遠(yuǎn)見卓識CEO的可持續(xù)發(fā)展指南+The+Visionary+CEOs+Guide+to+Sustainability

TheVisionaryCEO’sGuidetoSustainability

BAiN&CMPANY

Acknowledgments

Fortheircontributionstothisreport,theleadershipteamofBain&Company’sGlobalSustainability&Responsibilitypracticewouldliketothankthefollowingpeople:ColinArmstrong,NickBaker,MadsBalsig,AndyBankert,StephenBertrand,JanBudde,MichelleCarroll,ChristinaCerezo,RickClerx,CarlosCruz,KatrinaCuthell,FrancescoD’Angelo,PrashantDas,DiegoDepetris,JoeyDeRosa,MagaliDeryckere,SimoneDoms,KatherineDuceman,EmilyEmmett,AdamFrey,RainaGandhi,SheenaGarg,LudovicaGianni,ChristianGraf,IshitaGupta,JimHarris,MollyHart,AndreaIsabella,KrystleJiang,AustinKim,MichaelKochan,SuneKok,EkaterinaKuznetcova,SophieLadousse,AdeleLam,RafaelLam,EthanLampert,XueLee,EmilyLeinbach,NataliaLejarraga,ArielLerner,LiviaLuzzatto,ClarkMeng,MilicaMilic,MarthaMoreau,LudovicaMottura,ChristinaMueller,DayleNel,TizianoPaci,OnaizahPanhwar,AdamPapania,TracyParker,LesliePeng,TanjaPick,AndrewPontti,DaniRosen,JoeScalise,LisaSchold,JasonScuglik,GabrieleSessa,DeekshaSharma,TamarSifri,DaneSmith,AliceSong,IngoStein,KhushbooSultan,TiiramSunderland,HimadriSuri,JoeTan,SonalTripathy,ClementienValk-Fabels,TarahWalker,KatieWare,andSelinaZhuang.ThanksaswelltoNanetteByrnes,DavidDiamond,PaulJudge,andtheEditorialteam.

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interviewswithindustryparticipants.Bain&CompanyhasnotindependentlyverifiedanysuchinformationprovidedoravailabletoBain

andmakesnorepresentationorwarranty,expressorimplied,thatsuchinformationisaccurateorcomplete.Projectedmarketandfinancialinformation,analysesandconclusionscontainedhereinarebasedontheinformationdescribedaboveandonBain&Company’sjudgment,andshouldnotbeconstruedasdefinitiveforecastsorguaranteesoffutureperformanceorresults.Theinformationandanalysishereindoesnotconstituteadviceofanykind,isnotintendedtobeusedforinvestmentpurposes,andneitherBain&Companynoranyofitssubsidiariesortheirrespectiveofficers,directors,shareholders,employeesoragentsacceptanyresponsibilityorliabilitywithrespecttotheuseof

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Copyright?2023Bain&Company,Inc.Allrightsreserved.

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TheVisionaryCEO’sGuidetoSustainability

Contents

TheQuestionsEveryCEONeedstoAskAboutSustainability

3

LeversofChange:Technology,Behavior,Policy

8

SellingSustainabilityMeansDecodingConsumers

9

DoesaPurposeHelpBrandsGrow?

15

LowerCosts,FasterAdoption:ClosingtheSustainableInnovationGap

21

TheFutureIsCircular:HowCompaniesCanPreparetoGrow

26

LeadingwithVision:HarnessingtheClimatePolicyResponse

31

SectorPerspectives

39

BuildingResilienceinYourBusinessStrategy:FourImperativesforLeaders

40

TheEnergyTransition’sOtherBigPuzzle:MakingtheMathWork

46

CanFoodandAgricultureCompaniesRaiseTheirGame?

