Why brands are scaling back their sustainability commitments

Scientists have said that 2024 will be the hottest year since records began. It will also be the first year in which the planet is more than 1.5C hotter than in the 1850-1900 pre-industrial period, when humans began burning fossil fuels on an industrial scale.

 

The loss of ice from glaciers, sea-level rise and ocean heating are accelerating; and extreme weather is wreaking havoc on communities and economies across the world.

 

“Climate catastrophe is hammering health, widening inequalities, harming sustainable development, and rocking the foundations of peace. The vulnerable are hardest hit,” said UN Secretary-General António Guterres on the first day of the UN Climate Change Conference, COP29, in Baku, Azerbaijan.

 

Now, more than ever, there is a critical imperative to ramp up sustainable development. But with Trump elected as president of the US, who rolled back more than 100 environmental rules during his previous term, there is little hope that the climate or sustainable development will be high on his list of priorities.

 

Furthermore, a report by global management consultancy Bain & Company found that CEOs are deprioritising sustainability, as their focus turns to other global crises including inflation, disruptive technology, and geopolitical uncertainty. 

 

In the past year alone, we've seen multinational companies like Nike, as part of a company-wide cost reduction, lay off dozens of sustainability managers; and the likes of both Shell and BP have reduced their commitments to lower carbon emissions in response to rising oil prices. Footwear manufacturer Crocs has postponed its net zero carbon emissions target from 2030 to 2040. Meanwhile, according to the Wall Street Journal, companies like Coca-Cola and Nestlé have again deferred their goals for reducing virgin plastic usage after failing to meet previous targets.

 

"It’s a sad reality, but I think it’s true that we are seeing a deprioritisation of sustainability," says Laura Kantor, director of Climate Club. "Sustainability is inevitably still seen as a cost centre rather than a growth driver, and therefore tends to be one of the first departments on the chopping block when times get tough for a business."

 

Kantor adds that unrealistic expectations have also played a part in the corporate backsliding on meeting sustainability targets: "Those businesses that did prioritise sustainability, or at least commit to implementing some form of initiatives, have probably realised that many of these were set up without the proper capabilities to deliver them, or the patience to see them through."

 

Sustainability 2.0

 

Yet, while it appears many business leaders are walking back some of their sustainability commitments, there is hope that this is just a transitional period, and a more mature phase of sustainability will emerge from it. 

 

"Many commentators note that we are currently on the downward part of the sustainability 'hype cycle'," says Andy Wilson, founder of Early Majority. "Sustainability is now being integrated deeper into business operations, product development and marketing, which will lead to a more mature phase (sustainability 2.0) where the focus will be less on making sustainability claims, and more on delivering sustainability performance."

 

 

While we are seeing signs of sustainability slipping down the priority list as other pressing business concerns come to the fore, it's still in the top three or five priorities for most big companies.

 

"We are seeing some companies re-evaluate sustainability commitments and the roadmaps in place to achieve them," says Suzy Goulding, head of sustainability APAC at Publicis Groupe. "For me, this is a good sign that many brands are at last looking intelligently and in detail at commitments and the actions (and timelines) needed to achieve them rather than just proclaiming a 'net zero' target with no clue as to how that would be achieved, which is what was happening over the last couple of years."

 

To that end, the approach to sustainability by many brands seems to be taking a quieter route. This growing 'quiet sustainability' trend reflects how brands are embedding sustainable practices into their operations without making them a focal point of marketing. 

 

For example, according to a recent study by Mintel, ethical and environmental claims in food and drink have stagnated over the past three years, while consumers continue to expect companies to ensure all products meet sustainability standards without the need for overt promotion. In beauty and personal care, the focus remains on efficacy and value, while sustainability is integrated subtly.

 

"There is definitely evidence of brands taking the decision not to proactively talk about their sustainability achievements and the risk of inadvertently being accused of greenwashing is the reason behind many of these decisions," says Goulding. 

 

There is evidence that it's becoming prevalent for businesses to intentionally underreport or withhold information about their sustainability achievements, for fear of being scrutinised or accused of greenwashing. This phenomenon has been called ‘greenhushing', and a recent 2024 South Pole report found that as many as 40% of companies in Singapore do this.

 

 

"I think this is a grave mistake," adds Goulding. "If brands don't talk about their experience of setting sustainability goals and how they plan to achieve them (the successes and the failures) we will not move forward at the speed we need to see progress happen. Nor will we learn how to do things better and more effectively."

