Love: it’s what make sponsorship, sponsorship

Last week I brought up the topic of sponsorship as a means of accomplishing corporate social responsibility goals and gave a few examples of when sponsorship can backfire. By pure happenstance, I stumbled across an article this morning about the theme for the Environmental Film Festival in the Nation’s Capital that shows a sponsorship relationship at its finest. My heart smiled a little and I felt all warm and fuzzy inside.

Environmental Film Festival in the Nation’s Capital

I should probably start with a disclaimer. When I lived in Washington, DC, and worked for a chain of organic grocery stores called MOM’s Organic Market, I spearheaded the sponsorship of one film screening at the Environmental Film Festival (EFF) back in 2014. So the film festival already has a very special place in my heart.

This year, the theme is “Parks: Protecting Wild.” Best of all, it will be presented in partnership with Subaru of America.

If you don’t know much about the Subaru brand, you might not get why I’m so excited about this perfectly matched sponsorship between a car company, an environmental film festival, and a National Parks theme. Wouldn’t a company that makes oil-free cars like Tesla or a sub-brand like Prius make more sense? I’ll try to sum it up in one catchy phrase: “authentic target audience compatibility.”

For a car brand, Subaru is already REALLY good at authentic marketing. They spent a lot of money to understand their core customer, and they have stayed true to that customer’s needs and values over the years. Who is Subaru’s core customer? Outdoor Enthusiasts in the Rocky Mountain and Pacific Northwest regions. Since you might say that this customer segment is more active on environmental issues that the average consumer, Subaru has spent a lot of time and money supporting and donating to causes that their core consumer cares about. So it makes a lot of sense to sponsor a film festival about National Parks, where Outdoor Enthusiasts love to spend their time.

Compatibility with a National Parks-themed film festival: check!

If you watch TV, you might be familiar with Subaru’s tagline in their ads: “Love. It’s what makes a Subaru a Subaru.” A quick 30 second browse of their website brought me to an elegantly designed page about their commitment to the environment, and another 15 seconds of browsing got me to The Subaru Love Promise: “we believe in making the world a better place.” One way they accomplish this promise is by being the first auto manufacturer in U.S. history to become zero landfill. Meaning their manufacturing plants have not sent a single thing to landfill since May 2004. A car company that, in my opinion, genuinely cared about the environment? Sounds like a great sponsor for an environmental film festival.

Compatibility with an environmental film festival: check!

Beyond “authentic target audience compatibility,” this sponsorship gives Subaru access to a new market of Outdoor Enthusiasts in the DC Metropolitan region. With that, Subaru has hit the sponsorship jackpot. Target audience fit and brand growth potential are the best you can hope for from a sponsorship, especially when that sponsorship aligns with your CSR values.

Way to go, Subaru. Way to go.

What core values?

Corporate jargon can be infuriating sometimes.

On Thursday, SeaWorld released a press release stating that the company would strengthen its security and risk management policies and controls. What SeaWorld actually means is that it got caught engaging in corporate espionage by having paid employees pose as animal rights activists. The statement comes after the Board of Directors hired an outside independent council to conduct an investigation of the practices.

According to the company’s chief executive, the purpose of all the spying was to “maintain the safety and security of company employees, customers, and animals in the face of credible threats that the company had received.”

PETA says differently. In July of 2015, the non-profit accused SeaWorld employees of trying to incite violence amongst otherwise peaceful protestors by masquerading as animal rights activists.

In my opinion, the company has a core values problem. The press release claims that from hence forth, SeaWorld’s security and other activities need to align with their core values. As a consumer, it’s not really clear that the company has any core values to begin with.

SeaWorld took a lot of heat in 2013 after the release of the documentary Blackfish, which detailed the saddening habitat features of Orca whales living in captivity in Sea World. Since then, three whales have died at a park in San Antonio. While Orcas typically live to age 30-40, these whales all died in their teens.

