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By Elisa Niemtzow, Sequoia Lab Principal.

 

2011 marks an exciting year in luxury goods. After years of being singled out for lackluster social and environmental performance, luxury brands are recognizing the benefits of going green, and are starting to talk about it. Backtrack four years ago to the release of WWF-UK’s analysis of the luxury goods industry, and things looked bleak. For example, Tiffany scored a D+, PPR a D, and L’Oréal a C+.

This year, Tiffany launched its well-received sustainability website, detailing the responsible business practices that have made it a sector leader. PPR unveiled the first complete annual environmental profit and loss account for its brand Puma, committing to extend the practice to all of its brands, including iconic luxury houses Gucci, Balenciaga, Yves Saint Laurent and Bottega Veneta by 2015. Finally, L’Oréal pleasantly surprised more than just one sustainability expert at its inaugural global stakeholder forums this year.

Like other business sectors, luxury brands still face a lion’s share of challenges. In September, the Ethical Consumer Research Association (ECRA) in the U.K. lambasted leading designer clothing companies in its special report Style Over Substance, at the height of the “killer” sandblasted jeans problem involving brands such as Armani and Dolce & Gabanna.

For sure, there’s a lot of work to be done.

However, in reading the ECRA report, many companies received criticism for lack of available information, and ECRA assumed the worst. Dig a little deeper and I’m convinced that better things are brewing beneath the surface. Secrecy, after all, is a hallmark of the industry, which protects its craftsmanship and its margins like a mother bird her eggs.

I used to manage wholesale at Chanel, one of the most coveted brands out there (and one of the most searched for names on the internet). Online videos will take you backstage at December’s Paris-Bombay runway show, but you’d be hard-pressed to find much corporate information on this very private company.

Because of their glamorous role front and center, we expect the best from luxury brands (and that creates a special risk for them if customer perception of good business doesn’t match reality). But, as luxury brands begin conversations around sustainability, they face the same challenges as their non-luxury counterparts.
Since I don’t have the space here to discuss all these questions, I’ll focus on that last one, i.e., how do you talk to customers about your social initiatives without detracting from key brand messages?How do you communicate on your sustainability journey, essentially a work in progress, without becoming a target for criticism or losing control of the dialogue? How does a corporate executive support sustainable consumption while meeting ever-increasing sales targets? How do you talk to customers about your green or social initiatives without detracting from key brand messages?

The question of how to communicate on CSR themes to customers comes up frequently with my consulting clients these days. Fortunately, luxury brands have the potential to excel in this arena. They know how to create universes – whether that’s stores, fashion shows, websites or ads – which are on brand, make you dream, aspire, and ignite all your senses.

First, let’s start with a CSR-focused ad campaign gone a little wrong.

Italian leather and fashion house Ferragamo pioneered eco-luxe in 2007, with the launch of a small collection of bags made of natural, metal-free leather. This year, it launched the Ferragamo World collection, with 5 percent of proceeds going to the vanguard Acumen Fund. What a great partnership, but what a bad ad.

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By Wayne Visser

As part of the Quest for CSR 2.0 series

By May 2008, it was clear to me the evolutionary concept of Web 2.0 held many lessons for corporate social responsibility. At the time, I declared: “The field of what is variously known as CSR, sustainability, corporate citizenship and business ethics is ushering in a new era in the relationship between business and society. Simply put, we are shifting from the old concept of CSR – the classic notion of ‘Corporate Social Responsibility,’ which I call CSR 1.0 – to a new, integrated conception – CSR 2.0, which can be more accurately labelled ‘Corporate Sustainability and Responsibility.’”

The allusion to Web 1.0 and Web 2.0 is no coincidence. The transformation of the Internet through the emergence of social media networks, user-generated content and open source approaches is a fitting metaphor for the changes business is experiencing as it begins to redefine its role in society. Let’s look at some of the similarities.

