Tony's Chocolonely: Raising the chocolate bar for industry change

For years, I’ve been supporting chocolate – and change – maker Tony’s Chocolonely to create their annual report. My kids and my colleagues love that I work for them. Because I always return from meetings with their yummy chocolate in funky flavors. Their bars are a treat, but what inspires me most to work with them is their commitment to creating positive change in the industry. Here’s my take on their key ingredients for positive change!

Crazy people raising the (chocolate) bar

Positive change usually starts with frustration about an issue plus people crazy enough to doing something about it. And this ccompany started just like that. Investigative journalists were shocked to find out how much child labor and slavery there is involved in nearly all chocolate. In 2006, in an attempt to prove that it could be done, they produced 5000 bars of slavery-free chocolate. As this first batch sold out in just a few hours, they turned the experiment into a company.  The company tagline says it all: “Crazy about chocolate, serious about people.”

Partners towards a common goal

A shift to more sustainable business practices is needed at all steps along the chain. From cocoa farmers, chocolate companies and governments, to retailers and consumers. The people at Tony’s understand they cannot transform the cocoa industry by themselves. Tony’s therefore developed a roadmap towards its mission: “Together we make chocolate 100% slave-free”.

The roadmap engages five key actors in the industry to work towards this common goal:

  • Strengthen farmers to increase their income
  • Engage the largest companies in the industry to take action in their supply chains
  • Encourage retailers to leverage their buying power
  • Push governments to adopt and enforce legislation
  • Enable chocofans to raise awareness and spread the message

Scaling up for real movement

To really engage partners along the cocoa chain, Tony’s knows there needs to be a business case every step of the way. Its own story and success provide lots of inspiration to get different parties to act.

At the launch event for its 17/18 annual report that scale became very clear:

  • Over 5,000 farmers benefit from the special premium Tony’s pays, nearly 1,000 farmers are involved in awareness-raising activities to prevent unwanted child labor and slavery;
  • The Netherlands’ largest retailer Albert Heijn announcedit will use Tony’s principles of cooperation for 100% slave-free chocolate for its very successful private label chocolate brand Delicata. World leading chocolate manufacturer Barry Callebaut supports the change process;
  • 5,000 chocofans joined the party, over 8,500 people support Tony’s mission as Serious Friends;
  • And the brand became the market leader in the Netherlands with a market share of 19%. Net revenue grew by 23% to nearly € 45 million and a net profit margin of 4.5%.

Relentless ambition for chocolate and change

Nice numbers for a company that produced its first bar of chocolate just 12 years ago… But they know there’s still a lot of work to be done. Therefore, Team Tony’s continues to work – and party – very hard to increase its own impact by expanding the business to other countries and continuing to drive collaboration in partnership with many others.


What sustainability leaders can learn from treasure hunters

Is sustainability leadership like a treasure hunt? Initially, I didn't think so, as these two concepts have different characteristics. Treasures generally don't move, while sustainability is an ever-moving target. Treasures are usually quite tangible and concrete, making it easier to express what you're looking for than when stating sustainability as a goal. And while both require an investment of time, willpower, and other resources, the treasure hunt usually benefits just a few, while sustainability strives to benefit many. Find out in this flog what sustainability leaders can learn from treasure hunters. On March 15, I attended Sustainable Talent's Sustainable MBA in One Day. When Mondo Leone, the guide for the day, was introduced as a treasure hunter, I was quite skeptical. But after a day at the Interface Awarehouse with a diverse group of people, I must admit there were great learnings to be captured from his treasure hunt. Some he listed at the end of the day, others developed over time in my mind. So here they are:

Explore for treasure

There are so many sides to sustainability. Use your curiosity to explore which topics are most relevant to your organization. The program highlighted the Sustainable Development Goals, Kate Raworth's Doughnut Economics, and the circular economy as sources to explore. Emerging technologies could also provide inspiration for areas to explore. One key caution: always start from why. If you don't know what your why is (at the personal and organizational level), then applying your curiosity to search for treasure won't be very useful.

Act for positive change

Organizations (re)act differently to the sustainability challenge. They can be either, inactive, reactive, active or pro-active, according to the model presented by Rob van Tilburg, one of the authors of the book Managing the Transition to a Sustainable Enterprise. Just like in a treasure hunt, nothing happens until someone takes action. Various models were provided to create strategies and action plans, including inspiring guidance on how to drive change by Peter Senge and an overview of the seven roles of sustainability managers.

