The Green Future of Advertising

Advertisers must follow business and societal trends in order to market products optimally. After the digital and IT megatrends of past decades, businesses now face the newest megatrend of sustainability and ethical practices. As companies from around the world scramble in the ever-more competitive ‘green’ world, communications managers must understand the importance of this newest movement and be prepared to help their organizations advertise these changes. This global shift of perspective not only effects the company at large but what and how messages are conveyed. The biggest considerations for the current and future of advertising is understanding the audience, practicing transparency, and profit yield.

The Green Audience

David Lubin and Daniel Esty say “sustainability is an emerging megatrend and thus its course is somewhat predictable” (1). Surveys such as the one by Nielson which asked 30,000 people from around the world if they would pay more for sustainable goods found that three out of four millennials would spend more (Toyota). Sustainable practices include not just fair-trade, organic and biodegradable materials but also reducing, reusing and recycling. Millennial consumers have shown a desire to practice minimalism and choose to purchase the products they do buy from companies “that help express these values” (Ottman, 21). 67 percent of Americans agree that “even in tough economic times, it is important to purchase products with social and environmental benefits” (32). Patagonia successfully targets this market with advertisements such as showing a Patagonia jacket on a plain-white background with the text “Don’t Buy This Jacket”. Patagonia’s Marketing Director of Europe, Alex Weller, says “the real message of ‘Don’t Buy This Jacket’ – and it continues to be the real message of Patagonia in terms of consumption – is don’t buy this jacket if you don’t need it” (Weller). Weller believes the advertisement is “not about encouraging people to not own things; it’s about changing people’s relationship with stuff, and being not just thoughtful consumers but thoughtful and careful owners of stuff” (Weller). Because of the inevitable green business movement, “this market will only magnify over time, reflecting further advancements in design and technology and an ever-expanding range of high-quality green products” (Ottman, 32). The contradiction of consumerism and reducing consumption is “an opportunity for brands to rethink their design principles so that aspirational consumers can feel that they are doing both at once” (Bemporad). And for the companies who choose not to participate? Sanchez says sustainability is what attracts customers and that, "in the end, there will be a separation between good and bad brands" (Fitzgerald). Larry Fink is the chief executive of Black Rock, one of the largest asset managers in the world, and he recently promoted ethical and sustainable business practices:

Society increasingly is turning to the private sector and asking that companies respond to broader societal challenges. Indeed, the public expectations of your company have never been greater. Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate (Toyota).

Radical Transparency

Business investors and stakeholders once considered environmental issues such as water usage and carbon dioxide emissions as “externalities”; yet, this influential audience now understands these considerations are competitive materials that can hinder a company’s growth, expecting companies to share this information (Lubin, Esty, 1). Many companies have also begun practicing transparency in order to appeal to influential customers and aspirationals, or consumers who act as company advocates by promoting products on social media and websites, resulting in significant sales increases. Many of these trendsetters specifically look for companies that are ‘green’, or those with ethical and sustainable practices (Ottman, 39). These potential customers expect not just advertising and web campaigns but also “extensively documented sustainability reports” as well as internal and external transparent communication (39). For example, Timberland creates highly detailed sustainability reports and provides customers with “product-level environmental-impact information… with labeling that resembles the Nutrition Facts labels on food” (Lubin, Esty, 5). The 2018 Global Sustainability Index Institute reported on companies that have doubled their Sustainable Development Goals (SDGs) and communicate their annual reports “due to the positive benefits to company performance and in response to stakeholder interest” (Toyota). Environmental marketing expert Jacquelyn Ottman believes companies should include all its audiences as collaborators in the goal of environmentally positive change (21). This is one reason why it is important to practice “radical transparency, disclosing the good – and the bad” (21). It is not enough to just play the part, either. A study by Joel Davis found consumers will see past “a lack of ethical motivations” if the advertiser “is interested only in selling products and has no genuine interest in the consumer” (874). Ottman says “the brands consumers buy and trust today educate and engage them in meaningful conversation through a variety of media, especially via websites and online social networks (Ottman, 39). For example, Patagonia did not participate in the 2018 Black Friday sales choosing instead to advertise the hashtag ‘OptOutside’. The Patagonia Facebook page and website explained why they did not participate in one of the biggest shopping days of the year and included website links to outdoor activities customized to the consumer’s location. This type of advertising may help increase sales because “research suggests higher consumer involvement … as well as greater levels of perceived importance and/or relevance to one’s life, increase the potential for message processing” (Davis, 875). Davis found consumer attitudes toward advertising were more positive when they were aware of a company’s good ethical standards (883). Even still, many companies fear the higher costs to produce more ethical and sustainable products will actually decrease profit. Global head of special dyes at Archroma, Miguel Sanchez, believes company transparency will inform consumers that ethical products are “special and cannot cost as much as a Big Mac” (Fitzgerald). However, companies should be wary of moving too soon, too fast and risking ‘green-washing’ or reputational harm.