53

Fires,Floods,andLoans:HowBanksCanDealwithIncreasingClimateRisks

60

MakingItHappen

67

BuildingaData-BasedStakeholderStrategy

68

OperationsandSupplyChainDecarbonization:

LowerEmissions,HigherPerformance

71

MakingBusinessDoBetterforEveryone

78

OrganizingforSustainability

86

ATalentStrategyforSustainability:SkillsMatter,butMindsetIsEverything......91

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TheVisionaryCEO’sGuidetoSustainability

Fromourglobalteam

Sustainabilityisabouttakingcareoffuturegenerationswhileensuringeconomicprogresstoday.Achievingitwillrequireunprecedentedchange.Wedon’tyethaveallthetechnologiesrequired,weknowhowharditistochangebehavioratscale,andweneedtonavigatearegulatoryenvironmentthat’softendifficulttounderstand.

Wedon’tclaimitwillbeeasyorwillcomewithouttrade-offs,butthisreportoffersasetofideas,strategies,andtoolsanchoredinpracticalrealitythatwebelievecanhelpleadersmaketangibleprogresstodayandtomorrowonthisvitallyimportantchallenge.

Fran?oisFaelli

GlobalSustainability

PracticeLeader,Brussels

JennyDavis-Peccoud

PracticeFounder,

Amsterdam

MarcLino

PrivateEquity,London

DavidKnipe

Resilience,London

HernanSaenz

Performance

Improvement&

Circularity,Dallas

JohnBlasberg

AmericasPractice

Leader,Boston

TorstenLichtenau

Carbon&Climate,

Chicago

CamilleGoossens

FinancialServices,Paris

AlasdairRobbie

TransitionRisks,London

AbhijitPrabhu

SupplyChain&

Operations,Boston

Jean-Charlesvan

denBranden

EMEAPracticeLeader,Brussels

JoshHinkel

Circularity,Dallas

HarryMorrison

ConsumerProducts,

London

KatherineDixon

Policy&Regulation,

Paris

EuanMurray

LifeCycleAssessment,London

KaranSingh

APACPracticeLeader,NewDelhi

SashaDuchnowski

FoodSystems,Chicago

MarioH?uptli

Retail&Luxury,Zurich

DaleHardcastle

CarbonMarkets,

Singapore

KarthikVenkataraman

Social,Washington

JulieCoffman

GlobalDEILeader,

Chicago

BrianMurphy

Energy&Natural

Resources,Perth

CateHight

EnergyTransition,

Washington

DebraMcCoy

SustainableInvesting,SanFrancisco

LeahJohns

Consumer,Lisbon

VikkiTam

GlobalSocialImpactPracticeLeader,

NewYork

NielsKoggersbol

Advanced

Manufacturing&Services,Copenhagen

GrantDougans

EnergyTransition,

Washington

MarthaMoreau

Water,Paris

MattiasKarlsson

CommercialExcellence,Stockholm

3

TheQuestionsEveryCEONeeds

toAskAboutSustainability

Onaverage,fewerthan40%ofcompaniesacrosssectorsareontracktomeettheirvarioussustainabilitycommitments,butit’spossibletonavigatethechallengingtrade-offswithvisionandpragmatism.

ByFran?oisFaelliandTorstenLichtenau

Itwasalreadyclearthatclimatechangeisreal,butit’sgottenalotmorerealoverthepastfewmonths.FromCanadatoGreece,fromIndiatoTexas,citizens,farmers,tourists,and,ofcourse,executives

arewitnessingtheclimatecrisisupclose.

Climatechangewillcreatediscontinuityfortworeasons:first,becausewewillhavetoadapttonewenvironmentalandsocialrealities,andsecond,becausewewillhavetochangeandinvesttopreventfurthercrises.

Thescienceisveryclear.Itwilltakeacombinationofnewtechnologies,newpolicies,andnew

behaviorstoaddressthenegativeconsequencesthattheexponentialgrowthachievedbyhumanshashadontheplanetandsociety.Thisisevidentforgreenhousegasesaswellasforotheraspectsofsustainability,frombiodiversitytowaterandhumanrightstoracialequity.

