🛍️Principles of Marketing Unit 19 – Sustainable Marketing: A New Approach
Sustainable marketing integrates environmental, social, and economic considerations into marketing practices. It aims to create long-term value for all stakeholders while meeting current and future needs. This approach requires transparency, collaboration, and a shift from short-term profits to long-term value creation.
The importance of sustainable marketing is growing due to increasing consumer demand, regulatory pressure, and investor expectations. Companies that embrace sustainability can gain a competitive advantage, mitigate risks, and tap into new opportunities for innovation and growth in the expanding market for sustainable products and services.
Integrates environmental, social, and economic considerations into marketing decisions and practices
Aims to meet the needs of current and future generations without compromising the ability of future generations to meet their own needs
Focuses on creating long-term value for all stakeholders (customers, employees, shareholders, society, and the environment)
Requires a holistic approach that considers the entire lifecycle of a product or service from sourcing to disposal
Involves transparency and accountability in communicating the environmental and social impacts of marketing activities
Includes disclosing the carbon footprint of products and services
Requires reporting on the social and environmental performance of the company
Emphasizes collaboration with stakeholders to address sustainability challenges and opportunities
Requires a shift in mindset from short-term profits to long-term value creation
Why It Matters Now
Growing consumer demand for sustainable products and practices
66% of global consumers are willing to pay more for sustainable brands (Nielsen)
73% of millennials are willing to pay more for sustainable products (Nielsen)
Increasing regulatory pressure to address environmental and social issues
Paris Agreement on climate change requires countries to reduce greenhouse gas emissions
EU Green Deal aims to make Europe climate-neutral by 2050
Investor pressure to integrate sustainability into business strategies
$30.7 trillion in assets under management are invested in sustainable strategies (Global Sustainable Investment Alliance)
Competitive advantage for companies that embrace sustainability
Unilever's Sustainable Living brands grew 69% faster than the rest of the business in 2018
Risk mitigation by addressing sustainability challenges proactively
Reputational risks from negative environmental or social impacts
Supply chain risks from resource scarcity or social unrest
Opportunity for innovation and growth in sustainable products and services
Global market for low-carbon products and services is estimated at $5.5 trillion (World Bank)
Key Principles of Sustainable Marketing
Lifecycle thinking considers the environmental and social impacts of a product or service from cradle to grave
Includes sourcing of raw materials, manufacturing, distribution, use, and disposal
Requires collaboration with suppliers and customers to minimize negative impacts
Stakeholder engagement involves ongoing dialogue and collaboration with stakeholders to understand their needs and expectations
Includes customers, employees, investors, communities, and NGOs
Helps to identify sustainability challenges and opportunities and build trust and credibility
Transparency and accountability involve disclosing the environmental and social impacts of marketing activities and being accountable for them
Includes reporting on sustainability performance using recognized frameworks (GRI, SASB)
Requires setting measurable sustainability targets and reporting progress towards them
Circular economy thinking aims to keep resources in use for as long as possible and minimize waste
Includes designing products for durability, repairability, and recyclability
Requires new business models based on leasing, sharing, or product-as-a-service
Social responsibility involves contributing to the well-being of society and addressing social challenges
Includes supporting local communities, promoting diversity and inclusion, and respecting human rights
Requires aligning marketing practices with social values and expectations
Green vs. Greenwashing
Green marketing promotes products or services based on their environmental benefits
Includes using eco-labels, environmental claims, and green packaging
Requires substantiation of environmental claims and avoiding misleading or false claims
Greenwashing is the practice of making false or misleading environmental claims to promote a product or service
Includes using vague or unsubstantiated claims (eco-friendly, natural, biodegradable)
Can damage a company's reputation and erode consumer trust
Avoiding greenwashing requires transparency, honesty, and accountability in environmental claims
Includes using recognized eco-labels (Energy Star, USDA Organic) and providing evidence to support claims
Requires educating consumers about the environmental benefits of products or services
Regulatory oversight helps to prevent greenwashing and protect consumers
FTC Green Guides provide guidance on environmental marketing claims in the US
EU Unfair Commercial Practices Directive prohibits misleading environmental claims
Sustainable Marketing Strategies
Product design strategies focus on designing products that are environmentally and socially responsible
Includes using sustainable materials, designing for durability and recyclability, and reducing packaging waste
Requires collaboration with suppliers and customers to optimize product design
Pricing strategies aim to reflect the true environmental and social costs of products or services
Includes using lifecycle costing to account for externalities (carbon taxes, social costs)