Good Business

Consumers and international governments are pushing companies to become more sustainable and ethical. For example, the U.S. Securities and Exchange Commission (SEC) ruled that “climate risk is material to investors” and the Environmental Protection Agency (EPA) regulated greenhouse gases as a pollutant (Lubin, Esty, 1). For these reasons and more, many researchers believe “managers can no longer afford to ignore sustainability as a central factor in their company’s long term competitiveness” (1). Investment magazine Barron created the first list of the most sustainable companies in the United States and found “these companies enjoyed remarkable share price growth of 29 percent in 2017, compared to 22 percent for the S&P 500 index” (Toyota). Paul Hohnen is a sustainability specialist and believes the growing number of international companies adopting more ethical practices understand not just the future of humanity but the future of business “depends on a major transition to a new and sustainable business model” (Hohnen). For example, Patagonia repairs and resells its clothing products, H&M buys back used clothing, and Adidas recently released sneakers made from recycled plastic removed from oceans (Gould). These massive companies are game-changers on the forefront of the future of business and advertising. Even if these sustainable and ethical products are more expensive, research by Boston Consulting found that customers are willing to pay almost ten percent more for sustainable products – “something many brands aren't aware of” (Fitzgerald). Advertisers would be wise to consider that “sustainability is the single biggest issue to affect business in the next five to 10 years” (Fitzgerald). Strong advertising managers should not consider the green movement as a “burden… but an investment that can pay back handsomely” (Ottman, 21). Almost half of consumers are already boycotting brands with unethical practices and experts believe that trend will continue to rise: “Consumers are more likely to “do business” with advertisers whom they perceive to be ethical and who present ethically perceived advertising messages” (Ottman, 28; Davis, 884). Researchers conclude:One of the greatest business leadership challenges of the 21st century will be to simultaneously manage and mitigate their ESG risks and costs and to harness their capabilities to deliver market-based solutions that create shareholder value while at the same time driving towards a more inclusive, green and responsible global economy (Grayson, Jane, 25-26). Davis agrees, stating “It does appear that good ethics can be good for business” (Davis, 884). Weller says “the way the company thinks about the tension between business and doing good is really through the direct cause and effect of business success and the ability to make a positive impact” (Weller). In short, making money and helping the world can go hand in hand. For example, The 3M Company has spent the past 30 years promoting sustainability and environmental responsibility through their Pollution Prevention Pays initiative. During this time, 3M has reduced their pollutants by 3.6 billion pounds and saved 1 billion dollars (Lubin, Esty, 3). Dupont is a global leader in agriculture, materials science and specialty products that also marketed a sustainability program after realizing that “business and environmental risks would outweigh their potential contribution to future earnings” (3). GE created an ecomagination initiative worth many billions of dollars in revenues which also publically positioned the company as a sustainable and ethical energy and environmental solutions provider.

Conclusion

Researchers and global companies have already foreseen the future of business and advertising and understand that consumerism will continue to head towards more ethical and sustainable demands. Advertising these changes to stakeholders will be imperative for any company wishing to gain or continue success. As more consumers and government agencies demand higher production standards, advertisers must communicate all pertinent information regarding these issues, unless they choose to risk damage to their reputation and bottom-line. The businesses which have already properly initiated the green movement within their supply chain and marketing campaigns have yielded significant gains and continue to create even higher sustainable and ethical goals. At this point, it is no longer a question of if companies should become green, but when. Communicating these efforts through marketing and advertising campaigns will be crucial for any company’s success.

References

Bemporad, Rapheal. (2013). Interview: Raphael Bemporad on how to make sustainability cool. The Guardian. Web. 19 Nov 2018.

Davis, Joel J. (2016). Good Ethics Is Good for Business: Ethical Attributions and Response to Gould, Hannah. Can the advertising industry sell us waste-free living? The Guardian. Web. 19 Nov 2018.

Grayson, D., Jane, N. (2013). Corporate Responsibility Coalitions. London: Routledge.

Hohnen, Paul. (2012). Interview with Paul Hohnen: Greenwash, Sustainable Development and Saving the Planet. Business Fights Poverty Web. 19 Nov 2018.

Lubin, David A., Esty, Daniel C. (2010). The Sustainability Imperative. Harvard Business Review.

Ottman, J. (2011). The New Rules of Green Marketing. London: Routledge. Environmental Advertising. Journal of Business Ethics, vol. 13, no. 11, Nov. 1994, pp. 873–885. EBSCOhost,ezproxy2.library.colostate.edu/login?url=http://search.ebscohost.com/login. aspx?direct=true&AuthType=cookie,ip,url,cpid&custid=s4640792&db=ufh&AN=121324 36&site=ehost-live.

Toyota, Terri. (2018). Sustainability is now mission critical for businesses. Here’s why. World Economic Forum. 2018. Web. 24 Nov 2018.

Weller, Alex. (2017). Interview by Cameron Clare. Why Patagonia's off-the-wall advertising asks customers to think twice before buying its products. The Drum Web. 19 Nov 2018.