivot of Danone to be a certified B-corp to sustainability across its entire by 2030(45). It’s building a healthier portfolio demonstrates how all future through food not in overt brands, new and veteran, can put all-encompassing ways, but by CSR at their core. studying how food and nutrition can best be improved in 52 countries in the world, and adapts its products accordingly. In one example, Danone recently added vitamins to one of its best-selling cheeses after researching the diets of young people in Brazil.(46) 66 67

Case Studies CSR AS TAKING BNP Paribas ON FINANCE Their core: How their core manifests: Why it matters: We aspire to be the reference among European BNP Paribas mapped their business They took a stand in an industry banks with a global reach, the preferred long- model against SDGs and spent where many are staying quiet. term partner to our clients, and a contributor to two years tagging their balance Instead of dipping their toe in (47) responsible and sustainable global development. sheet to understand how things this space or creating a 501(c) (3) ―Our Vision/Mission BNP Paribas mapped to the SDGs. They divested philanthropic fund to run their from tobacco and from clients CSR initiatives on the side, they that are primarily involved in oil made sustainability part of their and gas. As they operate across DNA. asset management, retail banking and investment banking they’ve outlined how sustainability meets customer and employee needs across each of those business units.(48) 68 69

Case Studies CSR AS HYPER Tesla FOCUSED Their core: How their core manifests: Why it matters: Tesla’s mission is to accelerate the world’s Tesla created the first compelling, Tesla’s environmental and (49) long-range, serial production sustainable practices don’t sit transition to sustainable energy. —Tesla website electric vehicle. While the price in a department off to the side, point of these vehicles was initially rather they guide every action the incredibly high, their strategy company takes. Tesla’s narrow, always aimed to achieve scale: in focused mission enables it to early 2019 Elon Musk announced intentionally direct efforts in very Tesla’s most affordable model would specific areas. With a focused core, sell for $35K, enabling consumers both employees and consumers can with varied spending power to see the direct manifestation of the enjoy the benefits of sustainable company’s words through ongoing energy. In addition to cars, Tesla tangible actions. acquired Solar City in 2016 which enables Tesla to bring sustainable energy into people’s homes through solar. 70 71

Case Studies CSR AS 1 Hotels INDUSTRY RESETTING Their core: How their core manifests: Why it matters: 1 Vision. The future of the world and the future 1 Hotels leverages biophilic design There’s power in creating in-person of hospitality are one in the same. 1 Hotels aspires principles to make guests feel like experiences that enable people to to be a platform to spark conversations, between they are in nature. Guests drink feel what a sustainable lifestyle can innovators and guests, that transform the industry filtered water, breath filtered air, be like. Whether guests leave the (50) hotel and start using less plastic or and our lives. —1 Hotels website open their doors with keys made of recycled wood, and eat seasonal take shorter showers—the brand fruits from regionally-grown farms. has demonstrated what can be. Externally, 1 Hotels partners with The online content extends the advocacy and education groups that experience once guests leave the focus on environmental cleanup hotel. While these luxury hotels initiatives. Once guests leave the currently only exist in New York hotel, they can stay connected to City, Miami, and West Hollywood the transformative conversation - it will be interesting to see how through 1 Hotels’ website that 1 Hotels uses their platform to offers a “field guide” of content from transform the hospitality industry sustainable recipes to sustainable across price points, to consumers of clothing, ensuring they stay in the different spending power. loop until their next check in. 72 73

Case Studies The brand becomes a purposefully sustainable ecosystem

Case Studies CSR AS Organic Valley PARTNERING CROSS-SECTOR Their core: How their core manifests: Why it matters: When you spend your milk money on Organic Organic Valley, headquartered in Organic Valley demonstrates that Valley, we give you fresh food you can trust. It all Wisconsin, is made up of 2,000 CSR can’t be executed solely within comes from the family farms of our cooperative. family farms. In addition to being the walls of the corporation — cross- With your support, we make real changes in the advocates of organic farming, sector partnerships are needed (in (51) world one small step—and farm—at a time. — Organic Valley recently made real this case, through their partnership Organic Valley website change in the world—starting in with the local energy company). their own backyard. The brand set Everything Organic Valley does a goal of being powered by 100% starts with the farm and naturally renewable energy, and when they permeates from there. Their effort met that goal they didn’t stop. They to reach out and support the larger worked with the local communities community around them was not and energy companies to share done out of charity, rather it was the benefits which allowed 23,000 born directly from their mission rural Midwestern households to — starting with family farms and benefit from cheaper energy.(52) expanding to change the world one small step at a time. By leveraging a public-private partnership, they were able to fulfill this mission. 76 77

