Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:09] Speaker B: Hello and welcome to Activating Sustainability, the Anthesis Podcast. I'm your host, Chris Peterson. Today I'm excited to be joined by Ollie Lauder, senior strategy Director from the Anthesis Revolt team. Ollie's recently led a chunk of work that has come out in what is called the Cost of Silence report that really helps to build the business case for articulating and communicating your sustainability efforts, including lots of really valuable data points that support the business case.
I find this piece of work fits incredibly well with some other efforts that they've undertaken, including their work on causes the Count that helps us to understand what we should be communicating about, as well as their work on Poking the Bear, which is going to be updated and released at New York Climate Week in a new title called Hugging the Bear. That really helps us to understand how do we communicate in this moment. So to dig in on all pieces Cost of Silence and help us understand the outcomes, I'm excited to welcome Ali. Ali, welcome to this podcast. Thanks for joining.
[00:01:08] Speaker A: Thank you so much for having me.
[00:01:10] Speaker B: Maybe where I'd like to start is in the report you talk about headwinds as key driver for why are we talking about this now and how's that showing up? Wonder if maybe you could dig into that a little bit and share some insights?
[00:01:23] Speaker A: Yeah, absolutely. Thanks, Chris. I think we're in a sort of really interesting moment right now where a lot of businesses are trying to navigate what they say about sustainability and how they say it. And the real question, I think that's at the heart of this is is there value in communicating sustainability or is it just too big a risk? And that is really where this report starts and the question it leans into.
One of the reasons why we're having this conversation at all is because of the Headwinds of silence, like you just mentioned. That's what we're calling them. Essentially. They are five big factors, big reasons why now is a more difficult, cautious moment for companies to communicate than, let's say, a year or even 24 months ago.
And as you mentioned, there are five headwinds that we are talking about, and some of them are very macro, big picture, and some of them are quite specific and detailed. The first one is quite macro and it's really thinking about the context. I suppose the moment we're in, if we're putting messages out into the world, we're trying to land them in a cultural space where they will be interesting and relevant. And there's sort of three Cs going on in this space. There's conflict Whether that is national polarization within our communities or international in a way that's sort of upsetting and changing some of the familiarity of the world we once knew. There's also a sense in many countries of a kind of eternal crisis. Some have called it a kind of poly crisis, a movement from one problem to the next. And there's a real lack of optimism around. And it's difficult perhaps to look far into the future with a positive aspect without getting a little bit of sort of cynicism, concern called defeatism. And then finally, culture. There's been a culture shift, or maybe more accurately, we're in the middle of a culture shift. Some of those who used to dominate, perhaps the more dominant voices in our society, are giving way to other voices, other perspectives that see some of the core issues that concern us all from a very different starting point. Okay, fine, but this is actually creating huge amount of noise across a whole range of other topics. Why is sustainability one of those subjects that's going a little bit quiet? And the answer to that, really, I think, is that we've lost a little bit of a sense of what our destination is, that shared journey that we were all on as sustainability practitioners. And it could be summed up something like a better, greener, fairer future for everybody. Right? We had this sort of reasonably agreed sense of where we were headed, and we had things like we still do the UN SDGs, which fleshed that out a little bit more and gave us some structure to what that better future looked like. But we're in a kind of different context now. And it isn't necessarily clear that the whole of our societies are both walking towards the same shining city on a hill. We've got a sense of maybe different directions, and it's hard to place a story to communicate something about where your company's going in that uncertain sense of where we are all going as a society. So, look, that's number one. It's quite macro, it's quite big picture. The others are far more pointed and I think direct, and we'll dig into those now. So the first one that follows, or rather headwind, number two is targeted backlash. And what we've seen in, particularly in North America, is a rise in activist voices, particularly calling out companies around DEI commitments. And while that is sort of adjacent to sustainability, that has had a sort of quietening effect on communications around issues like climate responsibility, supply chains and a whole range of other issues.