Ifthescienceisunambiguous,theimplicationsforsocietyingeneralandtheroleofcorporationsinparticulararestillbeingdebated,andfortherightreasons.Thisisnotjustaboutthemoneythatwillhavetobeinvestedtofundthegreentransition—$4.6trillionannuallyby2030toreachnetzeroby2050,theInternationalEnergyAgencyestimates.SincetheUnitedNationsdefinedsustainabilityin1987,ithasbeenclearthatreachingitsSustainableDevelopmentGoalswillrequireacarefulbalancebetweensecuringtherightfutureforthenextgenerationsandprotectingthewell-beingofcurrentones.

InancientGreek,thewordpoliticsreferredtomanagingthecity,andassustainabilitychallengestouchmoreandmoreofus,politicaldebateiseverywhere.Forcorporateleaders,theemerginganswersvary

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TheVisionaryCEO’sGuidetoSustainability

considerablydependingongeographyandindustry.EuropeispursuinganambitiouspolicyagendabutraisingquestionsaboutEuropeancompetitivenessvs.other,morecautiouseconomies.Whilesomeindustrieshavelineofsightintothingslikeaffordablenewgreentechnologiesandthepathtomorehumanesupplychains,othersseemstuckinanunsolvablepriceandregulatoryconundrum.

Wehavetalkedtothousandsofexecutivesaroundtheworld.Theygetit.Theyknowtheyhavearoletoplayandthatthepublicexpectsthemtolead.Buttheyareworried.First,becausetheyarepresentedwithtoomanysimplisticanswerstowhattheyknowisanincrediblydifficultbalancingact.Immediatelystoppingtheuseoffossilfuels?Well,todaytheyareessentialtomosthumanactivityandareliterallyfuelingthedevelopmentofneweconomies.Focusonshort-termprofits?Butemployeesandcommunitiesexpectchange,andcompaniestodayaretrustedtotakeontheirshareofenvironmentalandsocialchallenges.Bytheway,executivesarepeopletoo,andmanyseethisastheirlegacy.

Thesecondthingworryingexecutivesisthegrowinggapbetweentheirpubliccommitmentsand

deliveryonthem.Mostlargecorporationsthathavecommittedtoreducinggreenhousegasemissionsarefallingbehind.Some75%ofbusinessleaderssurveyedbyBainbelievetheyhavenoteffectivelyembeddedsustainabilityintotheirbusiness.Bainresearchhasalsofoundthatfewerthan40%of

majorcompaniesacrosssectorsaretrackingtotheirsustainabilitygoals,includingthoserelatedtowateruse,wastereduction,andpreservationofbiodiversity.

Goalsthataretopofmindforcorporateboardsandtopmanagement,andinspirationaltoemployees,areprovingdifficultfortheP&Lownerswhomustreconcileimmediateprofitdeliverywiththeseenvironmentalandsocialcommitments.Feeling“taxedandtold,”theyareincreasinglyallergictosimplisticpicturesofthesustainabilityrevolutionasalandofopportunityandhigherreturns.

Whattodoaboutallofthis?Makingthesetrade-offscallsforamixofvisionandpragmatism.Thoughnoonehasalltheanswers,itisnotjustpossiblebutessentialtoact.TheIntergovernmentalPanelonClimateChange(IPCC),theUNbodyassessingthesciencerelatedtoclimatechange,estimatesthat

currentpolicies,infrastructure,andtechnologywouldallowfora40–70%reductioningreenhousegasesby2050,withcertainchangestoourlifestylesandbehaviorstobebuiltonwithgreater

far-reachingchangeinordertoachievetheworld’sclimategoals.

It’shardtodistillafullreport,onethatwehopeoffersusefultoolsandpointsofview,intoadvicesuitedtoanyexecutiveinanycompany.Still,thereareseveralthingswethinkleaderscan—andshould—dotoday:

1.Inyournextmeetingaboutyour5-to10-yearstrategy,askthethreecriticalquestionsbelow.

2.Pushforan“and”agenda:technologyandbehaviorsandpolicy.

3.ListentoP&Lownersandworktotranslatetheirstrugglesintoteam-sizedchallenges.

