Innovation in corporate responsibility


At Towson Town Center, sales are exceeding expectations in the mall's new wing of luxury retailers, executives said. (Astrid Riecken/FOR THE WASHINGTON POST)
November 9, 2011

Diana Verde Nieto is an entrepreneur and the founder and CEO of Positive Luxury and the founder of the global sustainability communications consultancy Clownfish. Nieto was named a Young Global Leader by The World Economic Forum in March 2011.

There was a time when brands were entirely local. Local vendors competed for business across the socio-economic spectrum of a community with simple products and simple production methods. Today, however, we are a global society of consumers. An Italian designer’s bag manufactured in Malaysia is distributed globally, sold in China and holds the same cache there – if not more — as it does in the United States. And these global brands have come to define us — from the clothes we wear, to the cars we drive, to the food we eat. We rely on brands to reflect our values, and, given this, we expect companies to operate in a way that is worthy of our endorsement.

Despite this, companies are, at their core, elusive when it comes to their business practices. They are eager to have customers “buy into” a carefully sculpted image, but that tends to be where their forthrightness ends. Ask them to disclose the details of their production methods and business practices, and they are often evasive, at best, and silent, at worst.

Meanwhile, companies rely heavily on the strength of the consumer’s relationship with their brand — a relationship that has changed from a passive acceptance of the brand’s ideal to a two-way conversation between the company and the consumer. Consumers no longer rely on blind faith. They are beginning to dig deeper into what is behind brands’ glossy façades. And many of them are finding that they do not like what they see.

Sustainability and environmental responsibility have increasingly become matters of public concern and, in turn, have had a tangible effect on spending habits. We care more about the impact the products we buy have on the planet and corporate ethics. Consumers, in increasing numbers, investigate brands and the companies that create them, since their purchases now stand to have global consequences.

Despite the reluctance of some companies to offer transparency in their practices, an increasing number are opening up their channels of production to scrutiny. They are also opening their wallets in an effort to not only improve their public image but genuinely lessen their environmental footprint. They are doing so by making their operations more sustainable and having a more positive impact on the people inside and outside of their companies who are involved in their processes.

Burberry is an example of this kind of evolution. The company is working to become more sustainable, and more publicly transparent about what is involved in bringing its products to the point of purchase. One of the thorniest issues, as companies try to introduce greater brand transparency, is the need to outsource. It’s difficult for brands to ensure that the factories operating abroad adhere to the working guidelines the company demands by virtue of its consumers’ expectations. Given this, Burberry is seeking to improve its corporate responsibility credentials by taking an active hand in its supply chain. In 2010, it increased visits to overseas factories by 30 percent and 13 percent in 2011.

This kind of tangible action not only strengthens the brand, it’s good for business. Greater accountability engenders customer confidence. With many global companies, such as Gap, Nike and Apple, rocked by allegations of workers’ rights violations, many consumers have either lost faith in the credibility of high-profile brands, or they lack awareness and therefore the ability to purchase confidently.

All brands contend with social and environmental sustainability – not just the fashion industry. In Sept. 2011, the Frankfurt Motor Show was a showcase for the importance of strong sustainable credentials as it relates to consumer buying power. No longer a niche market, companies are dedicating millions to the pursuit of greener products both in terms of how they are used and how they are produced. The greening of brands is now a vital market and attracting equally vital revenue. Frankfurt was not merely a showcase for the oft-featured clean city cars but for high-performance luxury vehicles with solid eco credentials — cars like the hybrid Jaguar C-X16, and the Peugeot HX1, which utilises state-of the-art technology to both be green and compete with other, more popular high-end luxury vehicles.

Brands are innovating to be more sustainable over the long term. They are accepting the importance consumers are now placing on issues of corporate responsibility and pushing their products to be leaner and greener. They are also pushing on a logistical and administrative level to make their practices, including sourcing, production and distribution, as efficient, ethical and sustainable as possible.

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