Why it finally pays to be a sustainable brand.

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This Earth Day, as I sorted through my inbox filled with beautifully designed emails celebrating carbon neutrality or give-back programs, one message rang loud and clear: you can’t build a modern brand without a sustainability commitment. It’s the only way to achieve long-term success in an increasingly impact-focused market. Sustainability has become a requirement — not a trend.

Sustainability isn’t anything new, but within the last decade, companies have made strides to integrate it as a core component of their brand promise. Just a few weeks ago, many brands celebrated Earth Day with festive campaigns, and marketers lauded these “Best-in-Class” activations. Yet some of these messages left me feeling uneasy, given these companies’ limited history of messaging and investing in sustainability efforts. While companies were quick to capitalize on this now-trendy holiday, many of their messages felt perfunctory. After all, sustainability is more than a marketing tactic designed to give a company a brand boost.

In my post on DTC 2.0, I discuss the pivotal shift from “consumer” to “community,” and the idea that brands do not just sell goods, but also must do so purposefully and in line with the values held by their communities. Broadening this concept, the idea of “community” extends to the world at large, and creates a new standard by which all businesses will be measured, based on their impact not just on their immediate communities, but the global community. And, just like community-driven initiatives, sustainability efforts must be authentic and consistent with a company’s strategy and mission. Often too, sustainable companies attract both employees and customers who are dedicated to these values and initiatives, and then help to further the company’s mission and vision.

Now, let’s explore the evolution of sustainability in marketing: why it’s become a must-have, and the opportunities and challenges to being a sustainable brand in today’s age.

The Challenge to Define Sustainability

Sustainability is broadly defined here as how a business minimizes its negative long-term impact. Most of the time, consumers assume sustainability means environmental consciousness or corporate social responsibility, but in fact it includes social and economic issues too. But it’s rare for brands to be simultaneously and consistently environmentally, socially, and economically sustainable.

Nowhere is this more true than in the beauty industry. As outlined by Allure, “clean beauty” has evolved from the early ’90s, where it started as a niche movement to promote natural and safe ingredients such as aluminum-free deodorant, in an industry where ingredient transparency was not the norm. Today, products boasted as “clean” to consumers may use “clean” ingredients, but these may not be sourced responsibly, or packaged with recyclable materials. Fair-trade products are not always organic, and transparent supply chains do not guarantee socially responsible fulfillment.

This overgeneralization of what “sustainable” means lends itself to confusion, that brands are often quick to take advantage of. Sustainable means different things to different people. Because of this murkiness, unregulated nature and few shared standards, the only way brands can effectively showcase their sustainability efforts is through transparency. The more transparent a brand is about where their materials come from, where and how their products are made or how they benefit consumers or the planet, the more credibility they will gain around their efforts. After all, if they’re implementing sustainable practices, they have no reason to hide this information.

Sustainability: Coming to a Store Near You

From the ’70s to ’90s, brands utilized sustainability messaging to gain a competitive differentiation from their peers. Today, sustainability can be so much more than a reactive marketing tactic, and when built authentically into a company’s identity, it has the potential to be transformational.

In Canada and Europe, retailers have tightened sustainability standards, which has led to larger legal changes. In the US, Beautycounter, a notable sustainability leader, lobbies for more stringent cosmetic beauty laws and has “prioritized advocacy, passing nine pieces of legislation to advance personal care product safety in the United States.” Patagonia also does this exceptionally well and founder, Yvon Chouinard, created the 1% for the Planet Initiative.

Sustainability is also good for business. Beautycounter has a network of consultants who sell their products in exchange for a commission; in 2019, they paid out over $120M in commissions. According to Beautycounter SVP of social mission, Lindsay Dahl, “based on polling of our independent consultants, we’ve found that over 80% of them have joined in some part due to the company’s mission, and our advocacy work and our dedication to safety and sourcing is all a part of that bigger mission.” What’s more, these initiatives are part of what attracted the Carlyle Group to invest in and value the company at $1 billion. On the other hand, Patagonia’s revenues quadrupled as they invested in sustainability initiatives over a 10 year period.

Investors, too, increasingly favor companies with high sustainability ratings because it demonstrates that they’re managing risk profiles properly and responsibly. One of the most important ways that companies can foster truly sustainable businesses is by laying out and prioritizing a set of values in their identity (versus brand) and developing internal KPIs and success metrics that align with these values.

Gen Z and The Next Generation of Sustainability

This shift towards sustainability is also largely being driven by Gen Z, or those born between 1997 and 2012. They may have been raised on smartphones instead of pet rocks, but their internet-since-infancy experience gave them exposure to information about the rock we live on and their role in caring for it.

Recently, I attended a talk given by Piper Sandler, a research firm, about Gen Z. The firm conducted a private study to learn more about what they care about and found that Gen Z is unique in that they appear to care more about social justice and the environment than older generations. The firm also found that 97% of Gen Z teens expressed environmental concerns ranging from global warming, wildfires, and the use of plastic. 44% said they changed their behavior in response to these issues with habits like driving less and recycling more.

While segments of every generation possess environmental awareness and have a stake in a sustainable future, Gen Z consumers will only grow in their dominance. Brands, specifically DTC 2.0, that can capture this generation’s loyalty and prove they share their values now through transparency will flourish now and be thanked on their earning calls later.

The Future of Sustainability

Sustainability is now part of the status quo for brands that want to continue to grow and attract the younger generation of consumers. It has the ability to be transformational in how companies conduct business, but it’s not without its challenges. Defining what it means to be sustainable requires continuous evaluation, evolution, and calibration to both customer priorities and company goals and mission.

For brands looking to increase their sustainability commitment, there are a few important areas to focus on:

  • Product Claims & Certifications: There has been a wave of certifications created to help consumers navigate the challenge of identifying sustainable products. Yet, these certifications can create more consumer confusion — and we need to separate fact from fiction. A possible solution could be an independent rating agency that compiles these as inputs into a larger composite score that consumers can easily access, compare and digest. By elevating trust and uniformity to the certification process, comprehension and trust will increase in tandem.
  • Transparent Supply Chains: Transparency should permeate every step of the supply chain, from labor input, to product components and fulfillment and distribution processes. This has already begun, as some companies now share public supply chain audits. Blockchain has made centralizing supply chain data even more transparent for companies that can take advantage of this technology.
  • Regulation & Governance: Right now, there is little regulation around sustainability marketing by the FDA or other government bodies. What’s more, there are few entities that de-mark sustainability standards; the most relevant is the B Corp. However, it’s expensive and time-consuming to become a B Corp, which may be a deterrent to adoption. How can we make these standards easier to adopt, without sacrificing their rigor?

The work is not done, but increasingly, companies are finally agreeing that it pays to be sustainable. Sustainability is a loaded word, but in short, it just means having a long-term mindset. And one thing’s for sure: the brands that get this right have a bright future ahead of them, and the world will be better off for it.

Growth practitioner. Former Founder/CEO @Vive (YC S15). Yogi and native NYer.