Case Studies CSR AS NEVER Patagonia BEING GOOD ENOUGH Their core: How their core manifests: Why it matters: (53) Patagonia has demonstrated that a Patagonia is in business to save our home planet. What can be said about Patagonia —Yvon Chouinard company founder, Rose that hasn’t already been said? business can never be too good to Marcario CEO A crusader for environmental not look in the mirror and consider protection since its origins, reframing their core to do even Patagonia has been an example for better. They’ve also demonstrated other brands to follow for years. that companies can take strong In December 2018, they changed stands on issues near and dear their mission - Patagonia is in to their heart, while potentially business to save our home planet. isolating some consumers, yet still They’ve acted on this mission day- remain a financially-successful to-day in innumerable ways: repair company. As Patagonia continues programs that enable customers to to look to the future, it will be maintain their Patagonia products interesting to see how they infuse for a longer life, suing President attainability and affordability Donald Trump over protection across their product lines. of public land, donating tax cut money to grassroots environmental organizations, constantly seeking more earth-friendly materials to put into their products. 78 79

Making Brands Matter for 5. PROPELLING the Generations to Come BEYOND TOMORROW—THE FUTURE OF CSR

Propelling beyond tomorrow —the future of CSR 2018 2019 48% 85% 48+52M 85+15M Eighty-five percent of executives say sustainability is influencing business growth strategy in 2019, compared to 48% who reported so in 2018.(55) “Sustainable development is development that meets the needs it’s easy to assume that the corporate world is moving in a of the present without compromising the ability of future direction that would indicate intentional CSR is gaining generations to meet their own needs.” (54) momentum in the minds and actions of CEOs. And the data shows that it seems it is! The quote above is the most widely accepted definition of sustainable development. It was delivered in 1987 by But if sustainable is not good enough—if sustainable Norwegian Prime Minister Gro Harlem Brundtland in doesn’t enable consumers and the planet to propel beyond the paper Our Common Future. Her involvement in this the immediate tomorrow—is the brand allowing future impassioned document enabled the international community generations to meet their own needs? As brands migrate to rally around one central definition of growth through a from doing less bad, to doing better faster, today’s conscious sustainable lens. The global community still looks to this consumers are closely monitoring the following inflection definition as their guiding principle. Thus, when brands points and are ready to vote with their dollars for the brands leverage the SDGs, ESG or any other form of sustainable that: initiatives, the roots stem from this definition. • Expediently adopt circularity across the entire business In 2019, it seems like every day brands are announcing new • Democratize sustainable options across the entire business sustainable products and initiatives. In this environment, • Embed CSR in all KPIs 82 83

Propelling beyond EXPEDIENTLY DEMOCRATIZE tomorrow —the future of CSR ADOPT SUSTAINABLE CIRCULARITY OPTIONS ACROSS ACROSS THE THE ENTIRE ENTIRE BUSINESS BUSINESS The global As brands pivot their core business 3.5% de- As in-store shelf space migrates toward economy is only models to become fully purpose-driven crease―the 9% circular - just decrease in more sustainable options, it will be 9% of the 92.8 companies that strive to be proactive conventional billion tonnes of products that important for brands to consider how minerals, fossil around environmental and social appeared in fuels, metals stores from their sustainable offering can meet the and biomass wellbeing issues, they will begin to 2014, to that enter the 2017. Mean- needs of all customers — not just those economy are re- experiment with circular approaches to while “other used annually.(56) their business such as: transparent who can afford to pay premiums for more label products” ―The Circular- increased from sustainable product lines. As brands pivot ity Gap Report 29.4% to 30.5%, 2019 and “sustainable • Extending a product’s lifecycle through products” from doing “less bad more slowly” and increased from design and repair 19.7% to 22.3% become “good faster”, it will be critical over the same • Planning for product end of life, time period, that they do so in ways that are inclusive of (57) respectively. recovery, and reuse customers across price points. • Regenerating natural energy systems ―Nielsen 2018 through production 84 85

