Eric Block On Responsible Branding

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By Gregory C. Unruh from the Harvard Business Reviews • Reposted: March 16, 2024

When I became the sustainability guest editor for the MIT Sloan Management Review a decade ago, I joined a research project sponsored by the Boston Consulting Group to track the evolution of corporate sustainability management. Over the course of nine years, our annual global surveys reached more than 60,000 respondents in 118 countries.

While there were many insights, a persistent managerial challenge was how to account for the intangible value generated from sustainability initiatives. Executives recognize the impacts these efforts engender with key stakeholders. Socially minded millennial employees, for example, want to work for responsible companies, and our surveys have shown that they’ll reward their employers with loyalty, lower absenteeism, and engagement. Similarly, customers want to feel good about their purchases, so they give their business to companies that care for communities and the environment. Comparable arguments can be made for other stakeholders, such as investors, partners, politicians, and the like. The challenge is that these important stakeholder impacts are difficult to see or measure.

Think of it like this: I can show you two eggs and tell you one is sustainable — but you can’t tell which by looking at them. The egg’s sustainability depends on things like how the chickens were raised, what they were fed, how the farmers were treated and compensated and so on. Holding an egg in the grocery store aisle, you can’t see any of that. It’s an intangible attribute for the typical buyer.

How do you overcome this? One option is to “tangibilize,” that is make the intangible benefits more clear, for stakeholders.

At one end of the spectrum is marketing. An egg crate can be plastered with logos, pictures of happy hens, and statements like “organic,” “cage free,” “no antibiotics,” “free range,” and so on. Of course, the customer can’t confirm any of this. They have to take the company’s word for it. Any perceived sustainability value is contingent on the customer trusting the brand’s claims.

Another option is to make claims more tangible is through third-party certifications. Labels like “Certified Humane” or “Fair Trade” are more tangible than marketing because they’re backed by verifiable standards. It’s analogous to having a company’s financial statements audited and certified by accountants.

These approaches work when there is a tangible product and process in place that can be evaluated for its sustainability performance. But what if the product or process is not yet available, but business success depends upon stakeholders believing that there will be tangible benefits in the future?

“Tangibilizing” an Uncertain Future

For highly intangible sustainability impacts, the communication challenge increases. Take sustainable agriculture, for example. Advocates claim the practice can engender resilient food systems, conserve cultural heritage, and mitigate climate change, and more. These benefits are not only intangible to consumers, some will only materialize in the future. Is there a way to demonstrate these intangible benefits in ways that can influence consumers shopping for eggs today?

Over the last few years, I’ve been studying how Intel has dealt with this intangibility challenge. In the late 2010s, the company was positioning itself in the rapidly growing artificial intelligence business, investing billions in optimized AI chip capabilities and integrated AI applications.

Realizing value from these investments depended on business leaders, government officials, and the general public embracing the AI revolution. However, this was years before ChatGPT demonstrated the potential of artificial intelligence to the world. At the time, the only impressions people had of AI came from science-fiction movies and pundits.

As they surveyed stakeholders, Intel’s public affairs team detected competing narratives arising about AI. On the negative side were anxieties about AI’s potential to eliminate jobs, exacerbating global economic inequality. The positive AI story was about human-machine collaboration to solve problems, where people do the creative work that AI can’t, leaving the rote work to machines. The competing narratives were based on an imagined future that was unmanifest, thus intangible, to the public.

The intangible narratives began having tangible implications in 2016 when several countries began developing national AI strategy plans. If the negative narrative took hold, risk-averse government policy could slow the technology’s uptake. What was needed was to demonstrate the sustainability benefits of AI — and in doing so, to tangibilize a positive AI future.

To help manifest this future, Intel launched AI4Y, a cross-sectoral collaboration with governments and national school systems to deliver AI training for K-12 students in an array of global markets. Students learned the technical aspects of AI applications, and were also trained in a humanistic approach that emphasized ethical deployment of AI to solve real-world sustainability problems in their communities. The goal was to demystify AI for policy makers and the public while democratizing AI and get it in the hands of users around the world.

By 2019, tens of thousands of students across nine countries had engaged in AI4Y programs. As part of the program design, pupils applied what they’d learn to solve real challenges in their communities, creating AI applications to address social and environmental issues such as bullying, computer energy use, and depression screening. In one case, a group of students at Busan Computer Science High School, in South Korea, used their AI skills to predict prices of kimchi, the Korean staple food made from fermented cabbage. Called Project VEGITA (derived from “vegetable” and “data”), they confronted the problem of cabbage price fluctuations that were hurting kimchi preparation and consumption. The team used machine learning to analyze 3,000 temperature and precipitation data points collected by the Korea Meteorological Administration and Ministry of Agriculture and then built a predictive analytics interface that could estimate cabbage prices based on seasonal forecasts. The results could then be used by producers to help them time the buying of cabbage for kimchi production.

AI4Y provided a powerful response to the concerns in the negative narrative about the future of artificial intelligence. If AI could be used by children to solve real sustainability problems in their schools and communities, how else could it be applied for good?

As of July 2021, AI4Y was available in more than 15 countries and Intel is planning to roll it out to 30 countries. It’s one of Intel’s five “digital readiness programs,” each targeting a different stakeholder group, from citizens to leaders. These programs make many of the potential benefits of AI real and tangible to students, workers, and decision makers around the world. By partnering with governments, Intel’s programs help prepare the country’s workforce to participate in and create a positive AI future.

Tangible Value Capture

For sustainability to be sustained it must be profitable for a company. If it is not profitable, it’s a subsidy and, almost by definition, subsidies are temporary. If markets shift, leadership changes, or economies collapse, subsidies can disappear. But if profitable, meaning that it creates value in excess of cost, it will be sustained because it’s just good business. By tangibilizing sustainability value for stakeholders, companies position themselves to capture more business value and help ensure that their sustainability efforts will be sustained.

Read more on Environmental sustainability or related topics: Sustainable business practices,Corporate social responsibility,Business and society, Social and global issues and Business management

Gregory C. Unruh is the Arison Professor of Values Leadership at George Mason University. To see the original post, follow this link: https://hbr.org/2024/03/making-sustainability-more-tangible