So that is a kind of chilling effect, I suppose, particularly in North America, but not exclusively in North America. Thirdly, this one is right within businesses. Worried marketeers. As sustainability practitioners, we love our marketing colleagues because they are the people who can tell great stories about the impact we're making, the change we're having in the world and why that matters and why anyone should care. And. And that unlocks a lot of the top summary value for businesses. It's how the rest of the world hears what you are doing. But marketeers are not trained in sustainability. And there's a statistic that shows almost half of them are worried about accidentally greenwashing. And who can blame them? Nobody wants to greenwash deliberately. Very few do. But there are a lot of rules. Those rules are changing, emerging. And we're in a moment where there are judgments and lawsuits, both in the EU and in North America. They're not yet resolved. We're not entirely clear what will be allowed and what won't be. Number four is about the leadership within businesses. This is distracted CEOs. And Chris, on this one, I'm not talking about Coldplay concerts in this case. Where I'm really talking about is the inbox. What is on the desk of those corporate leaders. There was a great report from Bain earlier in this year which looked at those priorities and what it showed was two things. One, sustainability is still more important for CEO CEOs than it was pre Covid. Right. The idea that you can have a systemic shock has for now been learned and understood that you need this macro perspective. But other things have crammed in. We have inflation and the connection with tariffs, which are causing real questions for CEOs. Should they absorb those costs? Should they pass them on to the end consumer? How do they stay competitive in the marketplace? And then of course, after that, AI, what on earth should a leader do? Do they need to get rid of a third of their workforce? What happens if they need to hire them all back again 18 months later? Because AI doesn't quite live up to its promise. It's a real uncertain moment and CEOs have got a lot on their plate, so it's taking away some of that attention from sustainability. And then finally, number five, the fifth headwind. This is emerging legislation and it's emerging. It's also evolving. And it's both. Again, Europe and North America. We're seeing a lot there. In fact, I think I read today that Spain has just brought out its own set of policies, particularly for businesses operating within that country.
So, you know, this is a complex, evolving environment. And what does that mean? It means our dear sustainability practitioners, our clients, our friends, our Colleagues, they are stuck under a bit of a mountain of paperwork. They're trying to figure out how do they comply, how do they report? It's a bit of a moving target and they're a bit too busy, frankly, to focus on that upside value of storytelling, reputation building and really enhancing the brands they're responsible for.
[00:08:32] Speaker B: That's great. And I'm really keen to dig into kind of what did you find? Because I know there's some really valuable and insightful numbers. But maybe just before we do, reflecting on those five headwinds or the uncertain context, targeted backlash, worried marketeers, distracted CEOs and emerging legislation, I'm curious, given your experience, the research, et cetera, does this feel like this is a kind of moment we're in or has this been like structural shift to this is now our new normal?
[00:09:01] Speaker A: It's a great question, Chris, and it's sort of the million dollar question in a way, right? Is this a change? Have things changed for good and this is the way things are going to be from now on, or actually is this just a moment that will pass? In some respects, change is the only constant. And and Thesis's position is very much that this is a moment that will pass. And there are good reasons for that. The first reason for that is practical reality. One of my favorite authors, Kim Stanley Robinson, says reality is that which remains when you stop believing in it. Right. It's a thing that is still there. It doesn't care what you think. If we think about the natural world and we think about environmental challenges in particularly, they're governed by natural sciences and physics is not interested in your politics, chemistry doesn't really care what's going on in culture. And biology is kind of immune from the business conversation that you are having in your own companies today. We haven't solved any of these environmental issues. We've made good progress on some of them, but there's a long way to go. So these are going to keep showing up. We're going to get extreme reminders from the likes of wildfires, hurricanes and all the rest of it. And we're going to get local impacts. The polluted river won't go away just because people want to be a little more quiet about their corporate communications and so voices, activists, communities, they're going to bring their concerns back into the fore. And we know that for a fact because it's what always has happened and will continue to happen. The other thing I think is really important here is the silent majority. Now, a Yale study coming out this year put the figure at around 70% of Americans who think climate change is a serious issue and they want to see more action on it. Now that is in perhaps the most polarized country on this issue. And actually a UN study put the figure at 80 to 85% on average in other countries around the world. So there is a big, big majority of people who are concerned and want to see action again regardless of what's going on in a particular cultural moment. And the final thing I just want to say is the commercial numbers back it up as well. You know, if you look in the CPG sector, products with a sustainability attribute to them were out competing others and they just stole 2.6% market share in the last 12 months alone. These are not eco brands. We're not talking about the Patagonias of the world and the sort of niche green positioned businesses. These are mainstream products but they're working in a sustainable element to what it is. They have to communicate and they're winning in the marketplace. People are voting with their dollars. So I think there's a lot of good reasons why one, overall this moment will pass. But two, if you're not communicating on this, if you're not reinforcing your brand and your business reputation, you're going to be missing out on some of that value.