5

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TheVisionaryCEO’sGuidetoSustainability

Whatgooddowebringtotheworld,andwhatisourpurpose

asacompany?

Whatcostwillhumanityhavetopayforustogrow?

Whatwillgetinourway,andwhatwillwerunshortof?

Threequestions:purpose,externalities,andshortages

There’safamousquote,often(andprobablywrongly)attributedtoAlbertEinstein,thatoneshouldspendmostofone’stimerefiningthequestionratherthanworkingontheanswer.Wehavesympathyforthechallenge.Herearethethreebestquestionsforexecutivestoaskduringtheirnextstrategiccycle:

?Whatgooddowebringtotheworld,andwhatisourpurposeasacompany?Itisincrediblyusefultoanchorlong-termplansontheunique,positiveimpactacompanyhasonconsumersandcustomers,employees,andcommunities.Adebateoversustainabilitycannotjustbedefensiveandputteamsontheirbackfoot.Itshouldalsobeaboutprideandimpact.

?Whatcostwillhumanityhavetopayforustogrow?Thisquestionmightcomeacrossasgloomy,butitiscritical.Externalities—theunpricedcostsofbusinessactivities—areincreasinglymeasured,andtheywillgetpricedeventually.Weneedtobecomemuchbetteratunderstandingwhat

thosecostsareandhowwecanmitigateorcompensateforthem.

?Whatwillgetinourway,andwhatwillwerunshortof?Weareenteringaperiodofscarcity,shortages,andphysicalrisks.Ourplansneedtoidentifytherisksthatclimagechangewill

create.Theyalsoneedtoidentifytherawmaterialsorthecapabilitieswewillbeshorton,fromwatertocobalt,nursestoprogrammers,shipstoaffordableenergy.

Threelevers:technology,policy,andbehavior

TheIPCC2023SynthesisReportmakesclearthatitwilltakeacombinationoftechnology,policy,andbehaviorchangetofaceoursustainabilitychallenges.

?Rediscoverthetechnologyexperiencecurve.Manyexecutivestodaywronglycomparethecostofalong-establishedbrowntechnology,whichiswaydowntheexperiencecurve,withthecostofaverynewgreentechnology.Companiesneedtoremembertheycandrivefastdowntheexperiencecurve(E-curve),becomeamarketmaker,andevencreatecompetitiveadvantagesthroughsustainableinnovation.

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TheVisionaryCEO’sGuidetoSustainability

?Formany,policyandcollaborationarenewlevers.Notallgreentechnologieswillbeaffordablewithouttherightregulatoryenvironment.Everynewstrategyshouldincludeapointofview

onhowtobuildtherightregulatoryframeworkandhowtoworkprecompetitivelyasanindustrytocreateit.

?Consumerbehavioriseminentlyactionable.Toomanyexecutiveteamsconsiderconsumer

behaviortobefixedandworrythatpeoplewillnotpayforsustainableoffers.Ourdatashowsthisisatleastpartiallywrong.ThemajorityofglobalconsumersrecentlysurveyedbyBainexpecttospendmoreonsustainableproductsinthenextthreeyears,andsomeconsumersarealreadydoingso.Bain’s2023ConsumerLabESGSurveyfoundconsumersarewillingtopayapremiumof12%onaverageforminimizedenvironmentalimpact,andthemostconcernedconsumers

willpaysignificantlymoredependingontheproduct.Thissentimentisgrowing,and,inourre-search,consumersreportthatdirectexposuretoclimateeventshascausedconcerntorise.

Makingsustainabilityateam-sizedchallenge

ThereisawaytohelpP&Lownerswhofeeltaxedandtold:Discussthetrade-offstheyfaceandalignyourteamsonhowtosolvethem.Ultimately,thekeyistotranslatebroadESGcommitmentsinto

team-sizedchallengesthatcanbecomenewroutinesornewinnovations.Thisisveryeasytowriteandverydifficulttodo,butbytappingthecreativeenergyofyourpeople,itispossibletomakerealprogresstowardamoresustainablefuture.