Fail fast

"Adventure is uncertain", said our guide for the day in his closing comments, "so prepare for failure." Several of the other speakers also highlighted failure as a key step along the way. We simply don't have the time to develop the one and only perfect solution. They, therefore, urged us to test different ideas at a small scale. And then to fail fast and learn from these failures to scale up the stronger ideas. And to share those learnings, within the organization and with peers in other organizations.

Collaborate for sustainable impact

Today's societal challenges are too complex to be solved by just one person or even one company. Therefore, collaboration is a key factor to succeed. The treasure hunter not only engaged many to fund the project but also engaged many people to contribute their expertise. Peter Senge highlighted that successful collaboration depends on the goal setting; finding a balance between the big, stretch aspirational goal and the practical, immediate goals that give people a sense of fulfillment along the way. He also highlighted the importance of relationships, trust, and empathy. Without these, collaboration is usually a waste of time as people are then unwilling to yield their own short-term interests to the larger, shared, long-term interest.

Celebrate your treasure

With many people involved and short-term goals in place, there are many ways to celebrate achievements and learnings along the way. The treasure hunter celebrated the outcomes of his expedition with his partners and funders. Sustainability leaders celebrate milestones along the journey of integrating sustainability into the strategy. And at the end of the "Sustainable MBA in One Day" workshop? We threw our graduation caps up in the air and toasted to all we learned and the people we met!


Top tips for greenwashing: communicating sustainability in horticulture

In October 2017, The Terrace was invited by the MPS-group to lead a workshop for and with leading growers of flowers and flowering plants from the Netherlands. This was part of event in preparation for an international horticulture trade fair. The focus of the workshop was on how to best communicate on sustainability in the horticulture sector. Here's what I had to say about conviction, focus, collaboration and... greenwashing.

Tip #1: Start from your personal conviction

The trouble with sustainability is the lack of a common definition. It may include topics like environmental protection, labor conditions, community engagement, economic impacts and/or governance. There are so many terms floating around, like CSR, responsible business conduct, future-proof, thriveability... Whatever term you prefer, it needs to be relevant to your core business and your key stakeholders. Most likely, this will be a function of the industry, the cultural/national context and the conviction and focus of senior leadership. So before communicating your sustainability efforts externally, first consider what sustainability means to you. For which parts of sustainability do you care most deeply? Why did you get started with organic flowers? What made you integrate sustainability into your business model?

Tip #2: Focus on what matters

Sustainability is multi-faceted, so your sustainability strategy probably is as well. But while all those facets may be relevant and understood by people within the industry, they won't all be equally relevant for different stakeholders. So when communicating your sustainability strategy, think first and foremost from the perspective of your audience. For different target audiences, focus your sustainability story in different ways. While keeping the overall story the same, differentiate the key topics to highlight for different audiences. Not everyone knows as much about sustainability issues in horticulture - or whatever sector you're in - as you do.

Unilever uses a very powerful analogy to further strengthen its sustainability communications: the sword and the shield. The sword is a strong message that you pro-actively want to share with your target audience. And which is very relevant for that target audience. The shield contains other topics which you are working on in your sustainability strategy, but which are less relevant to your audience, or less easy to talk about as an individual brand or company.

For example, for Lipton's sustainability strategy includes both social and environmental elements. In consumer communication, the social elements are emphasized like a sword. Most consumers realize that picking tea leaves is hard work in tough locations, so this context helps Lipton tell its story about the programs it has in place to make life easier for tea pluckers. The improvements Lipton is making to reduce pesticides is more like a shield. Something to work on very actively, but as most consumers are unaware that nearly all tea in the world contains pesticides, communicating about this as an individual brand is more challenging. So while this may be a great topic for a sustainability website or report, we'd not recommend putting that same story on the pack.

Tip #3: Some stories are better told together

Some topics are difficult to raise, even if you feel it is high time the world knew about the issues and your solutions. This is where sector-wide collaboration and communications may be needed. Just like for tea, for the horticulture sector, pesticides might be such a topic. As an individual grower of flowers, this is a topic you might be able to raise with expert buyers in retail. But with consumers, this is not so easy. If you try to mention this on your packaging, consumers might just link your name to pesticides in general, rather than the reduction you've achieved. To raise awareness of the issues around pesticides, it would be better to collaborate. With industry bodies and certification providers, but potentially also with NGOs and consumer organizations.