[00:12:03] Speaker B: A perfect segue to some of the like really fascinating and valuable insights from the report. So maybe to kind of shift there, maybe walk us through what are some of the headlines and then how did you get get there and, and then we'll move on to kind of what does it mean as we go forward?
[00:12:19] Speaker A: I think probably the best place to start is to give everybody an idea of what was the study that we did, what were we measuring, what were we counting? And this is a macro piece of research. So we were looking at 500 publicly listed businesses. We were looking at three years worth of data and we were looking across 16 different industries. So this is about a big picture view of the value of sustainability. And there were four things we were comparing. One is financial performance, how well is the business doing on the key financial metrics? Two is the environmental performance, how well is that business doing in terms of delivering on the key issues in its sector? And we were comparing those actions, those realities with two perceptions. The first was corporate reputation. How is that business seen in terms of is it a good company, is it a responsible company? And the second is environmental perception on the specific issues that matter for that business. Is it seen as positive, negative or neutral in sentiment analysis that we conducted and this research was done in partnership with Maha Global. So all the sort of raw data really came from them. And we've obviously built the insights and the narratives for this report. So that's the methodology. What were the findings? The first finding is what we're calling the three dimensional business case. And what this does is it looks at financial performance of companies and compares it to environmental performance of companies. And you can see in the report we show the graph for EBITDA compounded over three years and it's a very clear diagram. As environmental performance improves as it goes above average, you see financial performance improving as well. And in fact, businesses that have above average environmental performance have a 6% higher EBITDA than the ones that are below. And that's one factor. We also found it for gross margin and total shareholder return. So what that means is the business case is there for money coming into the business, gross margin, money coming through the business, EBITDA and money coming out of the business in value to shareholders as well. So it's a kind of full three dimensional image. But also I think it's important to say these core correlations are positive, but they're not direct one to one relationships. We are not claiming by any stretch that the sole source of value for a company is environmental performance. All we're saying with this report, all we're showing with the data is that it is a significant contributory factor and therefore it's something that needs to be acted on.
[00:14:54] Speaker B: Fantastic. Because I think so often we get caught up in the trying to have that causation directly captured. And I think that's a challenge everywhere. And I know through conversations you and I have had in the past, looking at the experience of marketing where there's a similar analogy to that, how do we capture the kind of correlation as an initial step and then really starting to unpack what are the actions we can be taking that can positively drive the outcomes even if we can't directly measure them and drive some of that insight. Picking up on that, we would love to hear, as you look at the kind of outcomes, the research, et cetera, what are some of the traits of the leaders within this space and maybe some of the behaviors that have stood out.
