What to do about Sustainability

Are you tired of hearing about how your company must become greener? Have you had your fill of the hype surrounding natural and organic ingredients? Do you still believe that this is all a fad and will eventually go the way of the Macarena or those awful low riding jeans? Then this is the article for you.

Although not recession proof as economists understand the term, the natural and organic personal care market continues to significantly outpace the overall personal care industry as consumers shift preferences toward products that they perceive as healthier and better for the environment than many of the offerings that have dominated the landscape for decades. In fact, recent data suggest that while sales of traditional personal care products struggled to remain level with previous years’ results, sales of green personal care products actually posted double-digit gains.

The reality of whether naturally derived and processed ingredients are actually healthier or better for the environment is not as important as the public perception of this idea as largely true. This attitude is pervasive not only among an increasing number of consumers, but also among media and government bodies. Indeed more regulation is on the way, and a number of the ingredients currently in use will eventually become either forbidden or strictly regulated. Add to this mix some pressure from NGOs, competitors, and supply chain partners who will both encourage and push you to become more sustainable, or“greener.”

The natural movement has impacted every segment of the personal care industry.

Need more proof that green is here to stay? Consider the mayhem that channel leader Walmart created in its supply chain to institutionalize vendor environmental requirements. Meanwhile, the European Union and California are both working toward more cosmetic regulation. Clorox has introduced a natural line of cleaning products. The landscape has shifted. Regardless of where your company is in addressing this issue, there are several initiatives to consider:
• Develop an ongoing sustainability plan for continuous improvement;
• Begin adding natural and certified organic ingredients in stages; and
• Communicate in a transparent and truthful manner.

Sustainability: The Green Imperative

Whether you use the terms green, socially responsible, environmentally friendly, or sustainability to describe your efforts, the meaning is really the same. Sustainability, the most current and all-encompassing term, can be defined as meeting corporate objectives and consumer needs in a way that demonstrates continuous improvement toward minimizing negative impact on people and the natural environment. Thus, businesses have redirected strategies toward health or the environment—or better yet, a combination of the two.

Most of the available literature is focused on the “why” of sustainability in business, but there has been little written on the “how.” First, consider the why:

Target Marketing: A sustainable marketing strategy, with products that are properly positioned, will address the growing target market for goods that are green, natural, etc., which is well over 50% of the population.

Sustainability of Resources: Ensuring the availability of resources to continue to make and sell goods is another imperative that suppliers and manufacturers must embrace. For example, cutting down all of the trees in a forest will not help the shareholders of paper companies, let alone everyone else.

Lowered Costs/Increased Efficiency: There are countless ways to save money and increase efficiency so that marketers can enhance the bottom line and stave off the narrowing of margins that occurs in every industry as it reaches the maturity stage of the life cycle.

Product Differentiation and Competitive Advantage: Every marketer knows that in the hyper-competitive world of ingredients and products, notably in personal care/cosmetics, it is crucial to maintain advantages over competitive and substitute offerings.

Competitive and Supply Chain Pressures: When competitive organizations and their products adopt sustainable business models and green positioning, it often pressures other companies to follow suit, especially in the case of market leaders. Walmart and its recent environmental and social initiatives illustrate how powerful supply chain members can force companies around the world to adopt more favorable social and environmental policies.

Regulation and Risk: Regulations at all levels of government are rising rapidly, so organizations must not only remain in compliance but also stay proactive with regard to impending legislation. This practice reduces shareholder risk.

Other Stakeholder Demands: Activist shareholders, NGOs, the financial sector, and the media all work independently and sometimes in concert to ensure that companies are cognizant of their impact on people and the environment.

Brand Reputation: Astute marketers know that a brand’s reputation is of paramount importance, and being sustainable enhances that reputation among the majority of consumers.

Global Market Forces: Global concerns about climate change, looming energy problems, and a recent growing backlash against globalization along with many others factors all point toward the necessity in addressing sustainability issues.

Customer Loyalty: A brand’s attitude toward sustainability is just one of the many variables that factor into the decision-making processes of the majority of consumers.

Employee Morale: A wide body of research points to the fact that adopting a more sustainable business model actually enhances employee morale.

The Ethical Imperative: This concept is simple. It is not ethical to degrade the environment and the people in it in the name of commerce. Embracing sustainability is simply the right thing to do, and stakeholders are sensitive to it.

A careful examination of the above reasons for building a sustainability model into your business and marketing strategy reveals that all can lead to those magic words, “Return on Investment.”

Developing sustainable personal care products is not only the right thing to do, it can be profitable too.