Tip #4: Always be honest

Good communications about your sustainability efforts and performance can build trust in your organization and its products. But even if you're selling plants and flowers, and you'd like to make the world a greener place, what you're communicating has to be true. Only balanced communications - sharing both successes and challenges - builds trust. If what you're sharing is not true, then it's merely greenwashing. That word might have a nicer connotation for the horticulture sector than for others, but it will simply erode trust.


Top tips for reading sustainability reports

To mark International Literacy Day, this post is about reading sustainability reports. In 2016, the theme for International Literacy Day actually was “Reading the Past, Writing the Future”. Which is quite similar to our recent blog about transforming sustainability reporting to a tool for positive change. But that's a different story, as this blog is not about writing reports, but rather about reading them.

An ever increasing number of companies publish a sustainability report. Or integrate sustainability into their annual reporting process.  The question is, who reads these reports? And are the readers finding any use for the sustainability data and stories presented in the reports?

Who's reading?

In 2015, the Global Reporting Initiative, creators of the most widely-used sustainability reporting standards, co-authored a report with Oxfam, Informing decisions, driving change, about how different stakeholders read and use sustainability data captured in sustainability reports. It offers a comprehensive view of the key users of sustainability data, such as civil society organizations, investors, business, governments, market regulators, and media.

Some would argue that consumers also belong on that list, as well as prospective employees. Very different stakeholders with very different objectives. Yet all trying to get insights from reading the same sustainability report! Besides a few reporting geeks, many people may wonder how to best read or assess a sustainability report. So here are some tips to guide your reading!

Commitment or compliance?

The fact that a company has a sustainability report, doesn't always guarantee a real commitment to making their company more sustainable. A company may simply report only to comply with regulations. So a key thing to look for when reading a sustainability report is commitment. Is top management involved and engaged? What are they committed to exactly? How are decisions made regarding sustainability topics? The introduction to the report by the CEO or chairman is the best place to look for "commitment" signals. A great way to test the depth of this commitment is to cross-check the introduction of the financial report. If there is no mention of relevant sustainability topics there, then that commitment may not run so deep.

Connected context

The selection of topics for the sustainability strategy and report generally shows how connected a company is to its environment. So the next thing to look for in a sustainability report is a clear understanding of the company's context. Is the sustainability strategy linked to the vision and mission of the company, or is it focused on totally different topics? Are environmental and social risks and opportunities explored in relation to the business model? If you are less familiar with a specific industry, this may be hard to assess. In that case, reading parts of the sustainability reports of companies in the same industry will generate insights on the key topics.

Large companies are expected to act according to the OECD Guidelines and adhere to the UN Guiding Principles on Business and Human Rights. And all companies can use the Sustainable Development Goals as a framework to assess how their business contributes to a better world. So when reading a sustainability report, check whether and how the company references these frameworks.

When done well, companies select their so-called material topics after engaging relevant stakeholders, such as employees, clients, investors, NGOs, and communities. Through a materiality matrix, many companies plot the interests of their stakeholders against the interests or impacts of the company. That matrix and the accompanying text are my favorite parts of any sustainability report.

Completing the cycle

Sustainability is all about the future, yet reports tend to look back in time. So when reading a sustainability report, check whether the report on past performance is in function of the future. Are the long-term objectives clear, as well as the strategies and policies to reach them? Are they closely linked to the material topics identified? Does the report share relevant results for the past year as well as previous years as a benchmark? How do these results stack up against the goals for this reporting year?

Are the results balanced? Not just sharing what went well, but also the learnings from things that did not go as well? And does the report provide insight into the specific goals and action plans for the year ahead? These kinds of questions help you assess whether there is a structured, full circle approach to sustainability for the company. In which reporting is a key instrument to fuel improvement, rather than a goal in itself.

Consistency

The GRI Sustainability Reporting Standards (and Guidelines) help companies to prepare their sustainability report, but they also help the readers. Especially the GRI Content Index, which lists the standard set of disclosures for all companies and includes the material topics selected by the company. With it, the reader can easily find the pages for each topic.

And just like it's useful to scan the sustainability report of a company's peers and the financial report, it can be tremendously useful to have a look at previous reports by the same company. Is the company consistently reporting on the same material topics? If not, are there good reasons to change the scope of the strategy and report due to changes in context? Or is the company cherry picking its stories and KPIs from one year to the other, to always have good news to show?