[00:15:35] Speaker A: Yeah, thanks, Chris. I think it's really important to say that in sustainability, in environmental performance, there are going to be some things that you spend money on that do not bring a direct or immediate return to the business. They may be compliance issues, they may be just about insulating your company from a future fine for not following particular legislation. Right. Then there will be other things somewhere in the middle that broadly break even. They give you some sort of efficiency, some sort of payback over the short or medium term. And then finally there are going to be investments. There are going to be things that your company can channel its money into that give it a serious meaningful return, a bigger bang for its buck. And that is what those most successful companies are doing. Companies are successful, broadly speaking, because they know how to assign the marginal dollar. They have a spare dollar to spend, they think wisely about where to put it. And they're doing that when it comes to environmental sustainability too, and looking for those big opportunities to get that roi. And really that's what we're talking about at anthesis when we talk about sustainable performance. It's exactly that. How do we kind of minimize and make efficient, you know, those things that you absolutely have to do, but are more of a cost base. How do we work with you to figure out where is that return, what is it going to bring in terms of either top line revenue or other added value benefits, such as reputation boost or increased staff retention? So that's really what it's all about, finding that opportunity where it pays back.
[00:17:11] Speaker B: Fantastic. And another question that seems to come up through the research, what did you see regionally? I know it's a global study, but thinking about some of those dynamics we're seeing, say here in the US versus what you're experiencing in the UK and the EU versus what we're seeing in Asia and other regions as well.
[00:17:29] Speaker A: Yeah. So this is, as you say, this is a global study. And really we're looking at some of the largest businesses in the world here. So they are multinational businesses operating in multiple environments at once. And one of the things that's really interesting, not in this study, but in a lot of the conversations that we've had from our clients on this, is we're almost universally getting the same story from them. And that story is we are still doing sustainability. We're maybe getting more pointed, we're maybe focusing on resources, on the particular things that are going to move the needle for our business, but we're talking about it a little bit less. There's some nervousness or some uncertainty around how we tell the story, and that is truer in North America, where the stakes feel higher in particular. But we're seeing it a little bit in kind of UK and Europe too, although to a lesser extent, by contrast, in Asian markets. Our colleagues tell us that really sustainability is going through a bit of a boom there, a Lot of companies are really getting their strategies in place, they are evolving them, applying them and they're keen to talk about them as well and build them into their reputations. I was speaking to a Japanese owned business earlier in the week who said, we're not going anywhere on sustainability. We know it's the right thing, we know it provides long term value for our brand and our business and we're going to continue to deliver. So there are some kind of cultural nuances and changes, but often it's about leadership and their comfort with these comms.
[00:19:01] Speaker B: One of the things I loved about the report was that segmentation between Green Washers, authentic communicators and Green Hushers. And as we think about organizations that many that we've spoken with, et cetera, that are kind of taking that step back, given, as you were saying, the change in dynamics, the headwinds, for the first time in maybe five or more years, there's a real risk to the way that you communicate. Would love to just unpack a little bit of like what were some of the value deltas you saw that was being left on the table by those Green Hushers and maybe the motivation to really revisit those communication plans.
[00:19:37] Speaker A: Yeah, absolutely. I think it's a really interesting space and obviously as part of the report we had to ask the simple question, does it pay to greenwash? Maybe those businesses are on better doing average. Does it pay to greenhush? Right. Maybe actually that is the better sort of financial move to make. But what we found with the data essentially is the more authentic you are, the closer the alignment between what you're doing on sustainability and how you're perceived to be doing on sustainability, the higher again the average financial performance. Now listen, that's not to say that you can't greenwash and perform well as a business. In fact, the data shows that there are some companies doing exactly that. We live in the real world, but at the same time those businesses are operating at a risk. What happens when the NGO targets them? What happens when the whistleblower lets out that this company really just isn't performing as well as everybody thinks it is? There is a reputational risk there that nobody can really see the financial value of, but it exists within the business. So investors, they should be very cautious about that. They should want their companies that they're holding shares in to be as authentic as possible, to take that risk down off the table. And equally with green hushing, there are a kind of cluster of businesses that are green hushing. Not entirely, but definitely underplaying where they are and how they're doing on the environment. And what we see is that they, they sit below at a lower average financial performance than those who are authentic and getting it absolutely right. Now, we are not saying here that the key is to communicate everything that you are doing. The approach is to find the one, two, maybe three things that really matter in your space, wrap them up in a clear story, support them with strong initiatives and be consistent about them over time.