Source: CNN.com

I’m not buying SeaWorld’s claims, nor do I think the company has a problem that can be solved by strengthening its risk management policies and controls. As the company’s stock price continues to fall, it seems imperative that top management decide whether its core values are in line with ethical standards. If they’re not, changing their core values should be the first place to start.

 

One strike and you’re out

Sponsorship of professional and amateur athletes can help brands create awareness, build a positive image, and increase sales. Unfortunately, it can also jeopardize a brand’s reputation as a socially responsible company.

Last week, boxer Manny Pacquiao made some deplorable comments about the LGBT community. In case you missed it, he said:

It’s just common sense. Have you seen any animal having male-to-male or female-to-female relations? Animals are better, they know how to distinguish male from female. If we approve male-on-male, female-on-female, then man is worse than animals.

We’ll set aside the fact that Pacquiao is just plain wrong about there being no homosexual relationships in the animal kingdown. Pacquiao’s statement not only reflects poorly on himself, but as a Nike-sponsored athlete, it also reflects poorly on the brand he wears when he steps into the ring. Luckily, Nike has an excellent team of PR professionals who shook their heads, rolled up their sleeves, and released a counter statement (after swiftly dropping their sponsorship deal with Pacquiao):

We find  Manny Pacquiao’s comments abhorrent. Nike strongly opposes discrimination of any kind and has a long history of supporting and standing up for the rights of the LGBT community. We no longer have a relationship with Manny Pacquiao.

Statements made in poor judgement are not the only type of risk brands have to consider when weighing the benefits of sponsorship against their CSR values.

A little over a year ago, Clif Bar, the California organic energy food company, dropped five climbers from their lineup of sponsored athletes, infuriating the climbing community and sparking a heated dialogue in the outdoor industry. In Clif Bar’s defense, the company released a letter to the climbing community explaining its seemingly abrupt move. Clif Bar sited the extreme risk inherent in participating in B.A.S.E jumping, highlining and free-soloing, all of which were activities their dropped athletes took part in.

Source: The New York Times

As a company involved in athlete sponsorship, Clif Bar decided it no longer felt good about benefiting from the high level of risk that some of their athletes were taking. “Ultimately, this decision came down to a sense of responsibility to our own story, what we endorse and the activities that we encourage – which is largely reflected in our sponsorship of athletes,” the Clif Bar Team writes in their letter to the climbing community.

At the end of the day, athlete sponsorship must be part of a larger corporate strategy. For mission-driven brands, it is even more important that the actions of their sponsored athletes are in alignment with the company’s core values. In light of that, I have to agree with the decisions made by both Nike and Clif Bar. Even if all it took was just one strike to send them out.

When you’re Elon Musk, you can do whatever you want

Tesla owners are an interesting breed.

Apparently, if I owned a Tesla, I could entice my other wealthy environmentalist friends to purchase a Tesla using my referral link. They would get a $1,200 credit towards the cost of installing a home Electric Vehicle (EV) charger, and I would get a chance to win a Ludicrous P90D Model X and a private tour of SpaceX. So then I could own two Teslas and get to see rockets up close. Yippee!

The Tesla Model X…or one of those rocket ships that Elon Musk wants to use to fly to space.

Recently, I read a book by Craig Wilson entitled The Compass and the Nail: How the Patagonia model of loyalty can save your business, and might just save the planet. The book outlines a strategy that brands can use to create a loyal following of “cheerleaders” to champion the brand’s message. According to Wilson, there are different platforms that brands can use to create rabid fan bases, and it appears that Tesla is attempting to hit more than one of them.

Some brands, like Amazon, build loyalty through convenience, making it beyond easy for customers to utilize and access their services. Other brands, like Patagonia, create fanatical customers through an authentic ethical value system, giving consumers the means to make the world a better place by buying (or not buying) a Patagonia jacket. Claims of superior quality and an abundance of promotional loyalty programs help other brands create cheerleaders.

