Strategy
Digital companies can no longer ignore sustainability
Sustainability has gone in short order from a fringe concern of hippie companies, like Ben & Jerry’s, to a forward-thinking means of differentiating yourself in a crowded market, to now: where businesses who don’t engage with some sort of green business can expect to be penalised for it.
After a year of wildfires in Greece and incredible floods in Germany, around a third of consumers are looking at ways they can help confront the climate crisis when they shop.
Nearly six in 10 consumers want to reduce their environmental impact, according to figures from IBM, and seven in 10 respondents say they would, on average, pay more than a third more with brands that they believe to be sustainable.
Businesses are rapidly adapting. It is not unusual to see public companies, like Patagonia and Lush, whose marketing is mostly concerned with describing their green credentials. Even businesses with arguably no natural claim to being sustainable, like Land Rover, are on-board: the big car brand has committed to being carbon neutral by 2039.
The times are certainly changing if even the diesel-guzzling Land Rover is committed to the green revolution. Businesses across the globe are faced with needing to conform, innovate – or be left behind.
The most important points of the blog
Consumers report feeling ‘empowered’ to do something about the climate crisis.
Consumers report feeling ‘empowered’ to do something about the climate crisis.
Nearly three-quarters are actively looking to identify brands that reduce environmental impact, according to an MIT-linked center. Around 61 per cent say they are on the lookout for energy-efficient labels when making purchases and half report regularly buying organic products.
There is a generational element to this: Gen Zs and Millennials (born in the late ‘90s and ‘80s-’90s, respectively) place a special emphasis on ethical practices and sustainability efforts when making buying decisions (these are also the customers who tend to shop online the most.)
What is sustainable, anyway?
What is sustainable, anyway?
The first problem facing any digital company will be defining what sustainable action looks like for their industry and business model. But herein lies the problem for a business. What is ‘organic’? What is ‘energy-efficient’? Does reaching these standards mean changing assets, packaging, delivery, operations, a business model? Should digital-first companies be providing sustainable code, if such a thing exists? The list of refinements is potentially endless.
And how far should one go? Merely perform due diligence on potentially dodgy supply lines, or should companies be more ambitious: planting forests, like hip Scottish brewery, Brewdog (the project is branded: ‘Tomorrow’)?
As with any initiative, developing a strategy will be core to success – or, better said, progress.
This should include a mission statement: ‘to become an industry leader in sustainable fashion retail’, as an example. There should be a clear means of oversight and culpability: an annual sustainability report, for example. Audit existing supply chains and employ a means of vetting new ones. Limit travel to what is necessary and encourage employees to travel green, like a ‘bike to work’ scheme. These changes may require a change in organisational culture to make progress.
Ocado, the British online grocer, claims to be ‘industry leading’ in sustainable grocery delivery.
Ocado, the British online grocer, claims to be ‘industry leading’ in sustainable grocery delivery.
It aims to be carbon neutral by 2040 and is involved in a process of converting all its packaging to being made from recycled materials (and generating industry news by doing so). The company invests heavily in sustainability across multiple parts of its business.
Importantly, Ocado does particularly well at telling customers what it’s doing, being both clear and concise (‘Ocad0 Waste’). Being too wordy can have the unintended effect of being perceived as bragging or, worse, trying to obscure something.
The company also boasts superior SEO: type in ‘Ocado sustainability’, and the entire first page of results leads to various pages on the Ocado website covering its initiatives. This gives the company a degree of leverage and control in communicating with its customers. Obviously, this has to be about being as informative as possible, not hiding criticism!
Customers today are doing their own research out of fear of ‘green-washing’ – or companies who claim to be sustainably without being so.
Communicating clearly and honestly about green credentials is key: consumers need to hear that a business – and thus their transactions with a business – are doing something to make the world a better place.
Where there's smoke
Where there’s smoke
While companies are racing to meet new consumer expectations: they are also challenged with keeping up with other, sometimes contradictory, desires. Since there has been commerce, people have wanted things for the cheapest amount possible, which is hard to do ethically.
Recent trends, notably rapid delivery, have put extra pressure on online businesses to offer a number of speedy delivery options with competitive pricing. Around three-quarters of consumers now say they want things they order online delivered the same day.
This is not going to be environmentally-friendly.
This is not going to be environmentally-friendly.
A study found that various food takeaway apps could cause as much as a 450% larger carbon footprint per household. Plastic usage has also increased dramatically due to the demand for instant food delivery: generating 280 tonnes more per day.
Modern companies are faced with a tightrope of trying to be sustainable while meeting these demands. There are ways around this. Some brands market their social-conscious aggressively and charge customers upmarket prices for a clear conscience, like Sephora.
Others make it part of their business model.
Others make it part of their business model.
The Dutch startup, Picnic, for example, offers a milk-delivery service. They follow a set route at set times calculated on customer locations. The app shows exactly where the electrically-powered delivery van is driving. Customers have to ensure they are home to receive their order. Customers are asked to be part of the journey towards being sustainable: something that, ironically, contributes to the value proposition of Picnic.
Companies that aren’t able to update their business to account for customers who are engaged in modern concerns about climate change and the environment are inviting disaster.
Digital companies must develop a strong mission statement and carry it out at every level of the business – while making information about their progress easy to find and understand for shoppers.
The time to adapt is now.
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