[00:21:40] Speaker B: And maybe just to unpack those a little bit further as we think about how do you apply these insights? Like I think hopefully that motivation has come through the kind of justification, et cetera. But then what is that next step or steps that you see as how do you start to identify where are those handful of topics to really dig in on and communicate effectively?
[00:22:03] Speaker A: So one of the things we're doing, Chris, with our clients at anthesis is we are doing a sort of a version of the methodology that we use in this report and we're looking at them in a more micro, targeted approach.
So where are they compared to their peer set? And that might be directly to competitors, but it also might be to aspirational peers that they want to be regarded and respected in a similar way to.
And we are then breaking down by more detail which are the environmental issues that they have a hush on and which ones might they have a wash on? Because while the report looks at it as a corporate level, this methodology breaks it down. And reality is that most businesses, they've got an area where they're being a bit quiet and maybe there's some value to be unlocked and they'll have one issue maybe that they are perhaps seen to be doing better than they actually are on. Now you've got a choice in that situation. You can either do more action or you can be a little more cautious with your communications. Now, obviously, as people, you know, fighting for better environment and better performing businesses, we would say live up to your reputation, rise to people's expectations of you, rather than shying away.
But that is a useful kind of practical tool and we're doing that with somewhere between half a dozen and a dozen of our clients to give them that more pointed advice on where to invest.
[00:23:36] Speaker B: That's fantastic. Yeah, and I think it's fascinating. And part of what I love about this methodology is actually having the numbers behind it and some of that thinking of how do we engage this wider audience. And I know in some of the conversations you and I have been having with multiple clients, a consistent challenge has been how do we unlock investment? How do we engage our peers in the C suite to really understand what is both the value that can be created and the cost that we're leaving on the table as we go forward? And so I think it's fascinating digging into those results.
And maybe just as we continue to unpack and think about this going forward, are there a handful of practices that you see as valuable actions people can be taken within this? I know you mentioned that concept of getting granular and getting strategic and getting creative within that. And just wondering if maybe you can leave us with some thoughts of how do we actually apply this insight going forward.
[00:24:33] Speaker A: Yeah, absolutely. I think the one big takeaway that is really key is that the moment we are in the way for sustainability folk to move forward is to more than ever talk the language of business value, make the business case. And it can be a tricky one because really we've been used to, I would say the last decade or so, a very strong moral case driving action on sustainability. We've had the sort of era of world saving ambitions and targets of visionary CEOs who were really using a personal platform, wanting to create a legacy, seeing sustainability as their way to sort of do good, pay back and make a positive difference in the world. That was all, you know, perfectly valid approach, but there are ebbs and flows. I've been working in this space for just shy of 20 years now and culture does shift and will shift again. And the moment we're in right now, it's about the business case that can be tricky for sustainability, because if you're working in a company where business case means maximizing short term return to shareholders, a lot of sustainability value comes in the medium and a lot of it is about protection from shocks and damaged reputation, which is value that is not always easy to see. But as far as possible, communicating these solid benefits to the business is the way to do it. And that might mean that actually we need to abandon some of the language that we've been using to date. I think there's a lot of people who quite happily no longer talking about ESG as their shorthand for sustainability. They were never quite the same thing anyway. And we all sort of knew that, but it was the idea that was in vogue. And really if you look at what are we going to do to be a responsible business that drives efficiency and resilience, that is the space to invest in. One of my long standing clients said she's no longer talking about people, planet and profit, she's talking about risk, resilience, and return on reputation. And those are much easier, more familiar concepts for her C suite to engage with and it's easier for her to make the business case for what she's doing to create change within the business.
[00:26:54] Speaker B: That's fascinating as we navigate that and I love that kind of pivot from sustainability performance to performing sustainably and that kind of mindset that comes along with that so that we're not necessarily getting bonded out into purely a risk view or risk or compliance, but thinking about where those opportunities for marketing, for top line growth, as you were saying in here, et cetera. Great. Well, I know we are coming up on time. In the intro I mentioned some of the other reports that you and your team have worked on, including the Cause of the Count and Poking the Bear, which I understand is in the process of being updated. And just curious if you have any quick reflections on how these all kind of fit together or could be leveraged or used.
