With a somewhat late start in 1999, when Shell started the ball rolling with China’s first ever sustainability report, over the past few years we have seen that sustainability reporting is on the rise in China. In 2010 there were over 700 released.
The rapid growth in reporting in China is not surprising for several reasons: a shift towards a bigger focus on corporate responsibility and sustainability as the issue of climate change and the over-exploitation of resources has been covered more intensely by the media. Secondly consumers are looking for a greater focus on accountability due to increasing food prices and safety ‘scares’ with corporations usually at the centre of discussions. Thirdly, in recent years, the Shanghai Stock Exchange has also been putting increasing pressure on its members to report and have issued guidelines for doing so. Consequently corporations say that compliance, credibility, global pressures and leadership are the main reasons driving them to create these reports.
It should be noted that the most responsible reporters are often those companies with the biggest footprint, both environmentally and socially. However as this trend shifts across to a wider variety of players the contents of reports are including not only information around compliance but also more about the sustainability values of the brand, and a growing number of smaller companies are stepping up to provide information.
Sustainability reporting was originally born out of demands from society and in particular special interest groups, but only a very small group of people actually end up reading these reports. Generally consumers do not even visit company websites unless there are incentives or advice on offer, and they generally don’t stick around to read the latest press releases or CEO statements let alone in-depth reports.
When looking for information on a brand the first port of call are search engines, and so inevitably, if anyone has posted anything about the brand – either positive or negative – these will appear in brand searches, making a well put together sustainability report sitting on a corporate website on the whole void for the larger population.
So with the main driver for reporting being brand reputation, and more corporations rushing to keep up with their peers by producing sustainability reports, I find it strange that companies are not doing more with the information that they put in these reports.
Outside of China, companies have already been looking for more dynamic ways of demonstrating to consumers that they are stepping up to the sustainability challenge, but it is still very much in the early days of development.
Here in China as consumers are getting to grips with the deluge of marketing messages they receive every day, and paranoia on increasing in regards to who is trustworthy, there are many opportunities for brands to demonstrate their positive brand values at many stages of the consumer experience.
Channels such as digital media and on packaging are where subtle but important connections can be made with the consumer. In particular, mobile technology is growing stronger every moment, making it easier for consumers to quickly check things such as price, availability and product features while on the move and in store. I am always surprised that more brands do not take the opportunity to communicate with consumers about why their product may be a better environmental and social choice than a competitor’s.
Patagonia, the outdoor sportswear company, do a great job of reporting. In terms of transparency and education, they do a good job of giving the consumer a peek into the supply chain of their business in an accessible way and they demonstrate great brand stewardship. ‘The Footprint Chronicles’ focuses on communicating water, transport, energy used, Co2 and waste in a selection of products. One of the reasons they have such a strong brand following is because of their transparency and openness on progress achieved.
Virgin Media are a good example of a brand reporting to a wider set of stakeholders in a fun and engaging way. Through their corporate sustainability website they provide the traditional report but more prominent are the regular updates with bite size chunks of information about the progress they are making, usually in video form that allows viewers to share on digital media platforms.
Balancing the bad with the good
One of the main reasons companies hold back on reporting to a wider audience can be the difficulty of proving data and figures around this kind of performance. With standards changing constantly and a new topic in the media every month, it is understandable that a company may be nervous about communicating so openly to a broad group of stakeholders.
One thing that both Virgin and Patagonia do really well is the way they present information. The content available is less ‘look how great we are’ and more, ‘take a look at the impact of our business and see how we are trying to be better’. I think it’s fair to say that any company that has reached the stage of a sustainability report has a fairly good idea of the impacts and progress being made, so rather than being scared about communicating this information more widely, companies should use it as an opportunity to engage their consumers about how they are making changes for the better and bringing them along on their journey.
With such reporting, a company also has a great opportunity to get valuable feedback from their consumers as to what they really care about by both tracking the content viewed and reaching out to consumers for ideas, creating real brand value.
Visual content stays with the viewer for longer than verbal and written content, and video and images are not only a great way of getting to the consumer to see progress but are also simple forms of shared media that allow consumers to pass on content they like to their peers.
What’s the hurry?
So what is the risk of not engaging consumers now with sustainability? Losing the early mover advantage when a brand may already have great stuff to talk about could be the biggest mistake a brand can make as consumers look for brands to trust.
The way stakeholders interact with brands has never been more different and through an ever growing number of new media channels, consumers are getting to really know a brand’s ‘personality’. Add this to growing safety concerns and it’s no wonder over 17% of Chinas 1st and 2nd tier urban consumers consider themselves to be LOHAS (lifestyles of health and sustainability) consumers. It’s only a matter of time before third parties step up to provide information if consumers in China can’t find it themselves.
The GoodGuide is an organisation that’s been around in the USA since 2007. Both online and available as an iPhone app, it allows consumers to see not only a score of how companies perform overall but also to add filters according to what they care about most, for example animal testing, or social responsibility. As consumers shop they can search for a brand on the spot to see how it ranks against others. Others have since sprung up around the world such as ‘checkitmobile’ in Germany which shows there is a growing number of consumers that are looking to get their hands on more information.
We also see issue specific projects cropping up more and more> For example, The ‘Plastic disclosure project’, launching globally this year, asks companies to report their plastic use, policies for reduction and recycling incentives. It hopes to encourage more companies to take action to reduce plastic in their supply chains. Brands that have not fully mapped their impacts will be open to being exposed.
A world where consumers can stand in a supermarket deciding between brands that offer the same product and have as much easy access to details of their environmental and social performance as they currently do on nutrition content, price etc may be only a pipe dream right now but the more brands make this information available, the more quickly they will reap the rewards of brand loyalty from consumers who are looking for accountability.
This blog was adapted from an article written for ECOnomy magazine