Craig Wilson claims that some of these “bonds of loyalty” work better than others in the long run. For example, brands that build fan bases using convenience or promotions can be easily usurped by the next brand that provides similar products more conveniently or with better loyalty perks. Wilson is especially harsh on promotional bond-building, because he says true brand cheerleaders shouldn’t need monetary incentives to be a loyal customer. In the case of airline credit card, consumers tend to choose a points program with an airline company they are already loyal to, whether that’s because of the convenient routes it offers or the superior customer service it provides. The loyalty program is just the icing on the cake.

Looking through the lens of Wilson’s theories makes Tesla’s referral program a very interesting case study. Tesla’s brand image definitely hits the superiority and ethical buckets. Owners of a Model S are often wealthy people who want a classy car that won’t ruin the environment. Are those same consumers likely to become bigger brand advocates by participating in a referral program? It doesn’t seem likely.

It seems to me that Tesla is trying to expand its customer base to make Teslas slightly more accessible to the less-wealthy individual. This diluting of the brand message has destroyed many companies, and it will be interesting to see whether this referral program gains traction and confuses Tesla’s core consumer.

My favorite part about the referral program, however, is the fine print, which gives Tesla the right to withhold the prize from anyone they think has not participated in good faith. Just like when Elon Musk canceled a customer’s pre-order of the Model X because that customer wrote a “super rude” blog post about Tesla’s launch party. I guess when you’re Elon Musk, you can basically do whatever you want. It sure will be interesting to see how Musk’s influence impacts his brands over the next few years.

CSR isn’t just about saving the planet

According to the recently released 2016 PwC Global CEO survey, 64% of CEOs feel that corporate social responsibility is vital to their business and at the core of what they do, as opposed to just a stand-alone department buried somewhere in their company.

The majority of these CEOs can justify CSR because investing in the future is good for profitability. Richard Goyder, Managing Director of Wesfarmers, one of the largest public companies in Australia, sums up this sentiment perfectly in the report:

“I don’t think, as a listed company, there’s any doubt that our primary objective is to generate returns for our investors. But we have to do that sustainably, we have to do it ethically and we have to do it in a way that contributes to the communities in which we operate. That’s for our own good anyway. Because if we help the communities in which we operate then those communities will have more capacity to do business with us in the future.”

CEOs also recognize that authentic CSR programs help build trust in a company, which is also good for a company’s bottom line. Consumers who trust a company are 20% more likely to buy products and services from that company and 17% more likely to recommend that company to a friend or colleague. According to the 2016 Edelman Trust Barometer, trust in business across the general population rose 5% from 2015-2016. Despite scandals like Dieselgate, authentic CSR programs appear to be working.

There’s a third reason that so many CEOs think CSR is important. Take into consideration the following:

1. 90% of CEOs say customers have the biggest impact on their strategy
2. At 80 million strong, Millennials make up the fastest growing segment in the market and account for $1 trillion of current consumer spending in the United States
3. Millennials care deeply about corporate social responsibility

There’s a growing body of evidence that suggests that the purchasing habits of Millennials are driven by corporate social responsibility. The 2015 Nielsen Global Corporate Sustainability Report found that 73% of global Millennials are willing to pay more for sustainable products, which is up 23% from 2014. A study by Horizon Media, summarized in this Forbes article, found that “81% of Millennials expect companies to make a public commitment to good corporate citizenship.” And finally, the 2015 Cone Communications Millennial CSR Study found that 91% of Millennials would switch to a cause-associated brand.

No matter which way you slice it, Millennials spend more money on products and services from brands that have a mission.

Companies can increase profits by appealing to Millennial’s social and environmental values. Image cred: http:/bit.ly/1Ewx9WU

Amazon provides an excellent example of how all of these factors can influence a company to take CSR more seriously. Three years ago, the Guardian reported about the internet giant’s poor sustainability record, lack of transparency, and little regard for its social and environmental impact. “Unless consumers protest,” the article said,” there is little hope for change.”