And last, but not least, is the sustainability report itself consistent with the materiality analysis? Are the topics in the report - and the space they are given - in line with the materiality analysis? If not, it may be time to look for the page that highlights how to get in touch with the company about their report!


Transform your sustainability reporting to a tool for a positive future

Let's talk about how to transform reporting from a burden into a tool to build a better future. Our earlier posts zoomed in on materiality, but in the end, it's all about creating that better future. Here's our take on how to get more out of your reporting efforts. Just in time for the people in the midst of planning the next sustainability reporting cycle for their organization.

Every year, the reporting cycle returns and, every year, it turns out to be a lot of work. So it should raise questions around whether it’s worth the investment. Does the report itself add value to the company’s strategy and the sustainability efforts for a better future? Does it serve a strategic purpose beyond compliance with regulations and the accountability expectations of our stakeholders? For a strictly “by-the-book” type of reporting process, the answer to these questions is probably no.

Why? First, sustainability reporting suffers from a strange dichotomy. While sustainability is all about the future and long-term thinking, most corporate reporting is all about the past and has a horizon of just one year. Second, most companies do not use the reporting process to really connect the present performance to the future they to build and be part of. With our tips below, you can overcome this dichotomy and transform the reporting process into a powerful tool. So here we go!

Report the past in the context of the future

Start from the world you want in the future! In what kind of world does the company want to operate five to ten years from now? Instead of only looking back, we strongly recommend starting your sustainability report from the long-term vision and mission of the company. The report then gives an account of where the company is on your envisioned path

What does your company have to do to achieve that vision? How are your efforts to get there evolving? When you start from the vision and these questions, you report in the context of the future. This is a much more useful perspective for the company and for the report readers.

Focus on what's material for the future

Take your materiality analysis beyond the report! Most reporting frameworks include a so-called materiality analysis to identify the sustainability topics to be included in the report. The “by the book” analysis is mostly about what stakeholders want to know or what the company considers key risks, based on past performance and fears for the future.

To raise sustainability to a higher level, go beyond and ask: “what are the key topics we need to manage strategically to create value for the company and society?” Involve senior management in this analysis. Not only will the materiality analysis then inform the sustainability report content, but it will also provoke a strategic discussion and add a new perspective on what matters. That's the moment for sustainability (reporting) to enter to the board room.

Focus on what's material for the future

Involve your stakeholders in value creation! Stakeholders are vital to really create value for the company and society, so don't just engage them for selecting material topics for the sustainability report (as most reporting guidance recommends). Again, frame this step in the reporting cycle at a strategic level rather than the limited scope of reporting. And then continue the conversation from there.

Don’t limit the role of stakeholders to helping you choose your material topics. Really listen to what matters to them, what their goals are and jointly explore the world you want to build and the path you envision to get there. Only then can you find opportunities to collaborate and co-create on joint goals to make both your company and society stronger.

With these tips, we trust you can make your report a tool for positive change in the future, rather than just a report on positive change in the past. Let us know which of the tips you found most useful!

This blog post is part of a series on sustainability reporting and materiality. It is co-authored by Marjolein Baghuis of The Terrace and Nelmara Arbex of Arbex & Company. At GRI, they worked together on the creation and stakeholder engagement around GRI’s G4 Sustainability Reporting Guidelines. They now collaborate to support companies with strategic sustainability challenges, materiality analysis, and communications.


Developing roadmaps for reporting - for positive change

On June 22 and September 28, 2017, The Terrace held a workshop on sustainability reporting for companies just starting on their reporting journey and those eager to take their reporting to a higher level. Here are some of the key learnings from the workshop.

Start from why

We kicked off the workshop with a brainstorm on the reasons to publish a sustainability report. The participants came up with many: engaging stakeholders like clients, suppliers, and NGOs; having something tangible to prove what we claim to be doing; measuring and communicating our impact; accountability; informing and influencing employees to deliver on our sustainability strategy and more. Some are more internally focused, others are more externally oriented. Some relate to managing risks, others to identifying opportunities.

Make the complex simple

At the start of the workshop, we provided all participants an empty template for the reporting process. Using interactive exercises and group discussions, we jointly walked through the various steps in the reporting process. Here are some of the key questions we answered in the course of the workshop.

