Economy & Business
Marketing in the Age of Disruption
Can marketing give up its growth obsession and embrace sustainability?
By Mike Jewell
Businesses are now seemingly embracing sustainability with more enthusiasm and vigour than ever before. In an article in Harvard Business Review in 2022, respected writer Andrew Winston noted that discussions around environmental, social, governance issues (ESG) have become mainstream topics of business conversations.
“Virtually all of the world’s largest companies now issue a sustainability report and set goals; more than 2,000 companies have set a science-based carbon target; and about one-third of Europe’s largest public companies have pledged to reach net zero by 2050. On the social side of the agenda, companies have been expanding diversity and inclusion efforts, committing funds to fight racial inequity, and speaking out on societal issues they used to avoid.”
Now, let’s not kid ourselves that these steps spring from a new-found sense of altruism or previously hidden public spirited motives.
Businesses exist to make money. Period.
However, the world is changing rapidly and pressure on companies to realign their values and strategies (while still turning in handsome profits) is coming from all sides.
Firstly, from consumers. The Global Monitor from Kantar, the global data, insights and consulting organisation, shows that people around the world blame large corporations first and foremost for many of the environmental problems we face.
This negative public view is particularly troubling for business leaders, because Kantar’s BrandZ study has established that sustainability is now the single most important component of corporate reputation. In the latest EY CEO Outlook Pulse survey, 77% of the 1,200 senior executives interviewed claimed that delivering on broader societal demand to accelerate their sustainability journey is a priority and over half said it is a higher priority than a year ago.
Meanwhile, aspiring executive talents are increasingly factoring companies’ sustainability strategies into their decision making. Work by Globescan reveals that 75% of Millennials actively consider a company’s approach to environmental issues when deciding where to work.
Then there are financial stakeholders. At a recent ECCT Marketing Club lunch, Jonathan Hall, Managing Partner of Kantar’s Sustainable Transformation Practice, recalled a conversation with the MD of Capital Markets at Morgan Stanley who said, “ESG, (whatever we call it)…the concept has a material impact now on how businesses are perceived in the marketplace and their ability to access capital.”
Government and regulators are on the case, too, with the bulk of the global economy now operating under declared commitments to achieve carbon neutrality by 2050. Net Zero Tracker estimates that 92% of global GDP is covered by such commitments, giving administrators the power to regulate the affairs of businesses under their jurisdiction.
In an open letter in 2019, the then Governor of the Bank of England Mark Carney, his French counterpart François Villeroy de Galhau and the Chair of the Network for Greening the Financial Services Frank Elderson laid out what is at stake in no uncertain terms.
“The impact of climate change has compelled governments to act. The actions undertaken by individual countries will deliver a collective transition to a low-carbon economy… This requires a massive reallocation of capital. If some companies and industries fail to adjust to this new world, they will fail to exist.”
As I wrote in a previous article, governments are reacting much less decisively than is required given the current state of the climate emergency. Nonetheless, they will surely focus more attention on the commercial environment the closer we get to 2050. Small wonder that CEOs of the world’s largest companies believe that sustainability is critical to the future of their businesses.
However, despite the positive signals, progress towards a sustainable business environment is slow and prone to come to a halt on occasion. The same EY CEO Outlook Pulse reported that a quarter of CEOs are actually reducing their focus on sustainability, in the face of challenging economic conditions.
Sustainability encompasses a wide range of topics, not just the environment. The UN’s Sustainable Development Goals define 17 different areas relating to society and the economy as well as the biosphere. But by far the most pressing issue is the deteriorating climate, both in people’s minds and from the fact that there is so little time left to effect the societal changes necessary to limit the impact of global warming.
Analysis of the actions taken by companies show how far the business world is from fully coming to terms with the climate issue. A report by Kantar, drawn from research among the 100,000 board directors who make up the membership of the Climate Governance Initiative (CGI), found that only 40% of firms currently do any climate-related reporting and just one third either already have a transition plan or will publish one in the next year.
