It’s no longer a contrarian take to suggest that capitalism and environmentalism can go hand in hand. An enormous number of companies from top global brands to local retailers have reduced their carbon footprints — and heavily used those efforts for green marketing.
Everybody on the planet benefits when businesses consider the impact that their endeavors are having on the world. But is it possible to oversell yourself on the ESG (Environmental, Social, and Governance) front? When does it become so-called “greenwashing,” earning you the exact opposite reaction you wanted?
Harvard Business School professor George Serafeim, author of the new book Purpose and Profit: How Business Can Lift Up the World, told b. how to maximize revenue by focusing on environmental and social issues the right way.
Set Realistic Expectations
Claiming that your business is actively reducing its carbon impact or fighting world hunger sounds nice on paper — but businesses need to back up their big talk with concrete proof. “You’ve now created expectations about what the product stands for,” Serafeim said. “If you don’t meet those expectations, you might face consumer backlash.”
The key is to focus on specifics. If you donate a certain percentage of your sales to a humanitarian organization, go ahead and highlight your generosity. However, if all you’ve done is switch to recycled toilet paper, then failing to live up to big claims could tarnish your brand’s value and leave it in an even worse position than it was before. Nobody appreciates being deceived.
Highlight Simple Principles
Complicated mission statements don’t typically resonate with people, Serafeim believes. While a nuanced plan is necessary for tough issues in practice, such as tracing a component’s carbon footprint throughout the supply chain, a mass audience often needs to hear a simple message.
“If something is authentic but can be digested in a very simple and tangible way, it’s something that is much more likely to be effective,” Serafeim said.
Listen to Fresh Voices
While “set it and forget it” is great for slow-cooker recipes, it’s no way to run your business or its ESG efforts. For leaders who are rooted in traditional principles, bringing in new people — who are more likely to question current structures and strategies — is an effective way to benefit from fresh perspectives.
“You don’t want to throw out all the knowledge and experience that you have accumulated with hard sweat over decades, but at the same time, you don’t want to be stuck in the past,” Serafeim said. “Successful companies have really become learning organizations. They learn how the environment around them changes, learn how customer preferences might be shifting, and learn how to adapt.”
Purpose and Profit: How Business Can Lift Up the World by George Serafeim is available now.