Prepare: Who's on the team? What are the tasks and timings? what budget is available? What are your initial ideas on topics to include in the report?

Engage: Which stakeholders are impacted by how you do business, and vice versa, which impact your business success? How can you engage with them effectively to understand their issues?

Focus: What are the material (or important) topics to include in your report (and in your strategy of course)? How does the prioritization of these topics compare for senior management versus the stakeholders' interests? What are the targets and measures for each of the material topics? And how will you achieve these targets?

Collect: Which sources are available to collect the information for your report? Who needs to be involved? And when do they need to deliver the information? Is it realistic to get this all ready in time for the first report?

Report: What are the key building blocks for your report content? How can you best structure this for legibility and engagement? Who will write, edit, check the report content?

At each step along the way, the workshop participants filled in parts of their roadmap.

Show the positive side of business

We closed the workshop with a brainstorm on how to make the best use of the report once it's done. All agreed that reports and their content are currently underutilized in communications. Besides sharing the report in its entirety with stakeholders and the press, the brainstorm also generated ideas like sharing parts of the report on the website or in social media, tailoring the content to engage different teams internally, training sales reps to use the report in sales calls, and - our favorite - throwing a party to launch it.

Don't be afraid

This advice came back again and again throughout the workshop. Be honest with yourself and your stakeholders and therefore also share things that are not going so well. Of course always in combination with your learnings and next steps. Or perhaps there are material topics you cannot yet measure. Again, signal that you understand this is a material topic, combined with how you will address and measure it in the coming year. A balanced, honest report that goes beyond the good news show is so much more credible! And don't be afraid to ask for help in the reporting process. A reporting consultant can add expertise and extra capacity to your reporting team at every step of the reporting journey.

At the end of the reporting workshop, the participants were certainly less afraid to get started on their (next) reporting journey. We closed the workshop by toasting to the personalized, actionable reporting roadmaps which they had each created during the workshop!

Interested in how The Terrace can support your sustainability journey? Please contact Marjolein or join one of our future workshops. The next sustainability reporting workshop will most likely take place in September 2017. Interested to join? Please let us know by sending an email to hello@theterrace.nl. We look forward to welcoming you in a future workshop!


Shared learning and action to reduce plastic waste

On Tuesday, May 23, 2017, The Terrace hosted a diverse group of people to talk about plastic waste and the circular economy. The evening kicked off with an interview with Leontine Gast, founder of The Terrace, followed by a roundtable discussion on plastic waste in our lives, led by Nelmara Arbex, CEO of Arbex & Company.

The past and future of plastic

Leontine Gast is an expert on bringing purpose to business. At this event, she was interviewed by her colleague Marjolein Baghuis. Leontine has worked in sustainability for over two decades, including ten years as the founder and managing director of The Terrace, the agency for positive change. She has contributed to a more circular economy through her work with companies and other types of organizations. Her top tips from that experience regarding plastic waste target both users and producers of products that contain plastics. Consumers need to be much more aware; once they really understand what they are buying, they will make different choices. Producers need to continue to pioneer solutions and share their learnings. Not just solutions related to waste streams, but also as early as product design; i.e. with design for disassembly such as Ahrend’s vision on office furniture. For the years ahead, one of Leontine's dreams is that we’ll find a way to consume and produce less stuff – and better stuff – including a reduction in the amount of plastic we create. Other dreams include the transition to renewable energy and a switch to a more plant-based diet.

Sharing issues and questions on plastic waste

After the interview, Nelmara Arbex led a roundtable discussion on plastic in our lives. We all agreed that there is a role for plastic is our lives (to protect food, to store cosmetics, etc), but that its use had really gotten out of hand. For all of us, our awareness of the plastic problem started with an eye-opening moment. Bananas individually wrapped in plastic, bottled water in countries with excellent tap water, plastic littered beaches, a shampoo bottle in the middle of the jungle. But also by simply separating plastic from the other household waste, and being shocked that this was more than half of our waste. We shared our ways to avoid plastic waste as much as possible, such as:

  • Bring your own bags to the supermarket, even for fresh produce;
  • Carry your own reusable water bottle and coffee mug;
  • Making more food and other household items from scratch;
  • Collecting plastic waste separately;
  • Influencing peers to start recycling plastic.

