Impact Brands: Will socio-ecological activity become more important than profit (Part 2)
29. April 2019 ▪ Reading time: approx. 4:20 min.
“Corporate Social Responsibility (CSR)” has become common sense, companies can no longer use it to attract positive attention. Where can CSR go from here? What successful examples are there? Why are the new impact brands so popular with millennials and Generation Z – and what does this preference mean for traditional brands? In the three-part article “The post-CSR era – New expectations of companies and brands” we analyze this drastic change companies will have to face.
Impact brands did not emerge to make their founders rich, but out of a deep inner desire to change the world.
What do people expect of brands? A study conducted by Futerra shows: 88 % want brands to help them act in more environmentally-friendly and ethical ways (more than 1,000 respondents in the USA and the UK). Brands are expected to contribute to positive changes in our society and our world. What counts these days is "impact".
Ten years ago, who would have thought that aside from search-engine giant Google another platform could exist, not to mention be profitable? But it was exactly ten years ago that Ecosia went live. Its goal: to fight the global problem of deforestation. As a "green alternative to Google", Ecosia uses its ad proceeds to plant trees where they are most needed.
The company is still around – and still successful. It earned media attention with its offer to buy the German Hambacher Forst (a swath of forest to be cut down for coal mining) from power company RWE. To date, the company has planted nearly 50 million trees (that number is adjusted for the mortality rate of young trees). Its user numbers rose in 2018 to more than one million per day.
Less talk – more action!
Ecosia is a prime example of a brand that has "impact". It stands for a movement – in this case the opposition to global deforestation. That is what makes it attractive for its users. Ecosia helps them to do good. Conversion to the legal form of a so-called Purpose AG underscores their commitment. By taking on this legal status, Ecosia commits to not drawing any profit from the company but to reinvest everything.
Impact and economic success – not a contradiction
That does not mean that the desire to make a positive contribution to the world and the desire for economic success are mutually exclusive. On the contrary: The "movement" of social entrepreneurs is booming. Their strong will to represent their own values and bring about real change does not mean that economic interests have to be suppressed.
Social entrepreneurs are not blue-eyed do-gooders, but serious business people. Their thinking is based on the 3-P model: people, planet, profit. They want to have an impact and make a profit doing it. Social entrepreneurs are the people behind brands with real effect. They are the founders of a new category: the impact brands.
"Social entrepreneurs are not content just to give a fish or teach to fish. They will not rest until they have revolutionized the fishing industry"
says Bill Drayton, founder of Ashoka, a non-profit organization supporting social entrepreneurs.
Examples: How impact brands tick
Profit-oriented companies focus on optimizing themselves for better sustainability (CSR). The goal of non-profit-oriented companies is to correct bad decisions taken by people, companies and institutions. What drives impact brands is nothing less than a will to change the world – which also revolutionizes their markets. They place their mission center stage, build a profitable business model around it, and align their activities with that goal.
One example of an impact brand is TOMS®. During a trip to Argentina, founder Blake Mycoskie saw that the children there wore no shoes to protect their feet. "I immediately felt the desire and the responsibility to do something," he says. He decided to found a shoe brand that donates one pair of shoes for needy children for each pair sold. That was the birth of the "One for OneTM" movement.
But that was not enough. TOMS® uses exclusively vegan materials such as hemp, organic cotton or recycled polyester. There are controlled guidelines for the production of shoe boxes of 80 % recycled waste products, which are printed with soy ink. All that still would not be reason enough to call TOMS® an impact brand. But TOMS® is also a member in several associations and committees, Mycoskie speaks at conferences and industry meetings, to make sure that the knowledge of sustainable design and responsible conduct does not remain a USP of the TOMS® brand. He shares his experiences with his industry.
The brand Tony's Chocolonely, producer of delicious chocolate bars, wants to "make chocolate 100 % slavery free". Unlike its competitors, Tony's Chocolonely does not claim to be selling the smoothest, most tasty, hand stirred chocolate. No! Tony's Chocolonely makes its mission – the core of the brand – the first priority, both on the website and on the packages. And it's working. The fact that the chocolate also happens to taste great is secondary. The impact makes the difference.
Another pioneer among impact brands is Triodos Bank. In contrast to other banks, it does not concentrate mainly on profit maximization, but on its effect on society and the world. Once a year the bank publishes its Impact Report, a summary of what they did with their clients' money – in total and per client.
For 2018, the report's Energy & Climate section stated:
"In total, we financed 410 projects last year through all of our locations in Europe, including wind and solar parks. Their output supplied 1.4 million households with clean energy. That means that every single Triodos client contributed to more than two households covering their annual energy consumption with renewable energy."
The bank considers it a duty of all banks to support sweeping change.
Triodos is a founding member of the "Global Alliance for Banking on Values", an independent, worldwide network of banks that uses financial resources for sustainable economic, social and ecological development. Triodos Bank wants to achieve a transformation of the entire banking industry and appeals to all banks to join the movement:
"There is simply still too much money in the finance industry that is flowing in the wrong direction. We have to change that. The world does not have time to wait."
A newcomer who intends to transform the transportation and delivery industry is called Matternet. The brand wants to make goods as easily accessible as information everywhere in the world. How would that work? By building a drone logistics network for air transportation – at a fraction of the time, cost, and energy consumption of all modes of transport currently in use. This could save lives not only in regions with poor infrastructure like Africa, but also in large cities whose infrastructure is reaching its limits or in areas wracked by natural catastrophes.
If you watch the TedTalk by Andreas Raptopoulos, the founder and CEO of Matternet, you will understand the dimension of the transition this brand is striving to bring about. It's not surprising that investors and cooperation partners have been eager to get on board, for instance Boeing HorizonX Ventures or Mercedes as a cooperation partner for pilot project in Zurich.
Impact missions are not a marketing tool!
Impact Brands are not an invention of clever marketing managers. They did not emerge to make their founders rich. Rather, they were born from a deep inner drive to change the world. That is the core of these brands. As with greenwashing, any deception would be immediately uncovered.
What makes impact brands strong is consistent alignment of all activities with their mission. This clarity creates credibility and trust. The challenge for these brands will be to make sure that their mission is not watered down as soon as growth sets in or investors begin to exert pressure.
The new success indicator is the top priority
"Impact Led, Performance Driven" – this motto perfectly summarizes the conviction of impact brands. The core of these brands is their mission; the entire company is aimed at that one target. Increasing the effect on society or the world – that is their success indicator and their whole reason for being. Their key measured variable is called "impact". But at the same time, they are economically ambitious enterprises – and they know this is by no means objectionable.
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