Fast forward to today, when it appears that the company is building a sustainability army.

According to a more recent article by the Guardian, Amazon has headhunted at least four big names in sustainability over the last two years, and is now hiring over 100 employees into their sustainability departments, which include social responsibility, energy and environment, customer packaging experience, sustainability services, sustainability technology, and sustainability science. The most notable hire Amazon has made is Dara O’Rourke, who exposed “exploitative and hazardous working conditions” in Asian factories supplying Nike products in the 1990s. 

Amazon has never been big on transparency, but maybe that’s all about to change. Thanks to demand from Millennials, maybe there actually is hope that Jeff Bezos, Amazon’s founder and CEO, will join the ranks of other CEOs who see CSR as the only foundation on which a successful business can be built. 

 

What is the true cost of fashion?

Fashion has been on my brain a lot recently. Between creating an infographic about textile waste in the apparel industry, working on a sustainability report for an outdoor apparel company, and creating a growth plan for The Renewal Workshop (a start-up that partners with best loved outdoor brands to source unusable apparel and close the loop by responsibly managing the garments), I’m spending a lot of time thinking about how dirty the fast fashion industry is.

And it’s not just that the fast fashion industry is dirty. In too many cases, the fast fashion industry claims to be eco-friendly when “good for the environment” couldn’t be farther from the truth. “Greenwashing”, as this practice is known, occurs when a company tries to portray itself as more eco-minded than its practices might suggest. Yesterday, Eco-Business reported on an “ecology-themed” fashion show in Paris last month by German designer Karl Lagerfeld and Chanel that stunk of greenwashing. The show, which was presented in a “natural” wooden pavilion with a grass runway and neutral-toned fabrics, made no mention of the environmental issues in the fashion industry.

Chanel’s wooden pavilion in their ecology-themed fashion show. Source: Eco-Business

I’ve clearly mentioned a few times now that the fashion industry has some environmental issues. It would be easy to go down a rabbit hole of the myriad ways fashion is dirty, but for the sake of simplicity I’ll talk about it in three broad categories.

Materials
The majority of the environmental impact comes from the toxic inputs needed to dye the fabric or add a technical benefit like water-proofing or sweat-wicking. Many factories in China and India dump untreated water into local streams and river, making the water unsuitable for drinking and killing the living ecosystem.

Labor
It’s probably no secret that manufacturing clothing on the other side of the world creates the potential for human rights abuse in the supply chain. While some companies like Patagonia do thorough audits of their supply chain and work with third-party verifiers to ensure fair labor practices are instituted in their factories, many companies turn a blind eye to issues of abysmal wages, long hours and sexual harassment. Take, for example, the Rana Plaza collapse in Bangladesh in 2013, where over 1,000 factory workers died after being forced to continue working in a building not structured to hold the weight of heavy manufacturing equipment.

End of Life
According to The True Cost, a documentary about the impact of cheap clothing, clothing sales have increased 400% in the last 20 years. In America, the average person buys 68 new articles of clothing each year, and 85% of clothing ends up in the landfill. Most consumers don’t realize that even clothes with a million holes in them can be donated to charity. You won’t see your ratty shirt on someone walking down the street next week; charities donate clothes beyond repair to companies that turn them into industrial rags or building insulation. That ensures no clothing goes to waste.

Eco-Business was right to call out the “ecology themed” fashion show in Paris. When there are so many companies like Patagonia and Reformation moving the needle towards a more sustainable industry, it’s deplorable to ride the coattails of the environmental movement without taking action to mitigate the numerous issues in the fashion industry.

Interested in learning more? Greenpeace’s Detox campaign and The True Cost documentary (available on Netflix) are a great place to start.

Super Bowl 50 is over, and the winner is…

…the Earth!

To be honest, I was actually quite excited that the Broncos took home the trophy, even if the game itself was boring and the ads were lackluster. I still love a good Cinderella story.