Web 1.0

  • A flat world just beginning to connect itself and finding a new medium to push out information and plug advertising.
  • Saw the rise to prominence of innovators like Netscape, but these were quickly out-muscled by giants like Microsoft with its Internet Explorer.
  • Focused largely on the standardised hardware and software of the PC as its delivery platform, rather than multi-level applications.

CSR 1.0

  • A vehicle for companies to establish relationships with communities, channel philanthropic contributions and manage their image.
  • Included many start-up pioneers like Traidcraft, but has ultimately turned into a product for large multinationals like Wal-Mart.
  • Travelled down the road of “one size fits all” standardization, through codes, standards and guidelines to shape its offering.

Web 2.0

  • Being defined by watchwords like “collective intelligence,” “collaborative networks” and “user participation.”
  • Tools include social media, knowledge syndication and beta testing.
  • Is as much a state of being as a technical advance – it is a new philosophy or way of seeing the world differently.

CSR 2.0

  • Being defined by “global commons,” “innovative partnerships” and “stakeholder involvement.”

    From netasbitsandpieces.blogspot.com

  • Mechanisms include diverse stakeholder panels, real-time transparent reporting and new-wave social entrepreneurship.
  • Is recognising a shift in power from centralised to decentralised; a change in scale from few and big to many and small; and a change in application from single and exclusive to multiple and shared.

So what will some of these shifts look like? In my view, the shifts will happen at two levels. At a macro-level, there will be a change in CSR’s ontological assumptions or ways of seeing the world. At a micro-level, there will be a change in CSR’s methodological practices or ways of being in the world.

Macro Shifts

The macro-level changes can be described as follows: Paternalistic relationships between companies and the community based on philanthropy will give way to more equal partnerships. Defensive, minimalist responses to social and environmental issues are replaced with proactive strategies and investment in growing responsibility markets, such as clean technology. Reputation-conscious public-relations approaches to CSR are no longer credible and so companies are judged on actual social, environmental and ethical performance (are things getting better on the ground in absolute, cumulative terms?).

Although CSR specialists still have a role to play, each dimension of CSR 2.0 performance is embedded and integrated into the core operations of companies. Standardized approaches remain useful as guides to consensus, but CSR finds diversified expression and implementation at very local levels. CSR solutions, including responsible products and services, go from niche ‘nice-to-haves’ to mass-market ‘must-haves.’ And the whole concept of CSR loses its Western conceptual and operational dominance, giving way to a more culturally diverse and internationally applied concept.

Micro Shifts

How might these shifting principles manifest as CSR practices? Supporting these meta-level changes, the anticipated micro-level changes can be described as follows: CSR will no longer manifest as luxury products and services (as with current green and fair-trade options), but as affordable solutions for those who most need quality of life improvements. Investment in self-sustaining social enterprises will be favored over cheque-book charity. CSR indexes, which rank the same large companies over and over (often revealing contradictions between indexes) will make way for CSR rating systems, which turn social, environmental, ethical and economic performance into corporate scores (A+, B-, etc., not dissimilar to credit ratings), which analysts and others can usefully employ to compare and integrate into their decision making.

Reliance on CSR departments will disappear or disperse, as performance across responsibility and sustainability dimensions are increasingly built into corporate performance appraisal and market incentive systems. Self-selecting ethical consumers will become irrelevant, as CSR 2.0 companies begin to choice-edit; i.e., cease offering implicitly ‘less ethical’ product ranges, thus allowing guilt-free shopping.

Post-use liability for products will become obsolete, as the service-lease and take-back economy goes mainstream. Annual CSR reporting will be replaced by online, real-time CSR performance data flows. Feeding into these live communications will be Web 2.0 connected social networks, instead of periodic meetings of rather cumbersome stakeholder panels. And typical CSR 1.0 management systems standards like ISO 14001 will be less credible than new performance standards, such as those emerging in climate change that set absolute limits and thresholds.

