Davos Agenda

Innovative marketing can shape demand and lead us to net zero faster

Innovative marketing can influence consumers to make socially responsible choices.

Innovative marketing can influence consumers to make socially responsible choices. Image: https://couponsnake.com/, Joshua Rawson-Harris/Unsplash

Anna Lungley
Chief Sustainability Officer, International Markets, Dentsu Inc.
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Davos Agenda

This article is part of: World Economic Forum Annual Meeting

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  • Marketing is uniquely placed to shape consumer behaviour on the demand side of business.
  • Many marketing departments are currently not central enough to organizations' sustainability aims and programmes.
  • Equipping marketing with the tools and information to innovate will play a key part in reaching net zero.

Last November, COP27 ended in Sharm el-Sheikh, Egypt, with a historic agreement on a “loss and damage” fund for developing countries most impacted by climate change; however, the deal failed to include tougher commitments to limit global warming to 1.5°C.

What should now be clear to us all, if it was not already, is that if we are to have any chance of hitting the targets needed to stop the worst-case scenarios of climate change, systemic change is required beyond what governments can regulate or negotiate on their own; we must all act, and all act now.

The IPCC’s 6th assessment report indicated the huge potential for demand-side strategies, specifically highlighting choice architecture as a method of nudging consumers to make certain decisions, to lead to reductions in global greenhouse gas emissions (GHGs). These mitigation strategies were grouped into three intersecting domains: socio-cultural norms, infrastructure and end-user adoption.

While these demand-side actions are inextricably linked to supply-side decarbonization, multiple studies have shown that with innovative technologies and policies and behavioural change, these strategies can play an enormous role in helping us achieve our 1.5°C target to the tune of an estimated 40-70% reduction in global GHGs.

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Businesses have the potential and responsibility to bring these strategies to life by creating technologies, products and business models that help people make positive shifts in their lifestyles and behaviour and by scaling the adoption of these new norms and ways of living.

Consumers also have a responsibility to stay informed and make better, more sustainable decisions. But within our pervasive culture of overconsumption, where access to information varies, and price, experience and convenience outweigh sustainability benefits, they are relatively powerless.

Businesses must accept the majority of the onus for making our collective sustainability journey a success. Within businesses, the marketing function, as the bridge between consumers and the broader business, is uniquely positioned to influence and scale new behaviours; it can also drive and direct innovation within the organization consistent with sustainable planetary outcomes.

Today, given the urgent situation we are in, marketers are generational change agents holding the key to accelerate progress on the demand side of the climate change solution. However, there is a fundamental disconnect between business-declared sustainability aims and marketing departments’ ability to fulfil those aims.

In dentsu and Kantar’s recent research on Asia Pacific’s corporate sustainability landscape this “organizational intention- action gap” was identified as a major structural challenge preventing marketers from effectively driving their companies’ sustainability agendas and progressing the world’s fight against climate change.

The study found that businesses in Asia are struggling to align with consumers on the environmental and social issues that matter, partly because marketing departments lack the skills and tools to influence or measure sustainability programmes, and are not given the jurisdiction to play a central role in a company’s sustainability transformation.

While business divisions, including corporate strategy and supply chain operations, reported solid progress in contributing to sustainability, the marketing function is well behind in this regard. Out of the 71 businesses surveyed, only one in three (34%) marketing and insights teams were “executing against their sustainability plans and measuring progress”. This compared unfavourably to 46% in supply chain, and 51% in corporate strategy.

Marketers also say they are struggling to communicate the value of sustainability and prove to internal stakeholders that programmes have a positive, measurable impact. Some 44% of those surveyed said they are unsure of what consumers think of their brand’s sustainability efforts, while 37% worry that their company’s sustainability initiatives are seen as inauthentic.

To enable marketing departments to fulfill their logical role as generational change agents, businesses must make a radical corporate mindset shift and sincerely establish sustainable transformation as an organizing principle. Freeing marketing from constricting quarterly KPIs designed to maximize sales of “cash cows”, regardless of their impact on the planet or on our collective well-being, is a prerequisite.

For true progress, this means giving marketing departments a mandate to innovate. Starting immediately, companies can support innovation at the communications and campaign level. By equipping the marketing function with the skills, tools and capabilities to create informed messaging and campaigns – including investing in research that helps marketers validate sustainability messaging or techniques – businesses will help educate the consumer and nudge them towards the choice that is most planet-positive.

With a longer-term view, brands can unleash their true potential, by implementing mechanisms and incentives to give them maximum room to drive an outside-in innovation approach – putting people at the heart of decision making – whether at the product, business model or category level. Marketing will need the authority to work internally with other business divisions, and externally, with ecosystem partners, to fuel consumer preference-led innovation that makes a real difference.

Marketing must be further empowered on the sustainability front.
Marketing must be further empowered on the sustainability front. Image: dentsu/Kantar

Businesses can set a socially responsible foundation by starting with clarity. Articulating an internal commitment to changing norms, lifestyles and behaviours is necessary from a leadership perspective and will frame the right mindset across all divisions. Alongside this, businesses need to establish an unambiguous finish line by setting verified, science-based net-zero targets. This demonstrates authenticity and sincerity towards hitting that 1.5 °C target inside and outside the organization.

Crucially, businesses must translate the company’s overarching sustainability promise into clear departmental goals, including objectives for marketing. Arguably, within most companies, a lot is being measured in relation to sustainability already. The critical issue is not enough is being measured specifically in relation to sustainability and marketing. Sincere efforts must be made to crystallize the link between marketing’s sustainability strategies and business outcomes.

Returning to the idea that we are operating within a pervasive culture of overconsumption, there is a higher call for businesses to interrogate their raison d’etre and examine how business-as-usual impacts the planet. The trajectory that we’re on with respect to global warming means that there will be tipping points ahead where either policy or markets will render business-as-usual untenable.

At those tipping points, consumers will make firm switches away from old ways (or products) to new sustainable ways. For continuity, businesses will need to start thinking of those potential shifts now and invest in innovation – or they'll find themselves playing catch-up.

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How is the World Economic Forum promoting responsible models of consumption?

Businesses must focus steadfastly on inspiring people everywhere to new ways of living. Marketers must reframe their constituents to include ecosystem partners that co-own the sector’s value chain and its carbon footprint. By seeing themselves as the glue and advocate between the larger ecosystem, customers and their company, they and the brands they steer will be able to drive relevant, resonant innovation that will help ensure a sustainable future for us all.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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Davos AgendaClimate and Nature
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