LeversofChange:

Technology,

Behavior,Policy

SellingSustainabilityMeansDecodingConsumers

9

DoesaPurposeHelpBrandsGrow?

15

LowerCosts,FasterAdoption:ClosingtheSustainableInnovationGap

21

TheFutureIsCircular:HowCompaniesCanPrepare

toGrowinaChangingWorld

26

LeadingwithVision:HarnessingtheClimatePolicyResponse

31

9

LeversofChange:Technology,Behavior,Policy

SellingSustainabilityMeans

DecodingConsumers

Weaskedmorethan23,000globalconsumerswhattheyreallywant.

Whatwefoundwillsurpriseyou.

ByFran?oisFaelli,JohnBlasberg,LeahJohns,andZaraLightowler

AtaGlance

NewresearchbyBain’sGlobalConsumerLabhashelpedusunderstandconsumers’viewsonsustainabilityandhowtheyareinfluencingbuyingbehavior.

Companiessellingsustainabilityneedtoacknowledgeandaddressafragmentedconsumerbase—notassumethatdeveloped-marketoryoungerconsumersaremoreconcernedabouttheenvironment,forexample.

Differentconsumersegmentsdefinesustainabilitydifferently,andmanymakechoicesbasedonmisconceptions.

Companiestendtofocusontechnologyadoptionwhendevisingstrategicplans,butregulationsandconsumerbehavioraremovingjustasquicklyandhaveasbiganimpact.

Tounderstandtheimportantimplicationsofclimatechangeonconsumerbehavior,wesurveyed

morethan23,000globalconsumersaboutabroadsetofsustainabilityissues.Weaskedthemwhattheycareaboutnow,whattheyknow,andwhattheybuy(anddon’tbuy).Wefollowedthatupwithextensiveconjointanalysisandethnographicresearch,speakingdirectlytohundredsofconsumers.

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TheVisionaryCEO’sGuidetoSustainability

Thecounterintuitivefindingsarerelevantforconsumer-facingbusinessesasdiverseasbrands,retailers,andairlines,aswellasforbusiness-to-businesscompaniesineverythingfromindustrialstochemicalstopackaging,whosecustomersultimatelyselltoconsumers.

Acrossmarketsandconsumersegments,ourresearchrevealeddramatic—andunexpected—variationsinconsumers’behaviorandrelationshiptosustainability,andhowtheirviewsarerewritingtherulesforcompanies.

Whatwefound

Worldwide,64%ofconsumersreportedhighlevelsofconcernaboutsustainability(seeFigure1).Andthatsentimentisincreasing.Themajorityoftheseconsumerstoldusthattheirworrieshaveintensifiedoverthepasttwoyearsandthattheirconcernwasfirstpromptedbyextremeweather.

Ourresearchfoundthat79%ofconsumersinfast-growingmarketslikeChina,India,andIndonesiaareconcernedaboutenvironmentalsustainability,comparedwith55%indevelopedmarketsliketheUSandEurope(seeFigure2).

Figure1:Globally,64%ofconsumersarehighlyconcernedaboutsustainability,andtheirworriesaremounting

Percentageofconsumerswhoareveryorextremelyconcernedaboutenvironmentalsustainability

64%

Global

53%

US

81%

Brazil

61%

Europe

67%

Asia-Pacific

Percentageofconsumerswhoseclimatechangeconcernshaveintensifiedoverthelast2years

60%

Global

49%

US

63%

Brazil

57%

Europe

66%

Asia-Pacific

Source:BainConsumerLabESGSurvey,June2023(n=23,374),includingUS,Brazil(reweightedbyincomeandregion),Europe(France,Germany,Italy,Netherlands,UK),andAsia-Pacific(China,India,Indonesia,Japan)

11

TheVisionaryCEO’sGuidetoSustainability

Figure2:Consumersinfast-growingmarketsaremoreconcernedaboutsustainabilitythanthoseindevelopedmarkets

Percentageofconsumerswhoareveryorextremelyconcernedaboutenvironmentalsustainability

85%

81%

78%

73%

72%

64%

63%

56%

54%

53%

56%

31%

OverallIndiaBrazilIndonesiaChinaItalyFranceUKNetherlandsGermanyUSJapan

Source:BainConsumerLabESGSurvey,June2023(n=23,374)

Manycompanieshavelongviewedyoungerconsumersasmorefocusedonsustainabilitythantheiroldercounterparts,buttherealityisnotasclear-cut.Forexample,72%ofGenZconsumersand68%ofboomersgloballyareveryorextremelyconcernedabouttheenvironment,butincountriesasdiverseasIndia,France,andJapan,boomersaremoreconcerned.