As our world becomes more connected and global challenges like climate change and poverty loom ever larger, businesses that still practice CSR 1.0 will (like their Web 1.0 counterparts) be rapidly left behind. Highly conscientised and networked stakeholders will expose them and gradually withdraw their social licence to operate. By contrast, companies that embrace the CSR 2.0 era will be those that collaboratively find innovative ways tackle our global challenges and be rewarded in the marketplace as a result.

Note: This article has appeared on CSRwire

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by Megan Yarnall

Going green, or being green, has often been associated with expensive organic or eco-friendly products, lifestyle and habit changes, and limited luxury. But going green at home and in the workplace doesn’t have to break the bank.

Many tips that families use to stay green around the house and save money – such as turning off the lights when a room is empty – can be applied to the office as well.  This can lead to happier employees, reduced costs and of course a smaller carbon footprint.

Example of how we re-use objects in our office every day

First, a few things that can be done every day, with contribution from everyone in the office:

Tip #1 Limited printing. Most things don’t really need to be printed out in hard copy. And if they do need to be printed, you can re-use paper and print double-sided. When you’re done with it, stick in the recycling bin.

How we do this? Just the way it sounds! We print double-sided, or reuse paper when we can. We also only print when we need to, and do most things by email. Afterwards, we’re TerraCycle. So you better believe we recycle.

Example of how we re-use objects in our office every day

Tip #2 Turn electronics off. If a room is empty, turn the lights off. If a bathroom is empty, turn the lights off. If a computer is not being used, especially overnight or over the weekend, turn it off.

How we do this? Just the way it sounds! We turn our computers off at night, and turn the lights off when we don’t need them.  Power strips at each desk make it really easy to make sure monitors etc are not “leeching” overnight.

Tip #3 Reusable flatware. Most offices have small kitchens. Install an energy efficient dishwasher, and provide reusable flatware for employees. This will cut down on paper plates and plastic silverware being thrown away constantly.

How we do it? Here at TerraCycle, we also have an employee lunch program, in which lunch is served every day. This cuts down on takeout trash.

Tip #4 Mugs and reusable cups for guests. As opposed to offering a guest a bottle of water, offer a glass of water. Instead of offering coffee in a Styrofoam cup, have a clean mug handy.

How we do it? When we have someone in for an interview, or a business meeting, we use real glasses when we offer them water. The water comes from our cooler, which is hooked up to the city water, not shipped in.

Tip #5 Limit travel. Instead of traveling to a meeting, employ an application like Skype or GoToMeeting. Share screens, talk face-to-face, include as many people as you need – and don’t spend as much or leave so much of a carbon footprint.

How we do it? TerraCycle has offices in 15 different countries, with which there are meetings and calls a few times a week – via Skype.

Tip #6 Create a ride board to encourage employees to carpool, and help facilitate it to make it easy for them. Display who is coming and going, and locations and times.

How we do it? Some TerraCycle employees take the train down from New York, rather than driving separately, and when they arrive in the morning, one person picks all of them up. This cuts down on people driving from a far, and on people being picked up separately or taking separate cabs to the office.

Tip #7Make things from waste. Instead of buying new pen holders, make them out of recycled bottles or old mugs. Don’t buy new

Example of how we re-use objects in our office every day

furniture; buy used.

How we do it? TerraCycle’s office is made from waste from floor to ceiling – literally. The carpet is made of remnants, the desk are old doors and the walls are bottle, vinyl record etc.

There are other lengthier, more expensive projects (that will pay off in the long run!) that offices can investigate and institute in order to go green. While some of the upfront costs may be pricey, the money saved on energy bills in the end can make the investments just that – investments, rather than just costs.

Installing solar panels on the rooftop cuts down on electricity bills (eventually, you may have none!) as well as offering a source of clean energy for your office.

A green roof – which is essentially a yard and/or garden on top of your roof – helps insulate the building during the winter and keep temperatures down in the summer as it shields the building from the sun. (It also gives employees a neat place to take a break and eat lunch during the beautiful days!)

