Value through Transparency
Sustainability bran-
ding can be a power-
ful source of compe-
titive advantage

Sustainability Branding

The fourth and final category is ‘Sustainability Branding’: explicitly positioning products and services as more sustainable or ‘green’. Sustainability branding is usually supported by communication efforts in the other three categories, especially eco labeling. Choosing to highlight the environmental aspects of a product is a big decision. For most consumers, the environmental impact of a product is just one of the buying criteria, alongside quality, price, taste, convenience, etc. For this reason, and to avoid being accused of greenwashing, many companies choose not to highlight the sustainability impact of their products. However, as consumers become more aware of the environmental challenges, sustainability branding can be a good business decision.

Companies who engage in sustainability branding need to focus on two important elements. First, the product must meet certain criteria to be successful, and second, it must be supported by the right messages. Both are explained in more detail below.

Key Success Factors for Sustainable Products
Due to the skeptical attitude among many consumers towards anything ‘green’, it is not easy to be successful with ‘green’ products. These products need to comply with an impressive list of criteria:

Key success factors for sustainable products

What differentiates sustainable products from ‘normal’ products is that they provide benefits for society. However, to be successful, sustainable products need to satisfy personal consumer needs, first and foremost. The first generation of ‘green’ products that emerged in the 1980s got this wrong: the environmental impact was low, but so was the quality. Green detergents did not wash the laundry properly, energy-efficient light bulbs offered poor light, etc.

Providing personal benefits, such as product safety or cost savings, is essential. Furthermore, for the societal benefits to be relevant, they need to somehow be of value for individual consumers, e.g. through a ‘feel-good’ or a ‘look-good’ effect. Some ‘green’ products have become trendy and hip. For example, sales of the Toyota Prius in the US continued to rise while other hybrids were struggling, because research revealed that 57% of the buyers primarily bought the car to ‘make a statement about themselves’.

Pricing is a tricky matter. The production cost of sustainable products is often higher than that of products that damage the environment. Regulations will gradually force unsustainable companies to internalize the cost of pollution, creating a level playing field for sustainable products. Economies of scale will also help to achieve price parity. But until this point is reached, the market potential of sustainable products is most likely limited to the niche segment of the ‘Committed’: conscious consumers who are willing to pay (a little) more for sustainable products.

Sustainability Advertising
Companies that want to make green claims about their products need to be careful. They need to make sure that their statements are credible and trustworthy. As much as possible, companies should base their claims on facts they can substantiate. They should think twice about using green imagery such as trees, flowers and wind turbines, and should avoid vague terminology such as ‘environmentally friendly’ and ‘natural’.

Some companies have introduced their own labels. This is risky, because it adds to the confusion around eco labels. However, in some cases it can work well, e.g. when the company in question enjoys a strong reputation, which it can transfer to its green label, and when third parties are employed to verify the claims. Examples include Philips’ Green Logo and P&G’s ‘Future Friendly’ label.

A growing number of companies have started to use the ‘carbon neutral’ claim, which means that their net greenhouse gas emissions are zero. In most cases, this is achieved through the purchase of carbon offsets: reductions in emissions realized elsewhere, usually in developing countries. The use of offsets has become contentious, because it is difficult to prove that reductions have actually taken place, and that this was made possible by the money paid for the carbon credits. For these and other reasons, e.g. the fact that many consumers have no clue about carbon emissions and climate change, use of carbon neutrality claims is probably not a good idea.

In the end, sustainability branding is no different from building a ‘normal’ brand: it takes time and lots of money, but it can become a powerful source of competitive advantage.