How do you boost ROI? One manner of looking at this important business model and marketing strategy revolves around two primary concepts: Front End Sustainability and Back End Sustainability. If processes are to meet sustainability objectives, measures must be taken regarding:

Front End—Reducing, managing and eventually eliminating pollution throughout the product development process.

Back End—Re-designing systems so that resources are recovered to be re-used, reconditioned, and/or recycled so that the resources used can be recovered and avoid terminal disposal.

Application of this concept involves an all-encompassing environmentally- and socially-friendly approach that follows the product from its inception all the way to disposal by the end-user.

The days of choosing from a “green buffet” are rapidly coming to an end. Competitors, a growing consumer environmental and social awareness, rapidly increasing government regulations, the often-coercive influence of socially or environmentally oriented NGOs, the media in all of its splendor, and influential supply chain partners increasingly demand that organizations perform environmental and social audits and develop comprehensive plans for continuous improvement in a number of areas.

Sustainability efforts should be woven into every aspect of the organization for optimal competitive advantage. Shallow efforts at positioning products, let alone entire organizations, fall on increasingly deaf ears and, more importantly, open the organization up to the growing backlash against “greenwashing,” a kind of puffery that is rapidly gaining scrutiny among stakeholders too.

In order to achieve true transparency, the best way to utilize a green marketing strategy is for the sustainability audit and plan to be available on a company’s website. It must be updated annually with measurable objectives for improvement in the following areas:
• The nature of raw materials and composition of products offered;
• The nature, consumption and recapture of energy;
• The use of water;
• Impact on land and biodiversity;
• Reduction and recovery of emissions, effluents and waste;
• Distribution issues such as packaging and transportation;
• Cause related involvement; and
• Human resources and vendor partner policies.

Commitments to any of these areas can be easily assimilated into a product’s brand identity and crafted into a message that incorporates a concern for people and the environment.

Boutique manufacturers are rolling organic bar soaps.

Get Natural and Organic

Unfortunately for a number of organizations, many synthetic materials (such as pthalates, DEA and parabens) are in danger of becoming stigmatized, heavily regulated, or even outlawed altogether. California’s Green Chemistry Initiative, as well as a number of European efforts, have ignited a regulatory juggernaut. Fortunately, there are thousands of natural ingredients available from hundreds of suppliers worldwide. Natural ingredient availability may no longer be a major issue, but attempting to find steady supplies of certified organic ingredients is a more difficult task. Begin by removing controversial ingredients, which can be identified through conducting a brief internet search. Incorporate natural ingredients at a level that exceeds more than 70% of the total formulation. If you can source certified organic ingredients cost-effectively, then include those as well. Though regulations are not yet in place, you can conservatively make a natural claim such as “Made with Natural Ingredients” and can asterisk any certified organic ingredient as such.

On a second reformulation, strive for 100% natural ingredients, but be satisfied with 95% or higher so that an overall claim of “natural” can be safely made. Continue to replace any synthetic (and natural ingredients for that matter) with certified organic ingredients when feasible. Chemically speaking, natural and organic ingredients will behave in the same way but both will behave differently than the synthetic counterparts they are intended to replace.

Once 70% of the product is certified organic, you are able to make claims such as “made with organic ingredients.” When a product contains 95% organic content, a claim of “organic” can be made. “USDA Certified Organic” is the ultimate goal because this third party certification is regulated by the U.S. Department of Agriculture.

Be Honest and Diligent

In addition to complete transparency with regard to your annually updated sustainability plan, all marketing communications must be truthful and non-misleading. Exaggerated claims, half-hearted attempts at environmental stewardship and social responsibility, as well as outright falsehoods will only expose your company to risk. In no way can you achieve a sustainable competitive advantage through engaging in such behavior in this age of information availability and viral communication.

The process of sustainability auditing, planning and implementation is not much different than efficiency programs such as Total Quality Management, Six Sigma and Zero Defect. In contrast, sustainability programs can be relatively easy to institute and maintain. More difficult is the task of reformulation, but the industry is replete with success stories—larger brands such as Burt’s Bees and Aveda; established companies such as Jason and Aubrey Organics; and small market players like Pangea have all successfully traveled the reformulation route. These examples serve as case studies and as inspiration for navigating the road ahead.

About the Author
Since 2000, Darrin C. Duber-Smith, MS, MBA, has been president of Green Marketing, Inc., a Colorado-based strategic planning firm offering marketing planning, marketing plan implementation and other consulting services to companies in all stages of growth.

He has almost 20 years of specialized expertise in the natural and sustainable products industry and has been a visiting assistant professor of marketing at the Metropolitan State College School of Business in Denver, CO, since 2003 and an adjunct professor at the Leeds School of Business at the University of Colorado-Boulder since 2006. He can be reached at Success@GreenMarketing.net.