Authentic commitment helps corporate executives avoid the Green Gap

By CenterStone Executive Search

For today’s CEO, measuring the impact of your company’s carbon footprint is becoming a critical part of your corporate blueprint: The green movement is not just a consumer cause, but a growing corporate concern.

Even in today’s business climate, the issue remains a priority in both short-term and long-range planning initiatives. Be aware that the terms “Triple Bottom Line,” “Sustainability” and “People, Planet and Profit” are now a part of daily boardroom conversations and a core component of business planning sessions in offices across the country.

Both corporate- and consumer-facing, these various shades of green are appearing in company collateral, point-of-sale material, event planning and annual reports; they are even surfacing in the recruiting process at all levels of the organization.

Corporate executives are interested in avoiding the “Green Gap” – the distance between what they say their companies should be doing and what they have actually done. The just-released 2008 Makovsky Green Gap Survey, conducted by Harris Interactive, interviewed 150 executives of Fortune 1000 companies from a broad range of industries, services, locales and sizes. It found that:

• 75 percent think their company should act on climate change issues to improve their corporate or brand reputation
• 67 percent believe such action would strengthen sales and ROI
• 58 percent feel it would improve employee recruitment and retention

While some may consider this a seedling of a movement growing from the ground up, in actuality it is a deep-rooted corporate initiative, with companies such as PepsiCo, Wal-Mart, Brown-Forman, Target and Kimberly-Clark leading the way.

Take a page from PepsiCo, which released this statement: “Climate change could result in changes in consumer preferences and retail customer demands. We must anticipate and react to such changes to maintain the demand for our products. If our company is unable to meet changing consumer preferences and customer requirements, we risk reduction in demand for our products and erosion of our competitive and financial position.”

What’s clear is that providing eco-friendly products is only one part of the total equation. Along with other market demands, organizations are being charged with becoming stewards of the earth, with government regulations, investor scrutiny and consumer expectations riding roughshod.

Seek authenticity and transparency

The engaged CEO will ensure that the sustainability initiatives are far more than marketing-speak or corporate “green washing.” Organizations need to demonstrate and monitor their own efforts to reduce their impact on the environment.

One noteworthy effort is the Carbon Disclosure Project (CDP), an independent, not-for-profit organization that works as a go-between for shareholders and corporations on climate-change-related issues. CDP is sponsored by government agencies (including the U.S. Environmental Protection Agency), foundations and corporations from around the world. This year they published their sixth annual report on the carbon footprints of Global 500 companies and the third annual report on U.S. S&P 500 companies.

”Compelled, in large part, by an appreciation for the importance, sophistication and focus of the CDP investor base, the responding companies have provided more candid and comprehensive responses than in previous CDP iterations,” this year’s report noted. “Increasingly, collaboration between CDP, CDP’s signatory investors and the responding S&P 500 companies is enabling institutional investors to factor companies’ actions in addressing climate change risks and opportunities into investment decisions.”

In this current climate, everyone’s a skeptic. Consumers, investors and employees want and need to know about your corporate eco initiatives.

Consumer consciousness

Be aware that green has gone mainstream in terms of consumer awareness – it’s impossible to pick up a piece of print media, watch TV programming or sign-in online without stumbling across an article, opinion or product related to the topic. It’s now part of the consumers’ dialogue, and factors into the decision-making and purchasing process. But truth be told, in many cases it’s still not the deciding factor when considering a purchase or product choice.

A recent Mintel International Group survey published in Brandweek (July 2008) noted that approximately 10 percent of the population are classified as “Never Greens.” These are consumers who don’t buy green products and don’t remember green advertising – and are “irritated by it if they do.” This same class of “Never Greens” also showed up in a Shelton Group survey, which found that 26 percent of Americans are hardcore green skeptics.

However, while many consumers might not be showing an overwhelming majority of convert-to-purchase rate at this time, the numbers are growing steadily. A recent Yankelovich survey found that one-third (34 percent) of U.S. consumers age 16 and over are “much more concerned” about the environment than they were a year ago; 13 percent report being “strongly concerned.” That translates to almost 50 percent of the 2,800 consumers interviewed expressing an increase in their concern.

This aligns with a recent Information Resources survey published on ProgressiveGrocer.com that says: “Half of U.S. consumers say they consider at least one sustainability factor when selecting brands to buy or stores to shop.”

As you look across the demographics, remember that the passion continues to heighten and will grow as key generations age. It’s stronger for GenX and GenY than for Boomers, and stronger yet for those under the age of 12. According to a Packaged Facts report published on MarketWatch.com (July 2008), “a significant majority of kids 6-11 express concern for environmental issues, with nearly half of kids 6-8 encouraging their parents to buy green products.” Take a moment and check out a social network of some green teens called Inconvenient Youth to see where your future consumers’ heads are at these days.

Key takeaway:

Forward-thinking CEOs are incorporating the green value set into their organizations and holding their senior management teams accountable. However, credit comes only by demonstrating an authentic commitment to sustainability and getting green all the way up and down the supply chain.

Know the green mantra: Reduce, Reuse, Recycle. Make your business mantra: Reconsider, Revise, Reinvent.

Back to Executive Insights.