The real story of the game, however, is that Super Bowl 50 will go down in history as the most environmentally-friendly Super Bowl yet. It helped that the game was held at the San Francisco 49ers LEED gold Levi’s Stadium (which I talked about in this post), which is already the greenest stadium in professional sports. But the Super Bowl 50 Host Committee was also very intentional in creating a “net-positive” event.

To Niell Duffy, sustainability director of the Committee, net-postive means using the game as platform to do social, environmental and economic good in the region.

Source: Super Bowl 50 Host Committee

The Committee began implementing their plan in the community in mid-January in the form of multiple urban forestry and coastal cleanup events, which continued through February. Verizon, a major sponsorship partner of Super Bowl 50, and the non-profit American Forests committed to planting 28,000 trees in the Sierra Nevadas, which would cover an area the size of the entire Levi’s Stadium campus.

Super Bowl City was the main attraction when it comes to environmental sustainability at Super Bowl 50. The free-to-the-public fan village was powered primarily by renewable energy in partnership with PG&E, and any energy needed not covered was offset with renewable energy credits to reduce greenhouse gas emissions.

It remains to be seen whether the deep green nature of this Super Bowl will be the standard going further, or whether it is more attributable to the culture of environmentalism that is pervasive in the Bay Area.

What’s risky about carbon?

Six years ago, the Securities and Exchange Commission, a government agency responsible for protecting investors and maintaining market integrity, issued some “interpretive guidance” on how public companies should factor climate change into the risks to their business. The S.E.C. wanted to make it clear that they were not “opining on whether the world’s climate is changing, at what pace it might be changing, or due to what causes,” they were just reminding companies that it should be considered a risk that should be reported in quarterly financial reports.

After the friendly reminder, incrementally more companies began disclosing the risks of climate change, but most of the disclosure is still vague. According to an InsideClimate News report, only 27% of annual reports from the 3,895 U.S. public companies even mentioned “climate change” or “global warming” in their filings in 2013.

Why would investors care about the risks of climate change? Not because our planet is heating to levels that could cause massive natural disasters and completely destroy our food production system (although maybe somewhere in their hearts they care about that too). Put simply, climate change has the potential to hurt the bottom line of the company. As in, shareholders make less money.

A coal mine in Arizona. Coal is in low demand with the abundance of cheap natural gas. Source: The New York Times

So how does climate change potentially hurt a company’s bottom line? There are actually a lot of ways, some of which you might not have considered before.

A tax on carbon is one way that legislation and regulation related to climate change could impact a company’s bottom line. In simple terms, a carbon tax imposes an additional price on the greenhouse gas emissions associated with using fossil fuels such as coal, oil and natural gas. In most scenarios, the tax is levied on the fossil fuel companies. However, the costs are passed down through the supply chain, and can affect any company that relies heavily on fossil fuels in order to operate. There are many countries around the world that have successfully implemented a carbon tax, although the United States is not one of them. A carbon tax imposed in British Columbia in 2008 reduced emissions 3.5 times faster than the rest of Canada, for example.

Companies that rely intensively on finite resources like oil and water also face climate change risks as these resources become more and more scarce. It’s no secret that California is currently facing one of the most severe droughts on record. Think about all of the food produced in California. Unless someone finds an innovative way to grow food without water, those food production businesses face some serious climate change risks.

All of this climate change risk could encourage investors to take their money elsewhere. There are an increasing number of investors who are divesting from fossil fuels and moving towards more sustainable investments. Impact investing is one route that socially conscious investors can take to link their money to positive social and environmental change. According to the Global Impact Investing Network, “impact investments are investments made into companies, organizations and funds with the intention to generate social and environmental impact alongside a financial return.”

Considering climate change as a business risk is a valuable move. Big business is the main reason we’re in this climate mess, and it should be the force for good that moves the needle toward a more sustainable society.