We also shared the many questions we had regarding plastic. For some we found answers (in italics), others remain unanswered, such as:

  • Can biodegradable plastics be recycled with other plastics? No, please put them with your organic waste.
  • How much plastic is recycled in our city (Amsterdam) and what actually happens to it? Amsterdam's citizens collect only 8% of plastics separately. After sorting, cleaning, and shredding, recycled plastic are turned into new products like fleece sweaters, toys, furniture, and pipes.
  • Why are the ingredients for food and clothing spelled out in detail, but those for packaging nowhere to be found?
  • Where can I buy groceries without superfluous plastic packaging?
  • How to balance food waste with plastic packaging to keep it fresh longer?

Supporting behaviour change beyond rules and regulations

We also wondered what kind of regulation exists on packaging. New EU legislation is on its way, but we also realized that rules and rational information alone will not change our behavior. We need to appeal to emotions, feelings, and instincts in people to help drive change. Some of our recommendations include:

  • Teach sustainability as a topic in school at every level;
  • Make it easy and practical for consumers, retailers, and manufacturers to reduce, reuse and recycle plastics, potentially through interactive apps to support recycling or to help you find places to shop with less packaging;
  • Label products not only with calories and food content but also with a waste indicator to make people aware;
  • Leverage emotional storytelling on plastic waste to generate more awareness;
  • Ask CEOs to live without plastic for a week and to share their learnings publically;
  • Involve celebrities to make it aspirational to turn your back on today’s throwaway culture.

It was great to meet like-minded people at this event. Thank you for your active participation in the discussion Jacobien Crol, Nierika Hamaekers,  Frank Kohl, Sari Kuvaja, James Rowbotham, Kajsa Rosenblad, and Tal Ullmann. All with a strong belief that we can have an impact, each with a strong personal motivation to create positive change!

This blog was written by Marjolein Baghuis to share the outcome of the roundtable discussion on the OpenIDEO platform. It also appears on the website of Changeincontext.com. 


Join the OpenIDEO plastics circular design challenge on May 23!

Love them or hate them, plastics are everywhere around us. In fact, demand for plastics is expected to double in the next 20 years. Yet our plastics system is broken. Most plastic items are used only once before being discarded. Only 14% is recycled, meaning a loss of USD 80-120 billion per year to the global economy. One-third of all plastic packaging escapes collection systems and ends up – inadvertently or not – as litter in the environment.

If nothing changes, there will be more plastics than fish in the ocean by 2050.

So, how do we fix this? If we want to free our oceans from plastics, we have to fundamentally rethink the way we make and use plastic items so that they don’t become waste in the first place. That’s why we are inviting you as citizens, consumers, designers, scientists, entrepreneurs to find solutions that keep plastics in the economy and out of the ocean.

"Join us on Tuesday, May 23 from 5 to 7 pm at The Terrace offices in Amsterdam to explore how to reduce, reuse and recycle plastics in our personal - and professional - lives."

Around 5:30 pm, Leontine Gast, founder and managing partner of The Terrace, will kick off the event, showcasing some of the circular economy projects in which she has been involved.

We will then continue with a more personal exploration around the plastic in your life. How much plastic waste do you generate per day? How much of it are you able to reuse, recycle or upcycle? Plastic is collected separately in most of the Netherlands, but not even 50% of plastic is recycled. Why do you think that is? When you confirm that you're joining us, we'll send you a plastic waste diary to keep for a few days ahead of the event.

Nelmara Arbex (Arbex & Company) and Marjolein Baghuis (The Terrace) will facilitate the dialogue and discussion around plastics in an energizing way. At the end of the session, as a group, we'll create something to share with other people participating in this circular design challenge around the world.

 

Sign up and we'll see you there!

Sign up by sending an email to hello@theterrace.nl, so we can send you the plastic waste diary and more details. And ensure that we have plenty of drinks and snacks! We look forward to welcoming you at WG Plein 153-156, Amsterdam.

This event is a voluntary contribution to OpenIDEO, IDEO's open innovation portfolio, empowering people to design solutions to the world's toughest challenges, and working with partners around the world to bring these solutions to life. From May 18 - May 28, people around the world will be designing experiences that reimagine how we get products to people without creating plastic waste. 


