Environmental and Social Innovation for Business Growth and Brand Values

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8th Feb 2020 Business Strategy Reference this

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“Consumers’ desire to have a deeper connection with brands, the expectation not just that they won’t ‘be bad’ but that they should actively ‘do good’, is not going to go away. The brands that have not yet caught on to this and are not thinking about how they will embed environmental and social sustainability within their business model, will not be around in the next 50 years.”

Environmental and social innovation is becoming the engine for business growth and brand values. The future of business relies in the Sustainable Business, maintaining integrity and developing the capacity to generate a ROI of sustainability in the business.
The new Happiness and Sharing Economy (Heinrichs, H. 2013) – which protects the opportunities for a radical innovation of businesses and renewed successful brands – requires a deep understanding of how to authentically include sustainability in brands’ premises and the steps needed to build sharing in the process through the communication of the sustainability towards brands that express this value (Sustainability brands).
 

The decision to reverse the misbelieving according to which “Business” does not necessarily express the value of sustainability, is a necessary step needed for brands so that they can redefine their vision and be ethical and responsible.
Sustainability does not mean to simply focus on environmental initiatives, but expresses a much broader concept that integrates social, environmental and economic effects in order to build a stronger and longer-lasting society(Schultz, Don E. ; Block, Martin P. 2013); if brands understand this concept, sustainability as an indicator of efficiency can be considered a winning development model.
The impact of this “green wave” promises to change the business world, a trend that can give access to areas full of opportunities as well as new competitive advantages.

At the present time, brands are judged on much more than their financial performance and, because of all the economic and social factors that companies need to face, building a strong relationship with consumers is not as easy and direct (Chan, R.Y. 2001): authenticity and purpose behind a brands’ hard work are the qualities that consumers recognise and reward with their loyalty.


This environmental responsiveness helps brands to improve their competitiveness and market share (Chan, 2001; Fitzgerald, 1993; Porter and Van der Linde, 1995a) but has also shown that this strategy tends to promote profitability, motivates employers and improves their work ethic, whilst at the same time adding value to customers (Forte and Lamont, 1998)

Since the beginning of 2018, popular brands have been making the most of customers interests with the introduction of sustainable products; among them all, the sector with more costs and worst impacts on earth are fashion organisations.
In terms of waste, the fashion sector is the one with the highest values: more than 3.000 litres of water are used to make one cotton or polyester t-shirt, out of 23 billion shoes that are produced and sold globally in a years’ time, 300 million are sent to the dump (Hines, T., & Bruce, M., 2001) and a pair of jeans cannot be made without the use of 11.000 up to 20.000 litres of water. (Siegle, 2011).
If assumed that the current levels of consumption stay the same, with the constant population growth and the primary resources being limited, the Earth will not make it in the next decade. (The World Data Bank, 2015)
The situation has been proclaimed and stays critical since 2005, when Earth’s overshoot day – the time when humanity has used all of natural resources available for the year- has started to be declared in August, four months before the due date; in 2018 the overshoot day was the 1st of August, the worst result that has ever been recorded. (Global Footprint Network, 2018)
Together with the limited natural resources problems, the environment is also suffering from the severe growth of levels of pollution: it is estimated that more than 22.000 kilograms of waste get poured into the Ganges river every day, containing up to 440 kilograms of chromium in it (M. Douglas, 2003)
This has also a critical effect on the rest of the population as most of it- due to a limited access to water resources- uses the same water from the river to bathe, drink and cook; up to 10% of the chromium contained in water can remain in human’s body for up to 5 years, the enough amount of time for it to damage the DNA and that will, eventually, lead to death. (Siegle, 2011)
Issues with a little care for animal welfare has been proven as well, with an upgrowing demand of millions of animals’ skin to produce leather products; those are usually cows, pigs and goats but also snakes, alligators, ostriches and kangaroos. Dogs and cats are also used for their skin all over the world as well, after being first slaughtered for their meat in China. (Siegle, 2011)


In the pursuit of low production costs, apparel firms took advantage of lower environmental awareness and looser environmental regulatory system in developing countries. (Nagurney, A.; Yu, M. 2012)
Child labour, less than minimum wages, high risks at work and unstable factories are problems that workers in the 3rd World face daily: working conditions and wealth distribution have been discussed for many years, achieving very little but relevant results.
People in those countries do not have any other option but accept those conditions as they know that brands are always looking  for better deals and faster turnouts; they have a wide choice of countries to choose from, and if not supplying with a cheaply enough or at the required pace, the retailer will look for a supplier who can. (Siegle, 2011)
Although sustainability is at the core of todays’ businesses, there are often problems with its execution.

