Reconciling business communication with sustainable development

Case Study for the UNITAR course: Introduction to a green economy, concepts and applications
Edited by Giuseppe Flavio Fabiani

Contents
SECTTON 1: CONTEXT AND STTUATTON ANALYSES ........................... The social role of business ......................................... The scepticism about company ethical initiatives .................... Overall long-term goal of the Action ................................ SECTTON 2: OBJECTIVES AND EXPECTED RESULTS .......................... Sustainability reporting in the European Union ...................... The multiplier effect of communication .............................. Objectives of the Green Action Plan ................................. 2 2 2 4 4 4 5 6

SECTTON 3: PLANNED MEASURES/ACTIVITIES .. ... ... ... ... ... ... .. 7 .... ... ... ... ... ... ... SECTTON 4: RESOURCES ................................................ 8 SECTTON 5: IMPLEMENTATION AND SUSTAINABILITY .... ... ... ... ... ... 9 ... ... ... ... ... . BIBLIOGRAPRPHY ..................................................... 10

1 | Page

SECTION 1: CONTEXT AND SITUATION ANALYSIS

The social role of business Society at large has been aware for many years now of the influence that business has on natural resource use, technological development, models of production and consumption and lifestyles. This influence implies major responsibilities for these actors in their development, management, marketing and communication activities, especially in sectors that produce a major social and environmental impact like energy, transport, textiles, and food. The development of any sustainable product/service needs to meet new evaluation standards and take into account the environmental, social and economic effects it will produce over its whole life cycle: i.e. the impact of manufacturing in terms of natural and human resources, the specific characteristics of the product/service (polluting? reusable? recyclable? etc.), methods of use, and whether it encourages rational consumption. Corporations can play then a central role in helping solve the worlds environmental, economic and social challenges by making real changes to their policies and practices. As a consequence an increasing number of businesses have been quickly to introduce ethics and corporate social responsibility (CSR) strategies to comply with the pressure coming from a variety of internal and external stakeholders. Nevertheless companies' ethical initiatives have not always achieved the desired effects in terms of stakeholders' behavioural change and return on investment (ROI). One of the main reasons of these failures is the malfunctioning of the marketing communication industry where bad practices like greenwashing and astroturfing are increasing the mistrust and confusing truly green oriented actors.

The scepticism about company ethical initiatives There is a great deal of public scepticism about companies' ethical initiatives that are heavily publicized without any clear evidence to support their claims and the growth of the so- called 'greenwashing' is not helping it. The temptation to over-claim in a market in which consumers will often pay a premium for environmentally friendly products or have more brand loyalty to an 'ethical' marketer is enormous and set to increase.

2 | Page

Stephen Green, the group chairman of HSBC, in an interview to The New Statesman (2 July 2009) said: "there has in particular, been a marked decline in people's perception of whom they can trust. The collapse in perceived trustworthiness is most marked in relation to the banking sector, but applies to the business world more broadly, as trust has declined generally within family life and social relationships ... trust is central to the workings of the economic system and we are to restore people's confidence in the market" According to stopgreenwash.org, a Greenpeace's website discussing the practice of greenwashing, there are many ways in which corporations greenwash: 1. Dirty Business Touting an environmental program or product, while the corporation's product or core business is inherently polluting or unsustainable. For example, if a company brags about its boutique green R&D projects but the majority of spending and investment reinforces old, unsustainable, polluting practices. 2. Ad Bluster Using targeted advertising and public relations campaigns to exaggerate an environmental achievement in order to divert attention away from environmental problems or if it spends more money advertising an environmental achievement than actually doing it. For example, if a company was to do a million dollar ad campaign about a clean-up that cost less.
Malaysian Palm Oil Council television ads that ran on the BBC in 2007: the ad claimed that palm oil was environmentally friendly, and used green images and statements, such as "A gift from nature, a gift for life", "Helping the planet breathe" and "Sustainably produced since 1917".

3. Political Spin Advertising or speaking about corporate "green" commitments while lobbying against pending or current environmental laws and regulations. For example, if advertising or public statements are used to emphasize corporate environmental responsibility in the midst of legislative pressure or legal action.

3 | Page

4. It's already in the Law Advertising or branding a product with environmental achievements that are already required or mandated by existing laws. For example, if an industry or company has been forced to change a product, clean up its pollution or protect an endangered species, then uses PR campaigns to make such action look proactive or voluntary. Another PR practice which is increasing the public scepticism about company ethical initiatives is the so-called 'astroturfing'. Astroturfing initiatives are a form of advocacy in support of a corporate agenda, designed to give the appearance of a spontaneous civil movement.