In search of purpose for Fairphone: the power of purpose for brands

To really connect with consumers, brands can no longer present a facade and sell. To thrive, brands need to create an emotional connection with people, stemming from a clear brand purpose. A purpose that addresses a real societal issue and that strives to create a movement to resolve this issue. In May 2017, we organized an event about purpose marketing at Fairphone, a social enterprise that makes the world’s first ethical, modular smartphone. The event was organized by the Nyenrode Business University Alumni Circle for Sustainability, in collaboration with the Alumni Circle for Marketing & Digital. Here are some of the key outtakes from the event on purpose marketing.

Creating a fair phone isn't easy

Lina Ruiz, Fairphone's strategic partnerships and events manager, kicked off with an introduction to Fairphone's mission: making a positive impact in how phones are made, used and recycled. Interestingly, she used a video by Milton Friedman  to explain the complexity of supply chains. She then shared Fairphone goal of creating positive social and environmental impact from the beginning to the end of a phone’s life cycle. They do this in four ways.

Fairphone's long-lasting design creates products that last and that are easier to repair. The design helps people understand how to get more years out of the device and move away from the mindset that consumer electronics are semi-disposable objects.

Fairphone traces where the parts come from and therefore creates demand for fair materials that are good for people and planet. One material at a time, Fairphone strives to increase awareness and source better ingredients for their devices.

Fairphone wants to improve working conditions in the electronics sector. With experts, NGOs and other partners, they develop innovative programs to improve worker satisfaction and representation. 

 

To progress towards a circular economy, Fairphone encourages the reuse and recycling of electronics. Withspare parts and recycling programs, they support both consumers and producers. 

The power of purpose for brands

Consumers are increasingly oversaturated with advertising messages. Brands constantly try to sell themselves with beautiful messages, but not all of them are authentic. No wonder the Edelman Trust Barometer shows an implosion of trust in business. At the same time, people look to business to be drivers of change for a better society. From brands, people demand something they can relate to, authenticity and higher ethical standards. The brands that succeed are therefore those that offer shared value for both society and business. That have a purpose that truly connects their business to societal issues in a relevant way. Some companies, like chocolate maker Tony's Chocolonely and transportation company AirHunters, had a clear societal purpose from the start. Tony's wants to abolish slavery in the cocoa industry. Airhunters wants to decrease the carbon footprint and congestion caused by suboptimal transportation. Their brands, therefore, radiate their respective purpose very clearly. Other older and larger companies, like Unilever and Heineken, seem to have veered further from their original purpose but are redefining purpose for their brands with great success. Year on year, Unilever's purpose brands like Dove, Lifebuoy and Ben & Jerry's, outgrow the other brands by 30%.  And Heineken's responsible consumption campaign with DJ Armin van Buren created a global movement of DJs urging people to dance more and drink slowly.

Guiding brands toward purpose

Using the purposeful positioning model developed by The Terrace, the participants then got to work on Fairphone's positioning. The model helps companies and brands find their purpose through an outside-in approach.

1) What are external societal issues that a brand can or should address, such as environmental problems, social issues, latent consumer needs, stakeholder issues and true customer needs?

2) Through the lens of those key issues, how can a brand create shared value? Where are the opportunities for impact or societal value? And how can it create business value in parallel?

3) Who are the people to engage and keep in mind? Through the shared value angle, who are the people that will use the brand? With whom would the brand compete? And which parties are potential collaborators striving for the same societal value?

4) What does the brand really stand for? What are the brand's key benefits, personality, promise and the reasons to believe? This is often more comfortable territory for the marketer.

5) Why is the brand really here? What is the brand's true purpose? The heart of the model brings together the input and perspectives from the previous steps. Once that purpose is distilled and chosen, then go back from the inside out to refine all elements in the model.

Collaboration for positive change

Combining the forces of Nyenrode's sustainability and marketing alumni and their guests, the group came up with various alternate business models. Each stemming from a different angle on the purpose that Fairphone could adopt. Therefore each leading to quite different engagement strategies and tactics. The conclusion of the evening was that there are many opportunities for Fairphone to further focus its purpose and marketing tactics. Even with limited time, the group came up with very actionable ideas, which were gratefully received by the Fairphone team. The other conclusion was that crafting purpose takes more time than the 30 minutes we had available in the context of this workshop - and that is was incredibly inspiring for all involved! Over drinks, the participants continued to talk for hours, sharing how they could put more purpose into their own brands and lives.