[00:27:32] Speaker A: Yeah, absolutely. Chris, thanks for giving me the opportunity to talk about more thought leadership. I love it and love to create it and dig into all these insights. And to be honest, we've got quite a few pieces live at the moment that people might get some value for. We're also heading to Climate Week New York, and if you're interested in attending one of our sessions and hearing more about this report and some of the others I'll mention, please do follow the link in the show notes afterwards and you can see where you can potentially sign up. The other piece of thought leadership I'd love to talk to, which you just mentioned there is Poking the Bear, slash Hugging the bear. So Poking the Bear was a piece of work we did in 2023, which really looked at the levels of polarization around a whole host of social and environmental issues in North America. And it polled Republicans and Democrats to look at how they responded to different framing, different messaging. Because look, there are a dozen different ways to talk about saving the planet, so to speak, and some of those are going to land well with some audiences and some are going to piss off and polarize other audiences. So this is a really useful guide. And at Climate Week we'll be launching Hugging. There we Go, which essentially gives really practical advice to readers on how to avoid polarization when you're communicating on sustainability topics. So a very practical bit of kit there. The other piece of thought leadership you might find interesting is called Causes that Count. That is something we release once a year. We survey 3 to 5,000 people across five different markets around the world and we ask them a Very simple question.
What cause is most important to you right now? And what that does is it gives a clear sense of what issues are rising in public consciousness and which ones are kind of falling down. So this is really useful guidance to anybody who's looking at getting their cause related marketing. Right. Anybody who's doing perhaps a materiality process and wanting to get a sense of which issues are coming in or going out of vogue, culturally speaking. And so it's a good starting point for some of that insight.
[00:29:42] Speaker B: Yeah. And I know myself and colleagues within the strategy development space have leveraged all of these reports to great use as we go forward and think about building the business case, the focus and the actions we can take within it. Well, that's wonderful. Maybe just a final question for me to wrap up is, given all of the research, you've been living within this for an extended period of time. Is there one, one or two things that you would really hope that people take from this and bring into their kind of day to day in this moment or kind of structural shift that we're experiencing?
[00:30:14] Speaker A: Yeah, I think, look, point one to summarize is we are in the era of the business case. If you want to get sustainability and keep sustainability on the agenda in your company, you need to be speaking that boardroom language. And that is what anthesis have been hanging on about for years with sustainable performance. Performance, right. Trying to get that message and that story super sharp, super clear. So that's number one. Number two is this. There are more than one way to talk about what you're doing on sustainability. And the idea that it has to be framed in sort of very kind of progressive left wing language, that it has to be very earnest, very worthy, very serious, is just a lack of creative imagination, in my view. Revolt, which is the part of anthesis that I sit in, is a creative communications agency. And we are here and we are trained and skilled at bringing new, exciting ways to talk about these issues. That's all we do. Social, environmental, communications in creative ways as best as possible. There are ways to land this with the middle, the left, the right, the broad spectrum, mainstream audience, and to make it interesting, cool, sexy and desirable. If you're in a business saying, last time we did it, it didn't work very well, maybe the program is actually your creativity. Maybe it was the way you were coming at your storytelling. Maybe that's what needs to fix rather than anything you're potentially doing on sustainability. So those are my two kind of big takeaways.
[00:31:49] Speaker B: Ali, thank you so much for both the research and the time today and sharing it. Really appreciate it and thank you all for listening. As always, we'd love to hear from you on your feedback and can be reached through the anthesisgroup.com website where you'll also find past episodes, links to a number of the resources that were mentioned today, including the Cost of Silence report that Causes the Count and the Poking the Bear, which will be updated shortly, as well as other valuable resources and encourage you to check those out at your convenience. Thanks a lot for listening and we'll talk to you soon.