If I’m being Honest.

In an interesting follow up to my last post, Chick-fil-A began selling their first organic item in its restaurants last week. Honest Tea’s organic juice blends are now available in Chick-fil-A’s Kid’s Meal for no extra cost. Wendy’s also launched an Honest Tea beverage in April of last year.

I don’t think that selling organic juice absolves Wendy’s and Chick-fil-A of other issues in their supply chain, such as unsustainable palm oil or animal abuse. However, I think that I made my stance pretty clear in my last post about McDonald’s use of sustainable fish. So instead, I want to use this news tidbit to highlight how being purchased by a large corporation can actually be good for small green brands.

In case you didn’t know, Honest Tea is owned by Coca Cola. The little company with a big mission was purchased in 2011, three years after Coke invested a 40% stake in the company. Many Honest Tea fans were concerned about the deal, given the apparent disconnect between Coke’s product offerings and Honest Tea’s commitment to healthy ingredients and socially responsible business practices. Seth Goldman, founder and CEO of Honest Tea, contested this argument in a Washington Post article published March, 2011.

“We’ve been engaged to Coke for the past three years and now we are getting married,” Goldman said. “When you’re engaged to somebody, you’re around them enough that you can gauge any bad habits. So we don’t really expect any surprises and we certainly have developed a good working relationship.”

Without Coke’s distribution channels and financial backing, it’s unlikely that Honest Tea would be able to supply fast food chains like Wendy’s and Chick-fil-A with organic juice beverages. In a perfect example of how corporate acquisitions can further the mission of values-driven companies, Coke’s ownership allows Honest Tea to fulfill its mission of democratizing organic and bringing it to people who wouldn’t normally have exposure to these types of product offerings.

Being able to purchase Honest Tea at Wendy’s won’t make me want to eat there, but I hope that the new product offering encourages regular Wendy’s and Chick-fil-A customers to consider healthier and more environmentally friendly choices when they’re eating on the run.

I have a fish bone to pick

And I’m picking that bone with McDonald’s.

McDonald’s Filet-O-Fish sandwich

In 2013, McDonald’s announced that it would use only wild Alaska Pollock in its Filet-O-Fish sandwiches in the United States. Why Pollock? Well, the Marine Stewardship Council has certified this fish as sustainable. But what does sustainable really mean here?

The Monterey Bay Aquarium’s Seafood Watch releases a rating system that that puts fish species into three categories: “best choices,” “good alternatives” and “avoid.” In their latest publication, Alaska Pollock were on the good alternative list, meaning that there are concerns with how they are caught or farmed.

As in, their populations are moderately healthy but their numbers have been declining. As in, Alaska Pollock are at their lowest levels in over 20 years. As in, McDonald’s, as one of the United States’ largest single buyers of fish, could cause some serious problems for the future sustainability of the Alaska Pollock population.

To make matters worse, fishing operations for Alaska Pollock use trawling gear that also tend to pick up halibut and Chinook salmon, two species of fish whose population are in serious decline. According to a federal report, 6.2 million pounds of halibut were accidentally caught in 2014. That sure doesn’t sound sustainable to me.

Even if we were to ignore the sustainability concerns with Alaska Pollock, there’s still the tiny little issue of everything else that McDonald’s does. From using beef reared on ex-rainforest land, to exploiting workers, to serving antibiotic-laden meats, the company is no saint. A quick google search of “issues with McDonald’s” returns some eye opening results.

On the upside, there are plenty of food companies that do sustainability really well. Le Pain Quotidien, for example, uses organic and local ingredients in al of its food, incorporates green building design into its restaurants, composts its food waste and uses its spend food oil for biodiesel.

There are even some fast food chains, like Burgerville and Evos, that offer organic and local food on the fly without hormones or antibiotics. Take a look at the values sections on their website and you’ll quickly see that sustainable fish at McDonald’s is nothing but clever marketing in disguise.