Customers’ expectations have changed through the years: other than making a profit for the company and its stakeholders, businesses should use their power to do good from an economic, social and environmental perspective.
As a result, many popular fashion brands have launched the production of sustainable and innovative materials for their products.
Nike, Puma, Reebok and Adidas – to name a few- have started to use up to 90% recycled materials and all businesses are looking to apply sustainable products at the core of their organisations. (MJ Epstein, AR Buhovac, K Yuthas, 2010).
Products such as flip flops and shoes from such companies are now made of environmental- friendly materials such as merino wool and sugar cane; Reebok has launched a line of organic cotton sneakers with soles made from corn (Clark, T. 2018)
Chief operating officer at Nike, Eric Sprunk, has confirmed that since last year Nike has produced World Cup kits out of recycled plastic bottles and NBA uniforms were made of recycled polyester.
Out of the sportwear industry, H&M has made some radical changes in its production as well; its last sustainability report has shown a 35% increase of recycled materials and the brand is planning to only use that kind of materials by 2030. The company uses cotton from sustainable sources and recycled polyester, equivalent to 100 million PET bottles. (Clark, T. 2018)
Project manager in H&M’s sustainability team, Cecilia Brannsten, has stated that the companies’ goal is to change the mindset of its customers, so they see their old clothes as renewable resources rather than throwing them away or letting them pile up in the closet. (O Balch, 2013)
This initiative -operating under the term of Shwopping Deal- consists of customers handing in any participating store their old clothes from H&M and any other brand, usually in exchange of vouchers; in the UK the vouchers has a £5 value and can be applied on purchases over £30, whilst in the rest of Europe a 15% discount is applied on any purchase. (O Balch, 2013)
At this point, collected clothes are sent to I:Collect, a recycling start-up based in Switzerland that resells what possible to second hands or vintage markets; the rest of clothing found in poor conditions are usually converted for other use, such as cleaning cloths, or recycled into textile fibres.

Regardless the evident effort most of fashion brands are putting into the growth of the use of renewable and nature- friendly products, it is considered to be unsuccessful until companies will put all their focus into sales increase.
When big brands such as H&M and Nike, with sales up to 550 million of items per year each, plan to introduce an environment- friendly plan in order to assure a better future for Earth but at the same time try to increase those numbers, their concern about the environment and its well-being is highly doubted. (O Balch, 2013)
Furthermore, it is believed by many that materials made from wood pulp, as well as recycled plastic, organic cotton, merino wool and other Earth-friendly materials are not the perfect solution; if the final product is also not recycled, in the end they will end up in a landfill, causing a major loss of money for brands.
What is more, is that it takes years for many of these materials to be refined enough to be a desirable choice for brands and fashion retailers to use and most brands are not willing to risk their reputation, name and money for a project that will take a lot of time to show results and that might not bring them any profits.

After taking into consideration all the information above, it can be confirmed that, in its current form, the business model has not been made to last and if changes to its management are not made, neither will the Earth.
Brands and customers have different targets: brands want to increase their sales and gain customers and their loyalty whilst customers want to have value from the purchased items and at the same time receive more from brands, something that will satisfy their needs but also a permanent change in the world, something that will make a difference.
Sustainable brands’ choices implies a radical change in the use of materials, a gain of customers’ loyalty through their actions that benefits the environment and the maintenance of high sales, all of this whilst building themselves a name that will be remembered as  brands that have been responsible of creating and leading a positive and lasting change.
 

References

  1. Heinrichs, H. (2013) “Sharing Economy: A Potential New Pathway to Sustainability”
  2. Schultz, Don E.; Block, Martin P. (2013) “Beyond brand loyalty: Brand sustainability”, Taylor & Francis Group, Journal of Marketing Communications, 01 August 2013, p.1-16
  3. Chan, R.Y. (2001), “Determinants of Chinese consumers – green purchase behaviour”, Psychology & Marketing, Vol. 18 No.4, pp.389‐413.
  4. Forte, M., Lamont, B. (1998), “The bottom‐line effect of greening (implications of ecological awareness)”, The Academy of Management Executive, Vol. 12 No.1, pp.89‐91.
  5. Hines, T., & Bruce, M. (2001). “Fashion marketing -contemporary issues”. Oxford: Butterworth-Heinemann.
  6. Siegle, L., 2011. “To die for, is fashion wearing out the world?” London: Fourth Estate
  7. Nagurney, A.; Yu, M. (2012) “Sustainable fashion supply chain management under oligopolistic competition and brand differentiation.” Int. J. Prod. Econ. 2012, 135, 532–540.
  8. The World Data Bank, (2015). Population growth (annual %) [online]
  9. Global Footprint Networ, 2018. “Earth Overshoot Day 2018 is August 1”
    Available at: www.footprintnetwork.com
  10. Implementing sustainability: The role of leadership and organizational culture
    MJ Epstein, AR Buhovac, K Yuthas
    – Strategic finance, 2010
  11. H&M Company Sustainable Report 2017, August 2018 (online)
    Available at: https://about.hm.com/en/media/news/general-news-2018/hm-sustainability-report-2017.html
  12. Balch. O., 2013.  “H&M: can fast fashion and sustainability ever really mix?”
  13. Clark, T. 2018 “Sports brands step up for sustainability” (online)
    Available at: https://www.drapersonline.com/news/sports-brands-step-up-for-sustainability/7031917.article

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