IntheUS,96%ofconsumersagreethattheclimateischanging.Amongthoseconcernedabouttheenvironment,85%ofself-describedliberalvotersareveryorextremelyconcernedaboutclimatechange,comparedwith39%ofconservativevoters.Yetconservativesworryaboutspecificissuessuchaswater,biodiversityloss,andairpollutionrelativelymorethanliberals,whoworrymoreaboutclimatechange(seeFigure3).

Asthoseconcernsgrow,consumersarelookingtomakeenvironmentallysoundchoicesandarewillingtopaymoreforsustainableproducts.Yet,theyoftenrunintobarriers.Forexample,consumersintheUSarewillingtopayanaveragepremiumof11%forproductswithaminimizedenvironmentalimpact(seeFigure4).However,28%istheaveragepremiumforproductsmarketedassustainableintheUS.

Inoursurvey,50%ofconsumerssaidsustainabilityisoneoftheirtopfourkeypurchasecriteria

whenshopping.Yettheymaybemakingdecisionsbasedonmisconceptions—significantlyloweringthenumberoftrulysustainablepurchases.Whenaskedtodeterminewhichoftwogivenproducts

generatedhighercarbonemissions,consumerswerewrongordidn’tknowabout75%ofthetime.

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29%

19%19%19%

TheVisionaryCEO’sGuidetoSustainability

Figure3:AmongthoseconcernedabouttheenvironmentintheUS,liberalsaremoreworriedaboutclimatechange;forconservatives,naturalresourcesandbiodiversityaremoreimportant

Percentageofconsumerswhoaremostconcernedabout…

48%

Average

37%

34%

LiberalModerateConservative

23%

20%

21%

19%

16%

Climatechange

13%14%

11%

7%

Waterandnatural

resourcesupply

11%

11%

9%

6%

Lossofbiodiversity

anddeforestation

4%4%3%4%

AirpollutionWaterqualityOther

Source:BainConsumerLabESGSurvey,June2023(n=2,031)

Figure4:Consumersreportthatthey’rewillingtopaymoreforsustainableproducts

Consumers’reportedincrementalwillingnesstopayforsustainableproducts

20%

19%

16%

15%

15%

12%

11%

10%

9%

9%

8%

6%

OverallIndiaIndonesiaBrazilChinaNetherlandsUSFranceGermanyItalyUKJapan

Source:BainConsumerLabESGSurvey,June2023(n=23,374)

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TheVisionaryCEO’sGuidetoSustainability

Inadditiontosuch“unknownunknowns,”consumersadoptdifferentdefinitionsofsustainability.Globally,48%ofconsumersconsiderhowproductsareusedwhenthinkingaboutsustainability.Theseconsumersaremoreconcernedabouthowaproductcanbereused,itsdurability,andhowitwillminimizewaste.Incontrast,mostcompaniessellsustainablegoodsbasedonfactorssuchashowtheyaremade,theirnaturalingredients,andthefarmingpracticesdeployed.Thesefactorscausemanyconsumerstoconflate“sustainable”with“premium.”

Oneresultofthisdisconnect:Almosthalfofalldeveloped-marketconsumersbelievethatlivingsustainablyistooexpensive.Bycomparison,roughly35%ofconsumersinfast-growingmarketsbelievethatitis.