Propelling beyond EMBED “You want to refocus tomorrow —the future of CSR CSR IN ALL your core business BUSINESS in ways that make it KPIS a force for good, not (59) destruction.” While 60% of As data on CSR becomes more and companies believe their more compulsory, and investors sustainability disclosures continue to evaluate corporate facilitate investors’ com- strategies based on CSR metrics with parison of com- panies, 92% of increased intrigue, brands will need to investors do not agree.(58) ensure their initiatives are measurable ―CPA 2018 and codified against their overall business strategy – not add-on KPIs that live outside core business metrics and reports. ―Otto Scharmer Senior Lecturer at MIT and cofounder of the Presencing Institute 86 87

IS YOUR BRAND READY TO MAKE THE WORLD BETTER, FASTER? Reach out to us if you’re interested in: • Exploring a circular approach to your business strategy • Redefining your brand’s core to better portray conscious values • Improving the alignment of your CSR initiatives to your brand’s core 6% Employees and consumers alike will not wait for brands to • Internally and externally communicating how you intend to 6+94M slowly make their way toward making the world better. They make the world a better place of respondents want it now. Employees want to work at purpose-driven from medium and large companies and consumers want to buy from purpose- companies stated that they driven brands. In a marketplace of the future that’s built on operate within a sustainable the exchange of goods and services based on shared values, company that creates shared hanging on the sidelines of corporate social responsibility will value and where the organiza- simply not stand. tional Purpose is well-activated. (60) ―EY 2017 Going forward, brands that embark on wide, ambiguous CSR initiatives that are grounded in short-term appearance goals absent long-term substance will wither. Brands that will take a focused, refined — and yes, in some cases controversial—stand on certain issues will lead. This stand will enable brands to create focused alignment with consumers who truly meet their shared values. Employees and consumers alike will continue to watch and react to what they perceive as aligned or misaligned corporate social responsibility actions, stemming from a brand’s core. 88

