WPP CEO Martin Sorrell spoke about responsible marketing at the Added Value "Branding for Good" conference in London in March 2008. Here are extracts from his address
Doing the right thing: there's no alternative
Would you agree that the world has finally woken up to climate change?
Scientists, politicians, business leaders, investors, pressure groups, and the public are now deeply concerned about the potential consequences. There has been a remarkable shift in attitude. Climate change is no longer seen as the fanciful risk of marginal changes in weather based on scant evidence.
I think there are three key events from a business point of view, which have changed the corporate landscape at the level of chairmen and CEOs regarding the wider question of corporate responsibility.
The first was when Warren Buffet got together with Bill Gates about 18 months ago to support the Bill Gates and Melinda Gates Foundation. The singular purpose was to do good things. So that was a whopper, the two richest people in the world getting together.
The second thing was when Sir Richard Branson announced at the Global Clinton Initiative, again about 18 months ago, that Virgin would donate up to $3 billion of Virgin's profit to good causes and I think that made a major impact.
The third one was the carbon neutrality stance by the likes of Rupert Murdoch & his son James, of News Corp and BSkyB respectively, probably stimulated by Al Gore's film, An Inconvenient Truth. This has been followed by high street retailers, like Marks & Spencer with its 'Plan A' commitment and Wal-Mart's 'Sustainability 360', its strategy for reducing their environmental impacts. None of these has been done for altruistic reasons; they make commercial sense.
It is clear that climate change is front and centre for companies. But there are many other preoccupations for consumers. In America it is clearly still significantly down on the agenda. Currently, it is the 17th most significant issue. Added Value has the task of helping Al Gore get it into the top three. But as of now the American consumer is most worried about the economy - that is still the major issue, particularly at election time.
As a global business we see consumers reacting in different ways in major and emerging markets, particularly young consumers who regard not just climate change but ethically responsible issues as being critically important. One question that often gets asked is whether Chinese consumers or Indian consumers regard these issues as being important. The suggestion being how - if you are concerned about a job, or you have big agricultural populations or rural populations in these countries - would they be interested in as sophisticated issues as that? Our data is that they are. Three of the four BRIC countries - certainly Brazil, India and China - now have an environmental consciousness which belies their stage of economic development.
Q: What do you think we can expect to see in terms of companies addressing this through responsible marketing over the next few years?
MS: I think there are a number of companies that are putting together programmes which are effective and well thought through.
The risk is that you get ahead of yourself. We are all aware of examples of companies that have over-promised in this area. The danger is that because it becomes so fashionable because Gates and Buffet and the Murdochs and Richard Branson are doing it, you do it just for the sake of doing it.
Until about five years ago I was a cynic about this, because I think anybody who is building a long-term brand or product or service or company or institution is going to do things that are right. The basic point being that if you do things that are wrong you do not get to the long term.
If you just describe the mission, vision or strategy of a company as being to build a brand or product or service or institution over the long term you get rid of all these issues, in the sense that it is now right at the heart of corporate strategy. So you are not going to offend the environment; you are not going to cross government or NGOs; you are not going to upset your employees - you are going to do the right thing.
Q: What role does the consumer play in this?
MS: Consumers are used to the aspiration that you should consume more, the aspiration that you should have a bigger car, the aspiration that you should have a number of holidays, bigger houses and multiple houses.
So all the habits of clients, agencies, media owners is to encourage people to consume more - 'super-consumption'. That is still embedded in the consumer's psyche so we are going to have to respond by doing things differently and by making sacrifices if we are going to deal with issues such as climate change.
These are not things that are going to destroy profitability or destroy business models or destroy businesses. These are things that are going to offer opportunity though it is more difficult, perhaps, for more established business models companies to react.
We should be honest about it, for people in traditional businesses who have legacy systems and approaches life is going to be quite uncomfortable and there are some key challenges facing businesses today.
Consumers are becoming increasingly concerned about the ethical approaches to business, the Government is becoming increasingly concerned and so are NGOs. If your legacy system or your legacy production or your approach is rooted in the past you are going to have to change that too. So there are a lot of big challenges. Having said that there are big opportunities. Big profit opportunities, and product and service opportunities of considerable proportions.
A CD ROM of Added Value's Branding for Good Summit is available from www.added-value.com.
Source: The WIRE - Issue 28 - Page 2. Published April 2008