Building brands in a changing society

Private Sector Takes the Lead on Public Issues

Do corporations have an edge over governments and international bodies when it comes to addressing environmental issues?

While officials of the world wrangled over the details at the United Nations Climate Change Conferences in Copenhagen in 2009 and Cancun in 2010, a group of corporations were making headway on their own agreement.

As reported by Fast Company, an initial conversation between Walmart and Patagonia executives in 2009 about supply chain sustainability assessment tools eventually led to this year’s launch of the Sustainable Apparel Coalition. With participation from high-profile brands like Gap Inc., H&M, JC Penney, Nike, Target and others, the coalition will work towards reducing the environmental and social impacts of apparel and footwear products by developing an industry-wide index for measuring product sustainability.

These companies have two important things in common. First, they’re part of the same industry and facing common challenges related to greening their operations and products. Second, they’re all high-profile brands under increasing pressure from consumers to take responsibility for a growing list of issues.

Consumers expect more from corporations

As found by the 2010 Cone Shared Responsibility Study, American consumers expect companies to be accountable for a range of global issues, including reducing energy use to combat climate change, preserving natural resources and even alleviating poverty.

This is echoed on a global scale by Cohn & Wolfe’s 2010 ImagePower Green Brands Survey, which found that 60% of consumers want to buy from environmentally responsible companies. Further, 65% of consumers worldwide feel that transparent business practices are one of the most important factors for corporate reputation, as found by the 2011 Edelman Trust Barometer.

With bottom lines and brand reputations at risk, it should be no surprise that corporations are banding together to tackle shared sustainability issues. And their scope and flexibility in addressing those issues may be why corporations have an advantage over governments and international bodies.

The rise of private treaties

The idea that the private sector could be a driving force for pushing society down a sustainable development path is not new. In a journal article from 1997, Professors William Moomaw and Gregory Unruh proposed that the greatest strides in sustainability were most likely to come from “private treaties” established by multinational corporations and industry groups.  These stakeholders control access to the latest technologies and have global economic clout – two critical factors for making progress on major environmental issues.

What’s different today is that public sentiment has strongly shifted to support the notion that corporations should take greater responsibility for their environmental impact. This attitudinal change provides further impetus for the private sector to address system-wide issues that no one firm has the resources or scale to solve on its own.

There’s no denying that governments and international bodies will continue to play an essential role in establishing the policy frameworks to protect natural resources and curb carbon emissions. Yet, as the Sustainable Apparel Coalition demonstrates, there’s no need for the private sector to wait around for the public sector to lead the way.

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