If you simply type the word sustainability into Google, you get about 2,520,000,000 results. It is certainly a subject occupying the minds of everyone today—consumers, governments, academia, non-profits and businesses alike. The preoccupation with the idea of sustainability has become part of the social and corporate zeitgeist leading to the creation of new departments and new senior roles in organizations, like Chief Sustainability Officer. New degree programs are being created in colleges and universities to make this a profession and a full-time career option that someone can pursue. You might also say it has become part of a 5th “P” added to the classic marketing formula: Product, Price, Promotion, Place, and now Public Perception, or perhaps, Public Policy. Is it part of your marketing formula?
One of the technical definitions of sustainability is the ability to maintain or support a process continuously over time. The Merriam-Webster dictionary defines it as “of, relating to or being a method of harvesting or using a resource so that the resource is not depleted or permanently damaged.” One of the challenges with the word or concept of sustainability is how it relates to another relatively new construct, ESG, which stands for Environmental, Social and Governance. Sustainability is certainly a little fuzzier and can take on different meanings, while ESG is a very specific set of precise, measurable criteria. ESG has also become the darling of financial institutions and the investment community. It’s a standard for analyzing, rating, commenting on and recommending companies. Investment funds, like ETFs, are being created solely based on high-performing ESG businesses. ESG has spawned a cottage industry of consultants and companies whose business model is helping organizations construct ESG programs where they can measure and report on their performance across these criteria to satisfy the demands of investors and other stakeholders.
As pointed out in the opening sentence of this article, there is no shortage of information on this topic. And there are subtle and sometimes not-so-subtle distinctions, especially when talking about sustainability vs. ESG. Going out on a limb here, a scan of articles, white papers, etc. on this subject suggests the first thing people seem to think of when they hear the word sustainability is a direct correlation with a purely environmental association to reducing greenhouse gases, focusing on your carbon footprint or being green, environmentally friendly or eco-conscious. You will find some schools of thought that have a much broader definition of sustainability and equate it not only with an organization’s efforts to minimize its impact on the world, which would include an environmental component, but also includes job creation, promoting diversity, supporting social causes, being more involved in communities, etc. Just to make this a little more confusing, the latter definition has become part of something called Corporate Social Responsibility (CSR), which has its own advocates and champions. So, throw the idea of CSR into the mix, and you have yourself quite the confusing stew of ideas, practices, philosophies and definitions. What’s a manufacturing company to do? Who’s right? What do your customers, employees, suppliers and other stakeholders think when they hear any of these terms? Which one should you use, and how should you use it?
No doubt, it’s easy to get caught up in these various definitions and experience some analysis paralysis. That said, it’s absolutely something companies need to think through. Much of your language or approach is driven by whether you are a publicly traded company or have publicly traded companies as a large part of your customer base, where ESG has become the de facto measurement or framework. Most publicly traded companies are well down the road in this area and are building communications and programs around ESG. They are producing CSR reports and are using metrics, guides, materiality assessments and reporting criteria like GRI (Global Reporting Initiative), SASB (Sustainable Accounting Standards Board), TCFD (Taskforce on Climate-Related Financial Disclosure), UNSDG (United Nations Sustainable Development Goals) and others.
Even if you are not a publicly traded company, it is helpful to understand ESG simply because you may have publicly traded customers who are closely evaluating their suppliers based on actions related to sustainability or CSR—whichever construct is used will impact who they work with across their supply chain. How you operate impacts their ESG scores, so it is in your best interest to take an interest in this movement.
Sustainability, ESG, CSR—whatever you call it, the basic idea certainly seems here to stay, and it’s a pretty good bet where you stand matters to your customers. As a manufacturer in today’s world, your tangible efforts and positions on these issues must be part of your marketing and branding message. It can be a significant differentiator and lead generator, creating entirely new conversations and communications opportunities with prospects and customers. No doubt, words matter, but in this case, we would argue actions matter more. You have to start by asking and answering a pretty detailed set of questions about your actions as a company so you can begin to build your story and messaging platform. We’ve assembled a few starter questions below, far from an exhaustive list:
Do your actions and areas of focus align with your brand persona? How do you build your products? What are your carbon emissions? Are you a good steward of the environment? How do you use water? How do you treat waste? What about transportation? How do you source your materials? Where do they come from? Are you using recycled or recyclable materials? How do you treat your employees? How do you serve your community? How do your products positively impact the world? Do your products reduce energy consumption? Do they save water? Do they help reduce greenhouse gas emissions? What are your core values? What’s your purpose? Do you have articulated goals or targets related to future environmental impact? These questions, and many others, require both philosophical and quantitative answers.
Getting the information to answer these questions is a significant initiative unto itself and involves subject matter experts across your organization. You may find that none of this information has ever been quantified or captured, and it may require putting brand-new measures in place. It may necessitate your company reexamining how it fundamentally operates, manufactures and designs products.
We’re living through a significant societal shift in the world right now as it relates to an intensified focus on how manufacturing organizations are impacting people and our planet. Companies are being placed under a microscope by their customers, their communities, their employees and a range of other stakeholders. What your company is doing to make things better on both of those fronts must become a foundational pillar of your brand character, brand promise, purpose, core values and ultimately, the messaging platform for your marketing efforts. So, where does your manufacturing brand stand?
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