Requires balancing affordability with sustainability to ensure access for all consumers
Promotion strategies communicate the environmental and social benefits of products or services to consumers
Includes using eco-labels, environmental claims, and sustainability reporting
Requires educating consumers about the sustainability features and benefits of products or services
Place strategies aim to minimize the environmental and social impacts of distribution and logistics
Includes using sustainable transportation modes (electric vehicles, rail), optimizing routes, and reducing packaging waste
Requires collaboration with logistics providers and retailers to optimize distribution
People strategies involve engaging employees and stakeholders in sustainability initiatives
Includes training employees on sustainability, incentivizing sustainable behaviors, and engaging stakeholders in sustainability dialogues
Requires leadership commitment and a culture of sustainability throughout the organization
Measuring Sustainability in Marketing
Lifecycle assessment (LCA) is a tool for assessing the environmental impacts of a product or service throughout its lifecycle
Includes measuring energy use, water use, greenhouse gas emissions, and waste generation
Requires collecting data from suppliers, manufacturers, and customers to assess impacts
Carbon footprint is a measure of the total greenhouse gas emissions associated with a product or service
Includes direct emissions from manufacturing and distribution and indirect emissions from supply chain and customer use
Requires using recognized methodologies (GHG Protocol) and reporting standards (CDP)
Social impact assessment (SIA) is a tool for assessing the social impacts of a product or service on stakeholders
Includes measuring impacts on employees, communities, and society (job creation, health and safety, human rights)
Requires engaging stakeholders to understand their needs and expectations and assess impacts
Sustainability reporting involves disclosing the environmental and social performance of a company using recognized frameworks
Includes using GRI, SASB, or other frameworks to report on sustainability indicators and targets
Requires external assurance to ensure the credibility and reliability of sustainability data
Sustainability metrics are specific indicators used to measure and track sustainability performance over time
Includes energy efficiency, water use intensity, waste diversion rate, and diversity and inclusion metrics
Requires setting measurable targets and tracking progress towards them using data and analytics
Challenges and Opportunities
Balancing sustainability with profitability can be challenging for companies
Requires investing in sustainable practices and technologies that may have longer payback periods
Opportunities exist to create shared value by aligning sustainability with business strategy and innovation
Changing consumer behaviors and lifestyles to be more sustainable can be difficult
Requires educating consumers about the environmental and social impacts of their choices and providing sustainable alternatives
Opportunities exist to create new markets for sustainable products and services that meet changing consumer needs
Collaborating with stakeholders to address systemic sustainability challenges can be complex
Requires building trust, aligning incentives, and sharing risks and benefits among stakeholders
Opportunities exist to create collective impact by leveraging the strengths and resources of different stakeholders
Measuring and communicating sustainability performance can be challenging due to lack of standardization and transparency
Requires using recognized frameworks and methodologies and providing credible and reliable data
Opportunities exist to differentiate and build trust with stakeholders by demonstrating sustainability leadership and performance
Integrating sustainability into all aspects of the organization can be a complex and ongoing process
Requires leadership commitment, employee engagement, and a culture of sustainability throughout the organization
Opportunities exist to create long-term value and resilience by embedding sustainability into the core business strategy and operations
Real-World Examples
Patagonia is a leader in sustainable marketing, using recycled materials in its products, offering repair services, and advocating for environmental causes
Donates 1% of sales to environmental organizations through its 1% for the Planet program
Encourages customers to buy only what they need and to repair and recycle their products
Unilever has set ambitious sustainability targets as part of its Sustainable Living Plan
Aims to halve its environmental footprint and improve the health and well-being of 1 billion people by 2030
Its Sustainable Living brands (Dove, Lipton, Hellmann's) grew 69% faster than the rest of the business in 2018
Tesla is disrupting the automotive industry with its electric vehicles and sustainable energy solutions
Its mission is to accelerate the world's transition to sustainable energy
Has built a network of Supercharger stations to enable long-distance travel and reduce range anxiety
IKEA has set a goal to become climate positive by 2030, reducing more greenhouse gas emissions than its value chain emits
Uses sustainable materials (FSC-certified wood, recycled plastic) in its products and packaging
Offers buy-back and resale programs for used furniture to extend product life and reduce waste
Seventh Generation is a pioneer in sustainable household products, using plant-based ingredients and recycled packaging
Its products are certified by the USDA BioPreferred program and the EPA Safer Choice program
Advocates for environmental and social causes, such as climate action and ingredient transparency