Consumer Expectations Driving CSR

Makovsky

Corporate Social Responsibility or CSR is very much a top of mind issue for consumers and investors alike.  The headlines bear this out as major political and religious leaders have recently made news regarding matters pertaining to the environment.

In a recently-released papal letter, Pope Francis urged Catholics worldwide to make safeguarding the environment and battling climate change a top priority for the 21st century.  In the letter, he put forth the moral case for supporting sustainable economic and population growth as part of the church’s mission and humanity’s responsibility to protect God’s creation for future generations. While saying that there were natural causes to climate change over the earth’s history, the letter also says in strong words that human activity and production of greenhouse gases are to blame.

On August 3, 2015, President Obama and EPA announced the Clean Power Plan – a historic and important step in reducing carbon pollution from power plants that takes real action on climate change.  The Clean Power Plan is considered the strongest action ever taken in the U.S. to combat climate change and is designed to sharply reduce planet-warming greenhouse gas emissions from the nation’s power plants and ultimately transform America’s electricity industry.

What does this mean for corporations?

Actions speak louder than words

At one time, mere lip service to concerns over environmental issues was enough to get by; however, today’s consumers demand real actions that produce measurable results and companies are paying attention.

In releasing its 13th annual Sustainability Report, UPS, the package delivery giant, highlighted its growing investment in alternative fuel and advanced technology vehicles.

With its “Rolling Laboratory” approach, UPS accelerated its investment in an alternative fuel and advanced technology fleet of more than 5,000 vehicles last year, increasing the number of vehicles by 61 percent over 2013 and adding 1,100 natural gas vehicles. According to the report, UPS logged 154 million miles in 2014 toward its goal of driving 1 billion miles with the fleet by the end of 2017 – an almost threefold increase from 2013.  UPS reported that 5.4 percent – or 25 million gallons – of its total gas and diesel purchased in 2014 was displaced with alternative fuels including natural gas, propane, ethanol, biomethane, renewable diesel, and electricity. The commitment to alternative fuel and advanced technologies will allow UPS to reduce its annual use of gasoline and diesel 12 percent by the end of 2017.

Millennials driving changes

Given the major media coverage of environmental and sustainability issues, consumer awareness is clearly on the rise.  Consumers, most notably millennials, are demanding greater transparency from the companies they purchase products from.  They want to know how the product was manufactured, where it came from, and the track record of the company behind it.  Millennials are seeking products and are willing to pay premium prices for sustainable products.  Companies will benefit from communicating their efforts via the media and their websites.

Capitalizing on this trend is Timberland, a division of apparel manufacturer VF Corp.  Timberland, a marketer of outdoor apparel, along with Omni United, a well-known tire manufacturer and distributor, introduced new tires that would be easily recycled into footwear outsoles at the end of their lifespan. Footwear and tire industries are two of the major users of virgin rubber, and the environmentally responsible disposal of old tires at end of their life span is still a challenge. With the intention of creating a more sustainable lifecycle for rubber, Timberland and Omni United have come together to form a new partnership. With the new innovative design, the lifespan of tires is expected to increase as the collected old, used tires will directly go into Timberland’s recycling facilities and will be used as raw materials for footwear products.

-Scott Tangney