02 Aug Sustainability and its emerging relevance in building customer advocacy and loyalty
The Food Marketing Institute (FMI) is holding its annual Global Sustainability Summit from 10th – 12th of August in New Orleans. This is a major industry event and has been developed to give companies the tools, connections and proactive solutions to take their sustainability programs to the next level.
I will be attending and I’m looking forward to hearing from the host of leading industry thinkers and change agents who will be focused on the most pressing issues facing the industry today. I’m also interested to hear their views on emerging issues, trends and technology as well as sustainability success stories and how retailers and manufacturers might address challenges around sourcing.
So why such a focus on corporate social responsibility and sustainability?
CSR and sustainability continue to grow in importance. Initially, CSR was used by many businesses as a strategy to create a positive impact on society and establish a good reputation as they carry out their normal business operations. This has evolved into something which is often now integral to the way a business operates.
“Over the years, social responsibility has proven itself to be a valuable link in companies’ business strategies, which is why even the largest companies in the world spend millions annually on CSR.”*
Back in 2012, this article in Forbes identified the six business reasons why companies embrace CSR. The article cites companies that “get it” as those that are using sustainability as a way to push the following business processes into the organization:
- Cost savings
- Brand differentiation
- Long-term thinking to drive growth
- Customer engagement
- Employee engagement
Forbes had customer engagement on that list but today, consumers aren’t just looking for CSR as a “nice to have”, they are actively demanding it.
According to Deloitte’s report “Capitalizing on the shifting consumer food value equation”, an emerging driver in consumer purchase decisions is social impact.
Social impact encompasses company attributes such as local sourcing, sustainability, animal welfare, and fair treatment of employees. Retailers must identify which social impact issues present them with an opportunity to appeal to consumers or conversely, which represent the greatest risk. They also need to look at where they can lead vs. where they might follow.
More and more CPG and food companies have started to incorporate CSR and sustainability as an element of their brand promise and as a point of differentiation from their competitors.
Here’s an example that I find particularly impressive:
How McDonalds incorporated a CSR program
McDonald’s developed a Global Sustainability Framework with five focus areas or pillars:
The McDonalds website describes their CSR program as thus: “We set measurable, specific goals for some of these pillars to advance what we call “Our Journey Together. For Good.”
In a recent article and interview with Francesca DeBiase SVP worldwide sourcing and sustainability for McDonalds Corporation, she references their CEO’s commitment to Sustainability: “When he talks about it in relation to sustainability, he says being modern and progressive extends to supporting and leading meaningful change our customers notice across our industry, our value chain and the communities we serve. I think that modern and progressive fits very well into our sustainability framework. It’s a perfect fit.”
The quote that resonated the most with me was where Francesca talks about the major turnaround in how they focus on customers: She describes McDonalds as being “So much more customer – what we call customer-obsessed.”
“We’re focusing on supporting and leading meaningful change that our customers would expect of a brand like McDonald’s. We know that these things matter to our customers.”
How can retailers successfully implement CSR initiatives?
We’ve seen that sustainably has evolved from simply a business strategy to becoming a brand differentiator and now a key evolving purchase driver for consumers. Clearly it’s now key for brand success but what does it take manage such a complex business initiative?
Retailers need to enable CSR and sustainability as new and evolving priorities through a revised business model. It’s essential that they keep an eye toward speed, flexibility, and transparency in their product offerings and experiences.
This will involve an increased focus on sustainability throughout the supply chain. Incorporating sustainability into the supply chain is complex but the rewards are worth the effort.
By managing and improving environmental, social and economic performance throughout supply chains, retailers can conserve resources, optimize processes, uncover product innovations, save costs, increase productivity and promote corporate values.
Research shows the business case for supply chain sustainability is growing – look at the McDonalds example!
Where to start with progressing sustainability initiatives?
It starts with collaboration between external partners but one thing many retailers lack is the platform for meaningful external collaboration.
From the work we have undertaken in supporting retailers globally in their sustainability initiatives, using a systematic approach by engaging through a single platform to execute a program helps to build collaborative ecosystems and communities which is key to success.
Often, a retailer’s partner communities in various geographies have valuable information on local market conditions and resources. Remote collaboration with partners and suppliers will provide access to a wealth of information in areas where it’s not possible to be physically present.
It’s with this collaboration mindset that I’ll be attending the FMI Summit to hear how the retail industry plans to tackle the need for increased sustainability and CSR initiatives.