What is required in today's enterprise environment?

Building a sustainable brand takes work, but most experts would agree that it's fundamentally important.

We're hearing from people that we're at a kind of tipping point when it comes to putting sustainability at the heart of corporate branding.

On the one hand, although ESG practices and trends are well established, sustainability may still not receive enough focus and attention.

At a panel earlier this year, a range of experts attending Davos in January discussed ways to make business operations more sustainable, under the tagline “sustainability first, marketing second”.

The group discussed how this could be implemented in sectors such as commercial aviation, travel and healthcare.

“Consumers (and) employees want transparency,” said Sarah Chapman, Manulife's global chief sustainability officer. “They want to really understand what's behind what's being said at the brand level.”

“How do you bring your organization on a sustainability vision and journey,” asks MIT associate professor Abhinav Kumar. “That's no different than, 'How do you bring your organization on board with your values, your business strategy, and everything else?' It's the same equation: living and executing what you talk about as a leadership team.”

And then there's the human aspect.

“How can we use our sustainability message as a sword, not a shield, to attract more talented people?” asked Randall Lane, editor of Forbes magazine.

“There are people who want to be involved,” Chapman responded. “We have to find ways to meaningfully engage them. You know, we're certainly seeing a decentralization of sustainability. Sustainability is no longer the responsibility of the sustainability function. It's embedded in marketing, risk, finance, and so giving people the opportunity to embed an environmental social impact component through their work is the most meaningful way to do that.”

David Hague, founder and CEO of Brand Finance, spoke about the initiative to recognise CEOs as guardians of their brands and guardians of their reputations.

“There are a variety of things that people care about, particularly the vision of the CEO. But one thing that has grown over the years is the reliance and support for sustainability across all three key areas. In fact, we just released our latest survey results today, which show very clearly that the most successful CEOs are the ones who are embracing sustainability practices. And one of the primary audiences for that is internally – externally, of course, but also internally.”

Part of the conversation shifted to regulation, a big issue for many businesses and executives.

One of the things I've been watching and being conscious of is that as sustainability becomes more of a regulatory requirement, it's less emotionally relevant as a brand and more of a focus on sustainability in finance and risk,” Chapman said. “And so the pendulum has swung and maybe gone too far on the marketing side, which has led to some issues of greenwashing, particularly in the financial services industry. I think we'll continue to see this swing, but we have to stay somewhere in the middle and embed sustainability in our brand story and be able to talk about what sustainability is without blending it into the regulatory environment.”

“Regulatory pressure is there and it's growing,” Kumar added. “If you break it down, I think there are two aspects where regulatory pressure on companies will really start to kick in. First is raising standards and second is mainly reporting. On the standards side, I think it's a smart strategy for any company to be ahead of the standards if they're smart. They're already making changes before they're required to make them. The reporting side is a different matter and can get very onerous. Large companies have the resources and can set up whole new compliance departments and tackle it (that way). For smaller companies, I think it's going to be a huge burden.”

Panelists also spoke about the dilemma of sustainability in business and the precarious ground corporate leaders must walk.

“Analysts believe that if you don't follow sustainability practices, especially in terms of sourcing, you're going to lose market share,” Hague said. “So finance people are chasing the market. That's the big problem for brand managers. If you don't solve this, you're going to kill market share, you're going to kill your finances.”

“But that's counterintuitive in a way,” Lane said, “because sometimes to gain market share, you're going to have to give up opportunities that aren't sustainable. But it's very hard to get other people in the company to say, 'No, we're going to drop that business, drop that customer, drop that initiative.' How do you do that? You train people in the company that transparency is important in the long term, but sometimes you have to take a short-term hit. How do you get people to do that?”

“I think that's the biggest challenge for CEOs today,” Kumar responded. “How to balance short-term pressures with the long-term interests of the company. Different CEOs do it differently. Some give in completely to short-term pressures, drive up the stock price, and leave the company in a position where someone has to come in and fix it in the long term. Others have a 100-year vision and focus on that, but don't take enough short-term actions to give them the breathing room to drive the long-term vision.”

You can watch the rest in the video of the panel. Participants discussed the relative carbon load of the tech sector (around 3%) and how it compares to the aviation industry, noting that AI, Web3 and cryptocurrencies each have their own carbon footprint. Panelists praised the success of companies like Patagonia and Tata in India and spoke about the importance of setting goals and anticipating challenges on the sustainability front. It was a good reminder of how companies must put sustainability standards into practice in a rapidly changing world.