Gil Friend, CEO of Natural Logic and new member of the Sustainability Hall of Fame, opened up the morning session. He argued that measuring the wrong things means that we overlook material risks and potential material value. For example, the wastes that are currently worrisome may not matter in the future, but there are other wastes that we haven’t examined yet that could be worse.
Jules Peck, chair of Edelman’s sustainability group and trustee of the New Economic Foundation, spoke next via video. Peck argued that ever-increasing amounts of stuff and unlimited economic growth is inherently unsustainable and is becoming impossible due to resources constraints. We are living beyond our resource availability – if everyone on the planet lived like the British or Americans, we would need 3-5 earths respectively. Instead, he argued that it is possible to have a zero-growth economy while increasing well-being.
Peck agreed with Friend’s assertion that the right indicators are vital for sustainability. He argued that our current measurements of economic progress are skewed toward resource overconsumption. He suggested that the Happy Planet Index 2.0 is a more appropriate measurement of economic well-being than GDP. In other words, the economy should be the means towards the end of well-being for people. Well-being indicators are especially important because while decoupling is an attractive concept, Peck warned that achieved efficiencies in energy and resources use are overshadowed by population growth and upward mobility development. Thus, he said, we need a much more long-term market view. We need to relate products, GDP, everything to well-being, while shifting away from consumerism.
Jeff Smith of Prophet followed with a presentation on corporate reputation. Studies have found that consumers pay more for products from trusted companies. Forbes’ ten most admired companies outpaced the S&P500 over the last 13 years. Prophet measures about 32 indicators of corporate reputation to create an index, which allows them to track reputation over time and what indicators drive reputation. Companies at the bottom of the list are complex companies with a lot of risk and public scrutiny. Big falls are possible: between 2009 to 2010 due to the oil spill, BP fell from ranking 78 to about 150. Toyota’s recalls caused a tumble of more than one ndred points from 18 to almost 200. Prophet will use the index to see how quickly can companies regain reputation and can they regain high rankings.
Prophet has found that transparency is very important to corporate reputation. In research on brand versus reputation found that brand drives familiarity but reputation plays the driving role in consumers’ recommending a brand. Reputation is twice as important as the brand when people consider doing business with a company.
Libby Bernick of Terrachoice followed to finish the first morning session. She said that we are all part of an exciting transition in sustainability metrics. Metrics will deepen, standardize and improve. Bernick focused on the consumer and institutional side, highlighting Terrachoice research in ecolabels and marketing.
She said consumers are seeing a huge increase in “green” products on the shelves. An important thing to measure is what consumers care about so we can market and educate consumers effectively. Consumers are now interested in “green” products, but with a specific focus on personal, family and community health. In other words, consumers have their minds wrapped around single attributes – like personal health – rather than more complex multi-attribute measurements, like fair trade + sustainably harvested, etc. Value mapping will help consumers understand the value and metrics on products. Yet a grocery study found that while 65 percent of consumers go into the grocery store looking for “green” products, only 20 percent actually purchase them.
Institutional buying is moving towards more sustainable purchasing by using multi-attribute lifecycle assessments. Retailers’ green procurement programs, however, are competitive because there is not a unified framework to measure product sustainability. There are examples of sector- and industry- wide product measurements like the Sustainable Apparel Coalition and the U.S. Green Building Council.
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IGEL @ Wharton 