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Don’t miss the boat on the wave of sustainability

When Cadbury announced the end of its Dunedin manufacturing, the well-known confectionery brand may well have abandoned any chance of reclaiming its position as New Zealand’s most loved brand. In fact, the rot set in when Cadbury became the lightning rod for concern over deforestation linked to the use of industrial palm oil.

In all fairness, many other companies have long-hidden their own use of unsustainable palm oil under the description “vegetable oil”. Efforts to support sustainable production of palm oil have been fraught by misleading claims overseas that has seen more companies saying they only use the ‘good oil’ that is actually produced.

Like most organisations, someone at Cadbury will have the word ‘sustainability’ in their job title. Many of the world’s largest companies have taken sustainability to the core of their business and benefitted from it in terms of share market performance. Many smaller companies – including local businesses that benefit from their association with ‘brand New Zealand’ – are more agile and better able to navigate the expanding desire from people for authentic and forward-thinking brands. Sustainability has moved from the margins to the mainstream, and indeed is now expected of any company worth its salt. For New Zealand brands there are particular opportunities because of the aura that our natural environment and low population density (of people, if not animals) brings.

Most of us know that the ideal attributes of New Zealand – clean, green, sustainable and ethical production – are yet to be realised in a corporate environment and that work is urgently needed to bring the reality into line with global consumer expectations, and to support our nation’s brand positioning. Unless collectively we do enough to manifest these attributes, the path will be one of economic stagnation. The brand differentiation that currently enables New Zealand to punch above its weight will be lost. We’re at risk of becoming locked into a commodity positioning that misses out on the value delivered by authentic commitment to sustainability, and New Zealand provenance.

A company’s resistance to taking sustainability seriously is sometimes couched in terms of the ‘behaviour gap’, observed when there is a disparity between what consumers say they want and their actual behaviour. Taking actual behaviour as a starting point to understand customers makes sense and is something that TRA agrees with. But it is a mistake to assume that just because people do not always do what they profess to do, that this gives a company a get out of jail free card so they can ignore their customers’ aspirations to purchase sustainable products.

The opposite is the case. Any company that approaches issues of sustainability as something to avoid and get away with not doing are building in current and future vulnerability for their business. Many businesses know that consumer’s actual behaviour towards sustainable brands do not currently reflect their claimed beliefs and concerns about how businesses should be acting. But falling into this train of thought is to fatally miss the important contextual movement towards sustainability, and the impact daily messages about climate change, deforestation, social inequity have on society and individuals.

This context can be considered at both an individual consumer level and at the level of macro ‘cultural currents’ that TRA have been identifying and monitoring as part of an ever-changing knowledge bank designed to inform clients about the future of their business environment.

The desire to identify and engage with brands that are doing ‘the right thing’ is growing. In the face of long term and seemingly insurmountable global challenges people feel limited in what they can do. There is emotional tension created by feeling unable to solve big issues, but wanting to do your bit: to do the right thing where you can. Purchasing from socially conscious brands is a practical way for consumers to feel they are doing their part.

At the individual level the idea of mental accounting may be helpful to understand these tensions and uncover ways companies can assist customers towards albeit temporary and partial resolutions ‘in the moment’.

Mental accounting is best considered a coping mechanism that may lead to people actively addressing an issue like sustainability in one mode or purchase behaviour, but discounting it in another. This is the contradictory behaviour that is grasped by some companies as an excuse to do nothing to assist customers in dealing with big issues in small, personal ways.

But those businesses that gain an understanding of the consumer’s mental accounting process – automatic and unconscious as it may be – have a starting point to develop initiatives that will differentiate and make their brand attractive to customers in the medium and long term. That is, to be part of the solution rather than the problem, and to enable customers to feel that emotion when they deal with you – tipping the mental accounting equation.

At the macro level of ‘cultural currents’ – the challenge for companies is to understand how their business fits, or could fit, within the trajectories those currents manifest in customers.

It is not an easy task, as there are many contrasting and conflicting currents depending on where you are looking and who you are talking about. That said, any organisation with the nous to understand its own DNA, purpose, and contribution to its customers’ lives should be endeavouring to understand what the cultural currents mean for their business beyond their office walls, and current horizons.

Cadbury may have not have foreseen the ill-wind that would blow across their brand as a result of the palm oil issue. But since then they should have been engaged in a more thorough process of understanding cultural currents set to fundamentally impact them.  They may have understood the importance of fair trade in their business but obviously not the potential for local production and association with ‘brand New Zealand’ to market products internationally.

It may be unfair to expect such understanding from a global behemoth detached from its roots and mission. But for other organisations there is an urgent need to unpack the notion of sustainability in order to grasp the implications, manage risks and make the best of the opportunities that these cultural currents present.

Jon Carapiet is a senior consultant at TRA.
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