Interview
Constructing a sustainability strategy and identifying the keys to business success.
World Earth Day is celebrated on April 22 every year, and this year's 52nd World Earth Day is themed "Invest in Our Planet", with a special reference to the need for enterprises to promote and implement ESG (Environmental, Social, and Governance) policies, and to realize the sustainable development of the Green Economy. To address this topic, we invited Jules Lee, Honorary Consultant of Process Pro Brand Taiwan, and Ming Chow, General Manager of Konstantin Management Consulting, to share their rich experience and successful cases in the industry, and how they can help their clients cope with this unstoppable international trend from the perspectives of branding and management consulting.
The Brand Project Incorporates Corporate Core Values into ESG Thinking
Jules:Brands are mediating conveyors of internal and external behaviors, core values, competencies and strengths within a company. Pro's mission is to create and develop brands that make a significant impact in a diverse environment, contributing consistently, comprehensively and optimally to the success of the organization. This requires an understanding of the brand's DNA, people's dynamics and market dynamics in order to create the authenticity, differentiation and relevance that the brand needs for the future. Therefore, Pro's brand engineering is about driving brand potential to create impact.
As ESG has gained attention in recent years, brand engineering must respond to the needs of the external environment, incorporating ESG thinking from the brand's internal DNA, values, vision and mission, core competencies to value propositions, and finding the sweet spot of "authenticity, differentiation, and relevance," in order to continue to make a great impact and contribute to the success of the enterprise.
Sorting out business models and cutting through commodity differences with ESG is a process of change and enhancement for companies, not a cost burden.
Ming:A change in business concepts and attitudes is an important start. In the process of counseling companies, we often start from evaluating the status of the business model, and help our clients to clarify the priorities of existing and future clients. For clients with better gross profit, their key influencers will start to be aware of environmental protection, and will emphasize differentiation in addition to high price/performance ratio when selecting a partner company, and ESG will be a good entry point. On the other hand, as environmental protection laws continue to rise and corporate social responsibility continues to be emphasized, corporate customers will also begin to demand partners. For example, if we can provide good assistance to our customers in carbon pricing, and if our products can respond to environmental protection needs, it will be easier for us to find high-quality partners.
Going back to the nature of corporate profitability, existing suppliers are also aware that they may not even be able to enter the supply chain if they fail to provide environmentally sustainable protection. When facing the choice of quality customers, ESG should be regarded as a process of physical change and capability transformation. For example, the capacity of air pollution and wastewater in the product manufacturing process must be greatly improved, which is an internal process of technological transformation. It may seem to be a policy burden and cost increase, but if you are willing to take the crisis as a turnaround, it will be a high-quality differentiation for the customers, and generate a good corporate image for the company, and also be a good material for story marketing for the consumer side. If we only pursue the minimum standard, it will only increase the cost in vain and the effect will not be obvious.
(Below left) Mr. Chow Yau Man, General Manager of Constant Contact Management Consulting, shared his views on corporate ESG online.
Companies will migrate sustainability into their DNA, highlighting the value of their brands.
Jules:In the early days, it was generally believed that the mission of enterprises was to make profits, so the way to give back to society was to donate money to public welfare activities, and then CSR began to appear, to take care of more stakeholders, including the community in which the enterprise is located and the natural environment, etc. In the beginning, it was necessary to "add" more behavior to make themselves in line with the value of progress, and slowly more and more brands integrated sustainable management into their business model and became The belief comes from the inside out. From a brand engineering perspective, it is often a matter of looking at a company's strengths and upgrading them, rather than the concept of paying extra costs.
The 2021 Pro assisted Zhongliang Industry is a great case study. Zhongliang is a supplier of functional textiles, due to the high environmental burden caused by the traditional textile industry, and in response to the rising awareness of environmental protection, brands have incorporated sustainability into their DNA, and have started to demand that the upstream supply chain comply with a variety of environmental protection labels, and have introduced digital sampling to save resources, costs, and time, as well as developed upcycle, which is a more valuable product made from discarded fishing nets. Another example is the well-known Polywell International, which takes "green chemistry" as its highest principle in product development and conveys its brand promise with "peace of mind for continuous evolution," which is also deeply rooted in ESG in the day-to-day operation of the company and the brand, and has completely subverted the stereotypical image that many people have of chemical factories.
