The birth of a new megatrend?

The IT revolution; electrification; the rise of mass production; globalization. What do they all have in common? According to Harvard Business Review, they are all megatrends, and sustainability should now be added to the list.

In business terms, a megatrend – the term was coined back in 1982 by John Naisbitt in his bestseller of that name – is a major societal or economic shift that ‘force[s] fundamental and persistent shifts in how businesses compete’.

Many businesses have certainly found themselves struggling to cope with the greater expectations being placed upon them to improve the sustainability of their processes, products and services. Our regular study of experts in the field reveals that those in the know rate companies only just ahead of government, and a very long way behind NGOs and social entrepreneurs, in terms of how well they are seen to be advancing the sustainability agenda. And while some companies do seem to have taken sustainability to heart and integrated it into their core strategy – our expert panel rates initiatives like Walmart’s Sustainability Index and GE’s Ecomagination particularly highly – other high-profile campaigns like BP’s Beyond Petroleum are seen to have foundered when they came up against a succession of crises and scandals, of which the Gulf of Mexico oil spill is only the latest. Incoherent, inconsistent or insincere initiatives, it seems, aren’t impressing anyone.

But perhaps this criticism underestimates the change in mindset that is taking place within the corporate world. Despite the challenges, and setbacks like Copenhagen, the drive to greater sustainability shows no sign of abating. And as HBR points out, while government is starting to regulate as never before, companies – critically - are betting that investing in innovations in low-carbon technology and energy efficiency will pay long-term dividends. This megatrend is just getting going.

Europeans Warming to Carbon Taxes?

Les Echos are reporting a new Eurobarometer poll that reveals there is, apparently, significant support across Europe for a carbon tax on products that damage the environment, with nearly half (46%) supporting it as long as it was paired with reductions in taxation for more environmentally-friendly products.

But governments should probably be wary of taking this as a green light to introduce carbon taxes – other data suggests that consumers remain more price-sensitive than ever, particularly in the middle of a recession.

The finding is more interesting for what it says about the way that the carbon footprint of the products we buy has imprinted itself on the European public consciousness in recent times. Whether or not consumers ‘mean it’, and would be prepare to put their money where their mouth is, the fact that so many are prepared to voice their support for tax increases in support of a cause is in itself striking.

It’s also revealing that the British are apparently the most open to the idea of a carbon tax on polluting products. This is very much in line with what we’re seeing in our international tracking and may be a consequence both of the state of the environment debate in the UK and the fact that its consumers are relatively lightly taxed. Though this may be about to change...

There’s lots more of interest in the poll, and we may return to it.

A Black Mark for Primark

In our international tracking surveys on corporate social responsibility, we often ask our respondents to name an individual company that is fulfilling its responsibilities to society particularly well – or badly. They usually find it difficult to do so – often, nearly half can't name any standout company. In most countries, it's rare for any individual company to be mentioned by more than 10% of respondents, and revealingly, it's often the leading consumer brands that crop up at the top of both lists – their strengths and flaws are just more visible.

But occasionally, a new name emerges. This has happened in the UK this year, where budget clothes retailer Primark has shot to the top of the list of irresponsible companies in our latest survey. The six per cent who point the finger at Primark may not sound like many, but it's enough to move it ahead of controversial names such as McDonalds, Exxon and Nestle. It's clear that media coverage of some of its questionable business practices, notably the exploitative use of immigrant labour and child workers, has cut through the noise. And it's particularly notable given that Primark is part of a sector that – perhaps surprisingly – isn't seen as one of the more irresponsible industries out there.

Primark has since announced that it has sacked three of its Indian clothing suppliers, who it accuses of perpetrating 'wholesale deception' in their dealings with the retailer. This action might reassure some – Gap, for one, seems to have managed to shake off a reputation for using child labour thanks to a programme of factory monitoring and a high-profile PR campaign. (Whether it deserves to be off the hook is another matter.)

But others may conclude that if they can still buy a Primark t-shirt for less than the cost of the cappuccino they have afterwards, someone, somewhere, is bound to be losing out.

The Perils of Greenwash

Received wisdom has it that one of the major casualties of the economic crisis has been consumers’ enthusiasm for the ethical and green product lines that have made such strides over recent years.

Our latest global tracking data is telling us otherwise, and in fact suggests that ‘ethical consumers’, who look to reward responsible companies and punish irresponsible ones, are more numerous than ever. But what’s also clear is that there is growing disappointment in a number of key markets – Germans are particularly downbeat – about companies’ performance in being responsible, particularly when it comes to environmentally-friendly products. Many consumers are sensing that the increasingly bold claims that are being made for products’ environmental credentials aren’t always justified. In 2008, for instance, the UK’s Advertising Standards Authority upheld a record number of complaints about environmental claims. Greenwash is alive and well, it would seem.

An interesting new report by Consumer Focus adds weight to this argument and makes clear what’s at stake – if consumers don’t trust the claims that companies make, they become reluctant to exercise their green purchasing power as they don’t know who to believe. Which doesn’t bode well for the prospects of building a low-carbon and sustainable economy.

Consumer Focus’ recommendations for advertisers (and those who regulate them!) in generating confidence and trust in green claims are that they should be clear and easy to understand; that they should be credible (realistic, accessible and verifiable – they have to mesh not only with what consumers already believe about the brand and the wider market but also with their existing beliefs) and comparable (providing simple, meaningful and like-for-like comparisons).