Lack of prioritisation is the main barrier, as only a third of company boards see the climate as a high priority (in contrast to the general public, 78% of whom in Taiwan, for example, nominate climate action as the issue of most concern, according to Kantar’s Sustainability Sector Index 2023). In too many cases, short-term objectives take precedence, exactly as the EY Pulse pointed out.
“When the business is not so close to climate change, it’s harder... because the agenda they have to deal with is getting larger and more complex and it’s deemed less of a pressing priority.”
Business leader, Brazil
And behind this apparent indifference is an alarming lack of knowledge throughout company leaders about the whole area of climate change.
Almost 9 in 10 board directors in the CGI study claimed that climate requires new forms of leadership from the boardroom. In their collective view, there needs to be a mindset shift to prioritise climate action and enable senior management to work together more easily and effectively to drive significant change. The basis of this change should be a swing away from risk and towards the business opportunities afforded by putting sustainability at the heart of corporate strategy.
According to Jonathan Hall, Kantar research shows that sustainability contributes US$193 billion to the value of the world’s top 100 brands and yet all but 2 of those brands are underperforming on sustainability. If all brands could lift their performance to the norm, that value would jump by a factor of 6 to US$1.2 trillion.
The conclusion? In contrast to conventional wisdom, sustainability is actually good for business.
“Sustainable marketing means selling better stuff”
If businesses are to adapt successfully to the increasingly environmentally conscious marketplace, then marketing will be a primary driver of the transformation process, given its central role as “the bridge of production and consumption” (Cambridge Institute for Sustainability Leadership – CISL).
“Marketing is such a strategic, commercial function. It sits at the intersection of business and society…If we want to transform the economy, we need to transform the marketing that is driving it.”
Charlie Thompson, Director of Commercial Reach & Influence at CISL
The marketing discipline as we know it today emerged in the early 20th century and the conceptual framework that still shapes most marketing planning appeared in 1960, when Jerome McCarthy defined the “4Ps” of the marketing mix.
Unfortunately, marketing’s image has become rather tarnished of late. Marketers have been subjected to finger-pointing and name-calling as instruments of and apologists for the worsening environmental crisis. With good reason (speaking as one who was deeply embedded in the corporate marketing machine for my entire professional career).
According to Paul Randle, co-author of ‘Sustainable Marketing: the Industry’s Role in a Sustainable Future’, marketing greatly facilitated the entrenchment of the consumerist economic model introduced in the 1950s and 1960s which forms the basis of western capitalism and which developing nations, irrespective of ideology, aspire to. That model promised to drive well-being in society by allowing us to buy products and services which made our lives better.
Marketing has become extremely successful in creating awareness of products and in motivating people to buy them, but the flaw in the concept is that the only goals have been profit and infinite growth, to the exclusion of all else. But infinite growth demands infinite resources, which we don’t have. In 2023, ‘Earth Overshoot Day’ – the day when humanity's resource consumption exceeds the Earth's capacity to regenerate those resources for the year – fell on 2 August. After that date, we were borrowing resources from future years. More alarmingly, much of the rich world has already blown its resource ‘budget’ for 2024. The US, Canada, Germany, France, the Netherlands, Belgium, Sweden, Denmark, Russia and Saudi are among countries to have gone into the red for this year.
Although companies are edging towards adopting a sustainability mindset, there is a sense that marketing is lagging behind. Research compiled by Kantar in collaboration with the World Federation of Advertisers (WFA) shows that only 10% of marketers believe that their marketing functions are “well advanced” in their journey towards sustainability, while over 90% claim that sustainability agendas must be more ambitious, and that the marketing industry needs to act more bravely to drive transformative change.
The monumental challenge marketing faces is undoing the damage it has done, unpicking the brain print created by decades of total devotion to its message of buy, buy, buy. In the global north, it is estimated that each person is exposed to 4,000-10,000 ads every day of the year, 70% of which are using the concept of inadequacy marketing, telling us we’re not good enough if we don’t buy this. Furthermore, the majority of ads portray high carbon lifestyles and set these up as aspirational, establishing them as the cultural norm for people to aim for.
