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As the general public appears to demonstrate (some might argue periodic) interest in green initiatives, it would seem that engaging in an environmentally conscious program would be a prudent endeavor. But how much of a sustainable effect does such an undertaking have on a brand’s value?
Greg Silverman, senior vice president of Analytics at Interbrand, says the degree of impact on brand value depends on the company’s industry. “Because the fundamental connection between brand and value is the securitization of future earnings, in some categories green is much more important to stickiness of brand and in other categories it’s less important.”
He says it also depends on the substance of the program. “Any strategy poorly executed is going to be a poorly executed strategy. It’s the efficacy of the program that matters the most. Green can be good if it’s good green.”
In reviewing the list of 100 Best Global Brands, GreenOrder, a strategy and marketing firm focused on helping companies maximize the value of sustainability, rated Toyota the most successful at using green initiatives to enhance brand value. Citing Toyota for the highest industry relevance—specifically, for leveraging green initiatives to successfully market hybrids—among the 100 brands on the list, GreenOrder also gave it high marks for messaging effectiveness, differentiation, and credibility. While noting that direct competitor Honda is considered by many environmentalists to be the greenest car company (both in internal operations and product), the value to the brand is in part tied to commercial recognition by the consumer (remember that brand value measures the intangibles of which perception is an important contributor).
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Founder and CEO of GreenOrder Andrew Shapiro explains why he rates Toyota’s efforts as creating the most effective impact on brand value: “For instance, because of the prominence of its messaging, consumers are more likely to know about Toyota’s achievements. It goes to the efficacy of the strategy that they’ve chosen. It’s one of the things that they are emphasizing in their communications: style, value, environmental achievements, et cetera.”
But he cautions against greenwashing. “Lots of companies are trying to get on the green band wagon because they perceive it to be a hot issue, and they are putting forward messaging campaigns that amount to little more than ‘we care about the environment too,’ ” he says. “I don’t think those empty statements are going to carry weight with consumers; [consumers] are becoming more educated and savvy about corporate environmental [practices]. They know when a company is making a broad claim that doesn’t have much weight behind it.”
Mary Nickerson, national marketing manager for Advance Technology Vehicles (including Prius), says Toyota’s green programs are not the result of 21st century trends, but rather reflect a long standing culture at Toyota that began in the 1960s to provide modes of transportation that have the least impact on the environment. “Green has long been in Toyota’s DNA,” Nickerson says. “We’re that way as a culture. It’s not an initiative for this year, an initiative for next year….”
Toyota's commitment to its environmental efforts is reflected in its stated intentions to have a hybrid version of each of its cars in the very near future (some reports place production of the entire line as early as 2010). Its hybrid offerings, coupled with internal green initiatives like returnable packaging, composting, and waste elimination programs, give it a platform upon which to promote its progressive actions on behalf of the environment.
But do consumers really care about the environment? According to a recent study released by HSBC, many do not.
In fact in the West, where green focused advertising is most prevalent, consumers seem to be least concerned. In regions that are directly suffering effects (for instance China, Hong Kong, India, and Latin America) the concern is much higher. In China, which contributes the highest emissions of carbon dioxide to the world, more than half of the respondents ranked climate change among their top concerns; 60 percent of Indians chose it as among their top concerns.
In relatively more developed, affluent countries (like Britain, Germany, and the US), cynicism persists that companies use environmental initiatives to further their own financial agenda. This sort of criticism can arguably be more damaging to a company’s image than doing nothing at all.
If Toyota and others are in the business of satisfying demand by supplying products that consumers are interested in, and the bulk of consumers are not that interested in the environment, then what is the benefit of fulfilling a green agenda? Given the many competing issues of the day for the average company, is there any substantial long-term risk to brand value by not participating in the green craze?
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Nickerson says she thinks Toyota’s brand value does benefit from producing its hybrid vehicles. “In the communities that we live in, people appreciate the emphasis that we put on the environment,” she notes. “There’s a benefit to the value of our brand from our focus on trying to minimize our imprint.”
Interbrand’s Silverman agrees that it can be beneficial within context. “Events roil different segments of the marketplace at different speeds of time,” he says. Therefore, he suggests, it’s worth understanding the market to judge how valuable the effort would be. “If [during] research and analysis, green surfaces in the dialogue and end-user choices as something that matters, then yes [it’s worth the effort]. If you’re green and it matters to your market base, then it helps your brand value.”
According to Silverman, while it comes down to the importance of green in the consumers’ choice, it is also possible for a company to set the agenda and influence consumers.
“Is green a part of [a company’s] value system independent of the financial return?” he asks. “[For instance, are] we going to do it because of what it explains to our customers and, more importantly, our employees about what sort of company we are? Then the question is more about who do we want to be?” As an example of a company going green with this possible motive, he cites Wal-Mart’s program to replace all the light bulbs in its ceiling fan displays with energy-efficient bulbs, saving $6 million a year.
“Switching out might cost more than what they are immediately getting back,” says Silverman. “That cannot have been the best financial decision in and of itself; but from a branding perspective they probably thought there were enough latent benefits that overrode the short-term costs. Four or five years ago they may not have made that decision.”
GreenOrder’s Shapiro also references a company’s intent as valuable to the overall effort, referencing BP’s rocky record in recent years. Shapiro takes a pragmatic approach to situations like this, suggesting that some effort is vastly preferable to no effort. “The truth is no company has a perfect environmental record,” he says. “Do you give companies credit for actions they are taking proactively? In that regard BP has taken a leadership position in finding new ways to combat climate change, deal with energy security.”
“[BP is on a mission] to be progressive on energy and environmental issues, and they have [been] for decades,” he says. “It doesn’t mean they get a free pass, but it also doesn’t mean those initiative should be undermined.”
In judging companies that purport to engage in green initiatives, Shapiro thinks the public should be practical. “Some people hold [these companies] to a higher standard but that’s not fair because what’s the alternative? You don’t want to drive companies in the opposite direction by holding them to too high standards.”
From Nickerson’s perspective, Toyota will continue its path regardless of the rise and fall of environmental concerns among the public. “I think we would stay our course because we’ve been on this course of hybrid as a core technology since we showed the first in the sixties at an auto show.” She notes that the savings Toyota realizes in its own environmental efforts also makes “good business.”
Or as GE says, “green is green,” which may be the best news to overcome the skeptics and continue to encourage big brands that a world worth saving is a world we can live in. Or put more cynically, if we don’t have a world to live in, we won’t need products.
[30-Jul-2007]
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Robin D. Rusch was the founding editor of brandchannel. She is the CEO of BrandWizard.
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