From price to value, help companies find out the correlation between ESG and the overall pulse of profitability.
Ming:For enterprises, the biggest pain point of ESG is the increase in costs and erosion of gross margins. It is necessary to make a breakthrough from price-oriented to value-oriented, and show enterprises the benefits brought by such a change, and reinforce their confidence with practical examples. For example, Starbucks and a convenience store offer different values and price their products differently so that customers are willing to pay more for value. While price orientation can help maintain gross margins by controlling costs, as environmental laws and regulations become more stringent, costs are bound to rise in the future, and price wars will inevitably lead to higher business risks. Returning to the nature of business and integrating ESG into strategy and business promotion, rather than just emphasizing responsibility, will help enterprises find out the correlation between ESG and the overall pulse of profitability.
Setting up a specialized department to pay attention to the laws and regulations of each country and to move towards net-zero.
Ming:Many enterprises are talking about carbon pricing and thinking about carbon emissions, but the regulations are still vague and we are all at the groping stage. We would suggest enterprises to start from the law, which is the minimum threshold and also a good reference standard. Combined with the business strategy, it is important to understand the requirements of environmental protection laws and carbon emissions in the client's location. The strength of the local government on this matter will affect the overall situation, such as the business of the backward country is still locking the price, the implementation of the laws and regulations will be pushed back, and the relevant laws and regulations of the advanced countries will be more advanced than the previous one. Enterprises are advised to set up specialized departments to pay constant attention and make adjustments as they go.
Management Company Helps Businesses Build Their Dreams and Inspire Sustainability
Jules:In the front-end analysis stage of the brand building project, we first collect the aspirations and declarations of the brand's competitors or benchmark brands in terms of sustainability; in the process of formulating the foundation of the brand strategy, we remind the brand owner not only to speak to customers, but also to take into account the stakeholders, and to have a sense of shared goodwill, which has a chance of having a greater impact; in addition to general brand building, in the past few years, we also began to build "employer branding" for enterprises, shifting the focus from customers to employees and potential talents, in response to "governance". In addition to general brand building, Pro has also begun to build "employer brands" for enterprises in recent years, shifting the focus from customers to employees and potential talents in response to "governance". This is all the more urgent and necessary in the face of the trend of childlessness and globalization, which is competing for talents.
Ming:In recent years, stakeholders have expanded to include the community, employees' families, users, etc., and marketing ideas have begun to change, and this group of people will influence decision-making and consumption. Evaluating the relevance of a company's current layout to ESG, under the restrictions and requirements of environmental protection, upgrading and developing technology is the kind of investment that a company should make. As far as management companies are concerned, assisting a company to face its future business operations is not only about evaluating the problems it is facing now, but also about taking it through the process of looking at the changes in the future, and how to make a value differentiation is the key, and it is important to be prepared to have long-term conversations with the company's senior management and clear up their concerns.
In addition, the management company should set a good example by recognizing ESG and communicating to its employees that it is not just a methodology, a tool to make money, or a slogan to make them believe that the company is more valuable because of our assistance, which is also part of social responsibility. ESG is a huge physical transformation and a long term journey.
From environmental protection, purchasing behavior, and employment, individuals can also practice sustainability in their daily lives.
Ming:Through the simple conversion of environmental protection, responsibility and family governance, individuals can also become ESG practitioners. For example, in times of epidemic, cooperating with anti-epidemic policies or volunteering to clean beaches and recycle resources are all part of ESG practice.
Jules:In their daily lives, individuals support the branding of their products/services with actual consumption, letting companies know that sustainability is good business. In addition, when applying for a job, one of the factors to be considered is the commitment to sustainability. Companies that are committed to ESG continue to improve their quality, and working in a quality company is like standing on the shoulders of giants. By utilizing the strengths of giants, individuals can also contribute to sustainable living and magnify their personal value.
A sustainable strategy of building a proprietary brand is the key to success!