Culturalnormsandfinancialrealitiesplayabigroleinconsumerbehaviors.Infast-growingmarkets,individualscanbecomemoresustainablebygoingwiththegrainofsociety—bybuyingatlocal

shops,generatinglesswaste,andeatingatraditionallyplant-heavydiet,forexample.Indevelopedmarkets,embracingasustainablelifestylemeansgoingagainstthegrainofaconsumptionculturebyavoidingexcessivepurchasingaswellasreadilyavailableandaffordableconveniences.

Consumerbehaviorcanchangemorequicklythanmanycompaniesanticipate,withexternalfactorssuchasgovernmentregulationheavilyinfluencingthemarket.Chinabeganofferingfinancial

incentivesonelectricvehiclesin2009;now19%ofChineseconsumersreportdrivinganelectriccar,comparedwith8%ofconsumersglobally.InEngland,theuseofsingle-usesupermarketplasticbagshasfallen98%sincethegovernmentbeganrequiringretailerstochargeforthemin2015.

Whatthismeansforcompanies

Themomentumbehindsustainabilityanddynamicshiftsinconsumerbehaviorhaveprofoundimplicationsforanycompany.Weseefourcriticalareasoffocus.

Deviseafuture-proofandflexiblestrategy.It’sundeniablethatwhat’simportanttoconsumersischangingfasterthancompaniescankeepup.Fewcompaniesplanbeyondthetypical3-yearstrategicplanningwindow,andeventhosethatdolookout5to10yearstendtofocusonexpectationsfor

technologyadoption.Theseplansfailtofullyconsidertwootherfactorsthatmovejustasrapidlyandwithasbiganimpact:regulationsandconsumerbehavior.

Acknowledgeafragmentedconsumerbase.Anotherlessonfromourresearchpointstotheneedtodeaverageconsumers.Traditionalassumptionsaboutconsumersandsustainabilitynolongerapply.Forexample,it’swrongtoassignmoreimportancetodevelopedmarketsandtoyoungerconsumers,ortoassumethatallconsumerstakethesameapproachtosustainabilityordefineitthesameway.Companiesneedtoinnovateproductsanddesignpropositionsthatappealtodifferentsegments—localmarkets,consumerswithdifferentdefinitionsofsustainability,andconsumerswitharangeofpurchasingmotivations.Onlythemostpassionateconsumersmakesustainabilitytheirsolepurchasingcriterion.Mostbasetheirchoicesonacombinationoffactors,frompricetoconveniencetohowaproductwillfitintotheirlifestyle.Thechallengeforcompaniesistostrategicallyalignsustainabilitywiththekeypurchasecriteriaofthecategory.

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TheVisionaryCEO’sGuidetoSustainability

Andwhensellingsustainabilitytofrugalconsumers,companiesneedtothinkofwaystomaintaintouchpointswhileofferingthemproductsthatlastlongerorcanbereused(inotherwords,sellingthemlessoftheproduct).Insteadofsimplysellingagreenerversionofaproductatapremium,

companiesneedtotakecareoftherestoftheequation,factoringincircularity,lifestyle,andeconomics.

Testandlearntodeterminewhatworks—andrepeat.Insuchafluidenvironment,companiescanleanaggressivelyonmarketingexperimentation,usingdigitaltoolstoquicklytestthesustainabilitymessagesthatresonatewithdifferentsegmentsandadaptaccordingly.It’sawaytohelpconsumersgainenoughclaritytomakedecisionsthatareconsistentwiththeirvalues.Forcompanies,experimentationrevealsnewdataandinsightsatadeep,specificlevel,complementingtraditionalmarketingresearch.Leadersinmarketingexperimentationoftencanproveordisproveahypothesiswithinweeks.Onceestablishedatscale,arobustexperimentationcapabilitycanenhancemarketing-mixoreconometricmodelingandbringteamsclosertotheircustomers.It’sarecipeforbothhighermarketingROIandstrongersalesgrowth(seetheBainBrief“CanMarketingExperimentationBecomeYourSuperpower?”).

Getoutinfrontofregulations.Aswe’veseenthroughouttheworld,governmentpolicyinevitablybecomesahugecontribu