 

Richard Cope, senior trends consultant, Mintel Consulting, says that greenhushing in marketing is a recognition that consumers prioritise the personal ROIs of health and financial benefits first and foremost, but also a sign that brands shouldn’t be shouting about the good work they’re doing in plastic reduction if they’re not as active in embracing renewables. 

 

"Whoever shouts loudest usually has sins to hide," says Cope. "It makes more sense to talk about progress made, even with setbacks and failings along the way. This contrite, transparent approach is more human and will resonate with those of us trying to find our own ways to reduce our personal impacts."

 

How to ensure sustainability remains a priority

 

Amid global competing crises, how can brands and communicators ensure sustainability remains a priority?   

 

"The majority of work needs to be internal," says Kantor. "To influence stakeholders to ensure that sustainability remains a priority and not a PR stunt. An organisation’s sustainability agenda needs to be aligned with the overarching business strategy; any conflict with wider business goals will cause any sustainability practitioner to feel like they’re constantly swimming against the tide."

 

There is growing consensus that we should move away from viewing sustainability as a standalone issue and instead recognise it as an integral part of a brand's overall ecosystem and business practices.

 

"We need to stop thinking of [and talking about] sustainability as this separate entity or issue and start seeing it as part of the overall ecosystem of a brand and how they conduct business," says Goulding. "From a communications perspective, sustainability issues and topics should be a constant element of any corporate affairs narrative."

 

Cope believes that brands can best prioritise sustainability by pushing its non-environmental benefits, such as efficiency, economy, wellbeing, and employment for farmers.

 

"This is sustainability in its purest form and typifies the most popular sustainable behaviours that we see: 43% are buying fewer new clothes and 33% are reducing the energy they use in cooking. Sustainable products need to be the healthiest, tastiest, most durable, best value, smartest and savviest option to succeed," says Cope. "More people are using renewables and reducing meat/dairy than think it is positive for the environment, inferring perceived financial and health benefits, which brands need to champion."

 

A matter of cost?

 

With rising costs, consumers are favouring sustainable behaviours that don’t come with an additional price tag, like reducing food waste. But do must sustainable goods always come at a higher price point? 

 

Research by Kantar found that nine in 10 people in APAC want to live a sustainable lifestyle, but only one-third actively change their behaviour. The massive gap between intention and action has yet to disappear, making companies' role in solving these tensions even more critical. 

 

"In Asia, cost is the most significant barrier for consumers in adopting sustainable behaviours across categories," says Jack Young, consultant, Sustainable Transformation Practice, Kantar. "And while brands can rely on the most eco-conscious group of consumers to pay more for sustainable options, if they always come with a higher price tag, brands will miss out on engaging with a much wider audience that wants to live more sustainably but needs to balance that alongside cost and convenience."

 

Evidence suggests that so long as the more sustainable options are more expensive than their mainstream alternatives, adoption rates will falter and they will remain niche.  

 

 

But Kantor argues that this doesn't have to be the case, and creativity can help solve the problem. 

 

"Imagine if an organisation reduces unnecessary packaging for their products-that reduction can lead to lower costs. A grocery brand like Redmart could switch from distributing items in cardboard boxes to using reusable crates. I’ve done the calculations for swaps like this for clients in the past and the cost savings are exponential," she says.

 

She stresses that it's important not to forget the role government policy and regulation can play. "Taxes on unsustainable products or companies should be introduced, especially for price elastic consumer goods and services, to nudge people into making better choices for the planet."

 

Overall, the picture doesn't seem too bleak as we transition from the sustainability hype cycle and PR claims to focusing more on delivering actual sustainability performance.

 

The green transition of the economy is gaining significant momentum. Currently, net zero targets set by various countries encompass 92% of global GDP, 88% of total emissions, and 89% of the global population. Although the timelines for achieving these targets may experience delays, the influx of capital aimed at facilitating this transition is steadily increasing. The Net Zero Asset Managers initiative (NZAM) reports a remarkable $57 trillion in assets under management (AUM) that are committed to supporting pathways toward net zero emissions by 2050, aligning with a 1.5°C Paris Agreement trajectory.

 

"With these foundations in place, commitments to more sustainable operations are finding their way into the private sector, and we are seeing a slow but steady incremental shift to more environmentally and socially responsible products and services," says Wilson.

 

"New technologies are creating a new set of more sustainable options for customers and consumers—for example electric vehicles and animal-free protein. As with all disruptions, the adoption of these more sustainable options will accelerate as soon as they deliver on category performance, affordability and convenience."