This has to change if marketing is to make a serious contribution to addressing the sustainability transformation, but marketers do recognise that they have a responsibility to help people live sustainably and that they have the skills and influence to make this happen.
“Over the last 70 years, we’ve been creating demand for lifestyles that call for more, more and more. We don’t just need to make incremental changes in industry, we have to fundamentally rethink the model and the purpose of our industry. The good news is that’s completely within our reach.”
Anna Lungley, Chief Sustainability Officer, International Markets, Dentsu
At the same time, the marketing industry must also take a hard look at the way it operates, pulling back on the emissions and waste it is currently responsible for. The carbon footprint of the global events and exhibitions sector, for example, is the same as that of the entire US and the marketing sector in total produces about the same level of greenhouse gases as the airline industry.
Paul Randle and his co-author, Alexis Eyres, both seasoned and respected marketers, envisage a fundamentally different mission for marketing in the future, composed of three principal elements:
- An environmental mission, focused on preserving, regenerating and respecting nature through optimal consumption and reduced production.
- A societal mission, emphasising personal well-being and treating individuals with respect and equity and helping them to be prosperous in their world.
- A continuing commercial mission, but defined within new, more sympathetic economic models, based on sustainability rather than on exploitation and growth at all costs.
Banksy, spray paint on wood, photo by Mike Jewell
Now, what of consumers? I’ve already mentioned that they blame the commercial sector for much of the environmental crisis and research shows that they are increasingly sceptical about companies and their marketing strategies. They are looking for much more action and accountability from the marketing community in terms of responding to the climate and other sustainability issues.
Feedback from Kantar’s Global Monitor shows that 74% of consumers across 28 markets believe businesses have a moral duty to make society fairer and 64% affirm that it is the responsibility of companies to solve environmental problems.
There is a clear generational effect at work, too. While an overall majority claim to be paying close attention to climate and societal news, Kantar’s analysis highlights that it is younger Millennials (i.e. those born in the 1990s) who are most stridently effecting change in society and demanding dramatic change from marketers and the brands they represent.
GenZers (i.e. born post-2000) are following Millennials’ lead and will be the demographic who really embrace the increasingly dominant values of mutualism, the idea that the social and economic well-being of any individual is highly dependent on the well-being of others in the society (in contrast to the extreme individualism of the post WWII era). Alignment with the values and beliefs of trailing Millennials and GenZers will be the key factor in determining whether companies are successful in the future.
Consumers are also reacting against the line many brands have pushed extensively that it is up to the individual to adjust their behaviour and mend their ways to address the crisis in the environment. As people feel that the crisis has been created by companies and their marketing, they are now fully expecting brands to help and support them to lead more sustainable lives.
At the same time, there is a high degree of cynicism about actions companies take. 59% worry that brand owners are involved with social and environmental issues purely for commercial reasons. Pure window dressing, with no real sincerity or authentic commitment to the betterment of society.
And it’s easy to see why. The incidence of consumers in the 33 countries included in Kantar’s Sustainability Sector Index saying they have seen or heard false or misleading information about sustainable actions taken by brands is very high, averaging 52% across the 42 business sectors covered. Some business fields are worse than others, but none is blameless, and the levels across the board are worryingly high, since consumers’ practical experience of greenwashing totally undermines trust in businesses and brands, understandably leading consumers to reject the brands concerned and sensitising them further to the sincerity or otherwise of other brands.
The Global Financial Crisis of 2008-9 ushered in a new era of uncertainty, instability and disruption, with climate change hanging like the Sword of Damocles over everything.
The established business mantra of infinite growth at all costs, with no thought for the environment is coming under increasing scrutiny and consumers are demanding a radical rethink in business priorities and marketing processes. Change is urgently needed, though and it will be interesting to see how industry responds to the pressure from stakeholders and whether it can genuinely adopt a more ethical stance and align itself with the new prevailing social value system.
Special thanks to Jonathan Hall, Managing Partner of Kantar’s Sustainable Transformation Practice, who agreed to be interviewed for this article and who supplied a considerable amount of support material.
Photo by Mike Jewell