Many truly green moves that are more costly will pay off in the end anyway, but if you’re not ready to invest quite yet, the smaller green moves can make a difference in the meantime!

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By Trey Trenchard

The term “differentiated green” refers to companies who pursue green strategies to go beyond clearing regulatory and negative PR hurdles.  It refers to companies who create green strategies for reasons such as cost savings and creating a larger and more loyal customer base.

The most notable country to not sign the Kyoto Protocol is, as we know, the United States of America.  Despite the size of its economy and the living standard among its citizens, the U.S. has historically been behind its sovereign peers as far as adopting regulations and in turn encouraging its corporations to adopt sustainability strategies. However, on an optimistic note, three of America’s most iconic companies find great value in pursuing comprehensive green strategies.  At least to them, “differentiated green” is real, valuable, and achievable.

General Electric

From 2004-2008 General Electric’s new Ecomagination program not only reduced its greenhouse gas emissions by 30% but also delivered $100 million in cost savings to the company.  The profitability of Ecomagination did not stop there.  By focusing on green initiatives through this program, the company has made innovating energy-efficient products a core competency.  While often the value of sustainability programs are discussed relative to the bottom line, for GE, the real value has been realized in its top line.  The $100 million cost savings of this period seems minuscule compared to the $17 billion ANNUAL revenue GE generated in new energy-efficient products such as light bulbs, MRIs, and locomotives.

In addition to financial results, GE has leveraged Ecomagination to improve customer retention and brand awareness.  The company recognized that it had an opportunity to boost its brand by educating the public on its commitment to environmental responsibility.  According to Interbrand, “GE Ecomagination is cited as a leading contributor to the 17% rise in GE brand value since its launch in 2005.”

Ford

Ford Motor Company recently rolled out its impressive Ford Focus EV.  It seems that everyone is going after the Electric Vehicle market and it is looking like Ford may have nailed it.  In addition to product development, Ford has also hired in-house climate scientists to set scientific mandates on its production as a whole in an effort to guarantee that the company does not contribute to certain catastrophic climate change metrics.  All this has resulted in a wealth of good publicity for the company and is promising to give Ford a drastic image makeover.  Not only is it acquiring a reputation as a socially conscious organization, but also, perhaps something no one thought it would ever be, an environmentally friendly company.

This is the type of marketing magic that cannot be bought with expensive advertising or a massive PR campaign.  Ford saw the future and decided to make the real changes earning them praise from even some of their toughest critics in the grass-roots environmental blogosphere and from formerly skeptical consumers who may even be converted into brand evangelists.

Nike

Nike recently produced jerseys for world cup teams made of plastic bottles found in landfills in Taiwan and Japan.  Nike’s focus on repurposing started in 1993, by reusing materials from old shoes to produce basketball courts and track surfaces.  Since their first decision to “go green” in 1993, Nike has been an early adopter of numerous sustainable strategies.  It has taken a serious stance on selling recyclable components, reducing waste, and reusing byproducts like rubber or plastic to create new products.  This has resulted not only in cost savings but in a wave of positive PR.

Its financial results are also staggering.   In the last 10 years, Nike’s stock price has increased 216%, and year to date, has increased 31%, relative to the S&P 500’s 4% decrease and 19% increase respectively.

* * *

As a business owner, American or otherwise, are you missing out on an opportunity for growth and brand equity?  As discussed above, cost reduction is now only part of the equation.  If embracing green leads to top line growth, there is no time like the present, especially in the United States.  We are on the cusp of another commercial revolution.  The advent of electricity caused a revolution that built GE.  The advent of the automobile did the same for Ford.  The wellness revolution that started in the 1970s opened the door for Nike.  Most recently, the technology revolution has created some of the largest market cap companies in the world.

The green revolution is just starting and there is plenty of market-share up for grabs.  The United States has historically been known as a great innovator and has led the pack in many of these revolutions.  If US companies actively embrace sustainability, they stand to see great profitability from this global movement.  If your business embraces it, so can you.

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