ENDNOTES (01) Extract from William McDonough’s forward (17) AdAge (31) Stephen A. Greyser and Mats Urde https:// October 2018, Hervé P. Duteil Chief Sustain- to “Waste to Wealth”, by Peter Lacy cmo-strategy/kondo-craze-hits-re- ability Officer, Americas BNP Paribas, public (02) Gizmodo. tail/317189 rate-brand-stand-for recording: year-old-climate-activist-greta-thunberg- (18) The Atlantic https://www.theatlantic. (32) Stylus tainable-business-summit-nyc/#video-re- has-been-no-1833290242 com/business/archive/2016/11/how-hu- c?utm_source=newsletter&utm_me- cordings (03) 350 org. mans-became-consumers/508700/ dium=email&utm_campaign=fri- (48) Derived from in-person presentation at million-students-across-the-globe-demand- (19) Earth day_news_and_views_Feb%2015,%20 Bloomberg Sustainable Business Summit climate-action/ about/the-history-of-earth-day/ 2019&mkt_tok=eyJpIjoiTXpJd1pUUTN- October 2018, Hervé P. Duteil Chief Sustain- NR1k1TW1OayIsInQiOiJ6WkRLSElRaFR- ability Officer, Americas BNP Paribas, public (04) Dialogue credit: Cradle to Cradle, by Michael (20) Grantmakers in the Arts https://www.giarts. melk4U3haUU5wbFNVek1DcWYwVzdOU- recording: Braungart and William McDonough. 2002 org/article/shape-corporate-philanthro- 1BRN04rNVo1RjRJZW5oS3JRU04rX- tainable-business-summit-nyc/#video-re- (05) LinkedIn. Marc Pritchard. https://www. py-yesterday-and-today C95RmNBcFBnaVgrQndsMTMzcG1n- cordings (21) Grantmakers in the Arts https://www.giarts. R0dyaUkyUWZcL09JOUpFMmZFbno3Yl- (49) Tesla ty:6512303882314539008/ org/article/shape-corporate-philanthro- VtdWwwVjhLWFl2bVl1T1ZJUzBqNU5DN- sion-tesla py-yesterday-and-today VYyS0tNdlYwQWFxIn0%3D (06) UN (33) Kering (50) 1 Hotels ment/sustainable-development-goals/ (22) Estée Lauder Companies https://www. couture-and-leather-goods/balenciaga/ us/our-story (07) MSCI (51) Organic Valley https://www.organicvalley. the-breast-cancer-campaign (34) Dell coop/about-us/ (08) Otto Scharmer. https://consciouscompan- (23) Bill Gates 2008 https://www.gatesfounda- corp1/corp-comm (35) Dell: (52) Organic Valley https://www.organicvalley. gy-models/embrace-the-journey-the-5-stag- bill-gates-2008-world-economic-forum en/bscorp1/corp-comm/ocean-plas- coop/blog/solar-community-future/ es-of-corporate-sustainability/ tics?c=bs&l=en&s=corp&cs=bscorp1 (53) Fast Company. https://www.fastcompany. (09) McKinsey and Company https://www.mck- (24) US Trust 2015 com/90280950/exclusive-patagonia-is-in- publish/content/application/pdf/gwmol/ (36) Sam’s Club business-to-save-our-home-planet making-the-most-of-corporate-social-re- ustp_arl8qsq7_2015-09.pdf com/our-story sponsibility (25) Oxfam https://oxfamilibrary.openrepository. (37) Sam’s Club (54) Gro Harlem Brundtland 1987, Our Common com/bitstream/handle/10546/620599/bp- com/our-story Future (10) World Economic Forum https://www.wefo- public-good-or-private-wealth-210119-en. our-common-future.pdf pdf (38) UNFCCC (55) ING es-must-be-driven-by-purpose-as-well-as- ca-commits-to-fully-decarbonize-by-2050 icas-here-i-come-articles/how-circular- profits/ (26) Nielsen (39) Turismo Sostenible https://www.turis- thinking-could-change-us-business-models (11) World Economic Forum https://www.wefo- insights/reports/2018/unpacking-the-sus- tainability-landscape.html (56) The Circularity Gap Report 2019 https:// es-must-be-driven-by-purpose-as-well-as- (27) Nielsen (40) Salesforce profits/ insights/reports/2018/unpacking-the-sus- company/about-us/ (57) Nielsen 2018 (12) Forbes tainability-landscape.html (41) Salesforce en/insights/news/2018/was-2018-the- jaycoengilbert/2019/01/24/larry-fink-tuck- (28) ING company/sustainability/ year-of-the-influential-sustainable-consum- er-carlson-david-brooks-and-the-call-for-a- icas-here-i-come-articles/how-circular- (42) MAC er.html capitalist-reformation/#62e40ace78a5 thinking-could-change-us-business-modelsl our-story (58) CPA Journal, 2018 https://www.cpajournal. (13) ING (29) Mariana Mazzucato - Professor of Econom- (43) MAC com/2018/07/30/the-current-state-of-sus- icas-here-i-come-articles/how-circular- ics of Innovation and Public Value; Founder our-story tainability-reporting/ (Originally from Price- thinking-could-change-us-business-models and Director, Institute for Innovation and waterhouse-Coopers, ESG Pulse 2016) Public Purpose, University College London (44) Danone. (59) Otto Scharmer http://www.ottoscharmer. (14) Ellen MacArthur Foundation https://www.el- (UCL), Author: The Value Of Everything about-danone/sustainable-value-creation/ com/sites/default/files/Otto_Scharmer_In- our-mission.html dian_Management.pdf my/concept mariana-mazzucato/let-us-get-real-about- (45) B (15) Larry Fink 2019 Letter to CEOs https://www. purpose directory/danone-north-america (60) EY Assets/ey-sustainable-brands-purpose-led- tions/larry-fink-ceo-letter (30) Stephen A. Greyser and Mats Urde https:// (46) We Forum brands-survey/$FILE/EY-Sustainable%20 da/2019/01/why-businesses-must-be-driv- Brands%20Purpose-led%20Brands%20Sur- (16) Marie Kondō, Author of: The Life-Changing rate-brand-stand-for en-by-purpose-as-well-as-profits/ vey%20Insights_Aug%202017(Digital%20 Magic of Tidying Up: The Japanese Art of (47) Derived from in-person presentation at -%20Single)_secured.pdf Decluttering and Organizing Bloomberg Sustainable Business Summit 90 91

Contact: Antonis Kocheilas — [email protected] Stephanie Bakkum — [email protected]