A big thank you to Fairphone for hosting this event, to the many people who participated so actively and to the many people involved from the Nyenrode Alumni Circles for Sustainability and Marketing & Digital. Interested in finding out more about purpose marketing, please contact Marjolein.

This blog was originally written by Marjolein Baghuis (@MBaghuis) and Tim Mazajchik (@tmaz85) for the Nyenrode University Alumni website. It has also been posted on the websites of Heartbeat Strategy and Change in Context.


Non-financial reporting: from comply and complain to explore and explain

In the past months, there has been quite some noise about corporate reporting. There's nothing unusual about that, as many companies publish their annual report in the first months of the calendar year. But this year, there seems to be more discussion about non-financial (or sustainability) reporting. Part of this is caused by the new EU Directive on Non-Financial Reporting. But it's also driven by the ever-increasing number of companies seeing true value from integrating sustainability factors into how they assess and report on their performance.

Complying with the EU Directive on Non-Financial Reporting

Assuming that transparency about sustainability topics will lead to better performance, the EU adopted a directive on non-financial reporting. By now, it has been transposed into national legislation in nearly all EU countries. It applies to all listed companies, banks and insurance companies with over 500 employees. As of the 2017 reporting cycle, it requires disclosure on select non-financial topics to provide stakeholders a more complete picture of a company's sustainability approach and performance. So what are the topics to be included? At a minimum, it should cover the company's approach, the risk assessment, as well as the results and key performance indicators regarding:

  • environmental matters;
  • social and employee aspects;
  • respect for human rights;
  • anti-corruption and bribery issues;
  • diversity on boards of directors.

The directive is not very prescriptive in how to report on these topics. If companies cannot (yet) report on these topics, they can simply explain why not.  And companies are free to choose how they structure this information and where they publish it. This can be part of the annual report or in a separate report. Unlike financial reporting, the data does not need to be externally assured. But the accountant does need to check whether the relevant information has been disclosed and whether any of it conflicts with other information provided.

Complaining about the reporting burden

An estimated 6000 European companies fall under this new EU directive. So perhaps you'd expect quite some sighs and complaints. Yet most of these companies already disclose their sustainability efforts on their websites, in separate sustainability reports or integrated into their financial reporting. Does this mean the directive will have no effect? Fortunately not. The voluntary practice on sustainability reporting has yielded positive results so far. But there are also quite some companies that seem to tick the box on sustainability reporting, yet have not truly integrated sustainability into their strategy. They report on what's easy to collect, or on things that at first glance may make them look good. For these companies, meeting the requirements of the EU directive could be a challenge. As they may not yet have policies, targets, and results in the areas listed above, the new legislation does indeed increase their reporting burden.

Exploring the value of integrated thinking

Many of the companies embarking on the transparency journey have found opportunities to improve their impact and their companies in parallel. The companies that benefit most are the ones that really try to understand what their materials topics are. These are the topics to include in their reporting, but more importantly, to focus on in their strategy. In a materiality assessment, a company assesses the impacts - both positive and negative - that their business can have on society at large. From their own perspective, but also through the eyes of their stakeholders.

From this analysis, they begin to understand how the relevant social, environmental and economic factors work together, ideally to create value for shareholders, stakeholders, and society simultaneously.  An in-depth materiality analysis provides the foundation for an integrated strategy with clear focus areas, each with their own goals and action plans. This strategic integration exercise is useful for all companies, not just the ones covered by the EU directive.

Explaining your focus, dilemmas, and results

Once you've chosen the focus for your strategy and reporting, be ready to explain and communicate it. This may include why you've decided not to include some of the topics included in the topics listed above. In your reporting cycle (and most likely elsewhere), get ready to share the achievements from your integrated strategy, yet also be ready to share what dilemmas you've faced and on which topics you've not yet reached your goals. An honest account of your performance will build trust with your external stakeholders and is a great way to engage your internal stakeholders - your employees - to celebrate success and to find better ways to reach your business and sustainability goals.

Interested in finding out what non-financial or sustainability reporting could do for your company or in getting started with sustainability reporting? Find out more in our upcoming reporting workshop on June 22, 2017. Find out more via this link. Does the EU Directive apply to your company and would you like a quick-scan on whether your reporting is compliant with the new EU directive? Please get in touch with Marjolein via marjolein@theterrace.nl.

Written by Marjolein Baghuis (@mbaghuis) for The Terrace, published simultaneously on changeincontext.com.