Overall long-term goal of the Action The Action Plan I am proposing focuses on correcting the adverse effects of the marketing communication industry by discouraging misleading practices, in order to restore people's confidence and trust in genuine environmental and social responsible businesses. In a broader context this Action Plan contributes in changing the composition of the demand and supply of manufactured products/services in order to support the transition to greener manufacturing i.

SECTION 2: OBJECTIVES AND EXPECTED RESULTS Before talking about objectives and expected results of this plan, we briefly need to mention the sustainability reporting state of play in the European Union and the anomaly of advertising and communication industry which is very slow in receiving it despite the key role it is playing by linking manufacturing companies and customers.

Sustainability reporting in the European Union A number of countries member of European Union have included mandatory and voluntary requirements for sustainability reporting in their national legislation. Early adopters were Sweden, France and Germany (2001), followed by Norway,

4 | Page

Belgium and Italy in 2004. In Sweden, reporting is mandatory for all state-owned companies including assurance, in Denmark it is now mandatory for the largest companies to report on CSR in their annual reports, and this legislation update has affected around 1,100 companies. In general, Western European countries have more regulations in place than Eastern European countries, where only Hungary and Romania have some mandatory standards in place. This trend in European legislation is not affecting the communication and advertising industry at all. As the environmental footprint of the communication agencies is still low compared to others, the communications sector has been slow to catch on regarding sustainable development. For instance, only one corporate network of communication agencies, WPP, has recently published its first CSR annual report. Paradoxically, though, when searching in Google for 'green communication agencies, results show a large number of self-described 'green', 'sustainable' or 'responsible' agencies. Thus, if annual reports are scarce in the field, then on what basis do these agencies prove their sustainable activity engagement? On what do green communication agencies rely to prove their CSR assertions?

The multiplier effect of communication One may ask what do the business communication sector has to do with green manufacturing. In this context, the UNEP insists on the important role of advertising and communication agencies that are a key link between manufacturing enterprises and their stakeholders. The position they hold and the influence they wield over society give them an undeniable responsibility. The biggest advertising investments are in sectors that represent a large portion of the individual ecological footprint: food, transport, energy, textiles. Marketing and communication professionals sometimes find themselves promoting new products that have a strong environmental impact(SUVs, mobile phones), with the risk that they may encourage people to over-consume or may promote products which consumption is recognized as dangerous for individuals (junk food, tobacco, alcohol, etc). Professionals who promote products or services in these productions and consumption sectors may send out messages that lead to behaviour with 5 | Page

substantial adverse consequences for the environment and society. Conversely, other communication agencies promoting different businesses or social messages can definitively inspire and orient positive changes in behaviours and support transition to sustainable consumption.

Objectives of the Green Action Plan Given the social role of business in helping solve the world's environmental challenges through sustainable business policies and practices, and provided the raising scepticism of people about sustainable businesses advertised on media a Green Action plan is needed to restore the 'consumer trust' a key element to the workings of the economic system. This Green Action is required to discourage misleading sustainability claims in promotional messages, and restore the correct market mechanisms which should strongly award those companies marketing genuinely environmentally/social-friendly products and services. The Action's purpose will be therefore to reduce the information asymmetry between consumers, communication professionals and manufacturing companies as far as the businesses promoted through green communication campaigns is concerned. The Action will be enforced in the member States of the European Union. Specifically this action should achieve the following details results: 1. reduce by 25% the occurrences of misleading environmental claims reported to or spotted by the national authorities responsible to take action against misleading campaigns; 2.increase to 20% of the total amount the European CSR-certified communication and advertising agencies; 3.grow by 5% the green versus brown economy performance in those industries where compete big advertising spenders selling products/services with a major social and environmental impact, i.e. energy, transport, textiles, food. 1)the National Authorities in charge of identifying and taking action against misleading communication campaigns will assess the incidence of misleading claims in the different countries; 2)the number of European CSR-certified communication and advertising agencies will be monitored by GRI; 3) finally the growth of green versus brown economy performance in energy, transport, textiles and food sectors will be assessed with standard green economy index like the Global Green Economic Index published annually by consultancy Dual Citizen Inc, which measures and ranks the perception and performance of 27 national green economies. 6 | Page

SECTION 3: PLANNED MEASURES/ACTIVITIES The Action's results listed above will planning of activities drawn up by the from the problem analysis and based on this stage of simulation we can expect project stakeholders as follows: be achieved through a proper project group with guidance the objective description. At activities involving the main

MANUFACTURING COMPANIES [measure 1] according to a new European regulatory framework established by local institutions, fines will be levied on companies that use misleading green claims; these fines will actually work as a sort of polluter-pays tax, imposing to compensate for the negative externalities of 'bad claims' in terms of promoting behaviours considered undesirable like drastically increase health hazards, environmental footprints, and financial risks of people. Misleading campaigns will have to be withdrawn immediately according to the current use and the budget allocated for the original campaigns will have to be matched by the charged companies (the amount request will be the total value of the misleading green campaign) to finance the actions described below which aim at restoring the important economic element endangered by the misleading messages, i.e. the 'consumer trust' in genuinely environmentally/social-friendly products and services. [measure 2] 50% of the money collected this way will be provided as incentives to European companies marketing or planning to market genuinely environmentally/social-friendly products and services in exactly the same industries of the charged companies: - 1/3 of the incentives will be allocated to education programmes covering industry-related green economy topics like environmental, economic and social impact of traditional productions, green transition opportunities, investment options and enabling conditions, etc. These programmes will be made available to the direct competitors of the charged company who are already marketing or planning to market genuinely environmentally/social-friendly products and services - 2/3 of the incentives will go on green stimulus package on green innovation in the industries where the charged companies operate

7 | Page

COMMUNICATION AND ADVERTISING AGENCIES [measure 3] 10% of the money collected from European companies advertising misleading sustainability claims will be provided as incentives to European communication and advertising agencies to attend a green your skills voluntary certification programme hosted by an industry association like for example the EACA (European Association of Communications Agencies). The programme will have two main objectives: rehabilitate those agencies who released already misleading environmental/social campaigns in the past so as to help them to adopt common code of ethics and to achieve the GRI CSR certification; train agencies who wish to participate in the voluntary certification in order to deepen the topic, to obtain a positive branding and to get first-mover advantages.

PEOPLE [measure 4] 40% of the money collected from European companies advertising misleading sustainability claims will be provided as incentives to European citizens, to increase the demand of genuinely environmentally/social-friendly products and services: 1/3 of these incentives will be allocated to develop education and awareness programmes for citizen which should motivate them preferring green to brown businesses in their purchase decisions These programmes will be co-created with local community organizations, consumers associations, environmentalists and activists and will cover topics like ecolabelling, personal and societal advantages of sustainable consumption, misleading sustainability campaigns, etc. 2/3 of these incentives will be allocated on consumers tax incentives on green products marketed in those industries where compete big advertising spenders selling products and services with a major social and environmental impact, i.e. energy, transport, textiles, food.

SECTION 4: RESOURCES This plan will be self-financed by the regulatory mechanisms discouraging bad marketing communication practices. A minor budget will be anyhow necessary in the scoping and preparation phase and should be supported by the European Union. 8 | Page

ys ys ds ds ds d

SECTION 5: IMPLEMENTATION AND SUSTAINABILITY

This phase still require a clear strategy as the same measures could be achieved involving different stakeholder. At this stage of simulation we can expect the following stakeholders being involved for the 4 key planned measures. MEASURE 1 European Commission and National Authorities responsible to take action against misleading campaigns. According to the level of competences developed by the different countries, the National Authorities may need to be trained on ethical communication and greenwashing practices evaluation MEASURE 2 UNITAR and national training/education organizations MEASURE 3 European Association of Communications Agencies and Global Reporting Initiative (GRI). I refer to the Global Reporting Index (GRI) when talking about green communication agencies sustainability reporting as GRI is the main international initiative trying to make sustainability reporting a standard worldwide. GRI has a specific programs framework named PR6COMM, for adherence to laws, standards, and voluntary codes related to fundraising, marketing communications, including advertising, promotion, and sponsorship. European communication agencies reporting on sustainability will be asked to comply with GRI PR6COMM. As an example the WPP GRI reporting can be found at www.wpp.com/corporateresponsibilityreports/2010/data-summary/gritable.html

MEASURE 4 Local governments, local community organizations, consumers associations, environmentalists and activists.

To create sustainable results is also important to activate training programs on the supporting communitarian legislation that would facilitate the process of monitoring and enforcement. A first reference is the directive 2005/29/EC of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices. 9 | Page

BIBLIOGRAPRPHY European Union (2011), State of play in the sustainability reporting in the European Union McKinley, M. (2012) ' Ethics in Marketing and Communications: Towards a Global Perspective', Palgrave Macmillan UNEP (2009), Sustainability Communications - A Toolkit for Marketing and Advertising Courses European Commission (2000), Guidelines for the Assessment of Environmental Claims GRI's 2010-2011 Sustainability Report Al Iannuzzi (2012), Greener Products - The Making and Marketing of Sustainable Brands, CRC Press Giselle Weybrecht (2009), The Sustainable MBA: The Manager's Guide to Green Business, Wiley

_________________________
i

Green manufacturing aims to reduce the amount of natural resources needed to produce finished goods through more energy and materials efficient manufacturing processes that also reduce the negative externalities associated with waste and pollution

10 | P a g e