It is surprising that the practice of marketing (and business strategy more generally) does not explicitly integrate and address the environmental problems and their impacts on mankind.
Yet by not doing so marketing practitioners are sowing the seeds of their own destruction. In the not so distant past businesses were quick to respond to less significant marketing-related problems.
For example, firms, consumers and governments spent hundreds of billions, if not trillions, of dollars dealing with the millennium bug, or Y2K problem. As many will remember computer programs traditionally only had two digit codes for the year and could not adapt to changes associated with moving from the twentieth century to the twenty first century which required a four digit code for the year.
However the process of greening marketing (and addressing environmental issues more generally) seems to be viewed with significantly less urgency on the part of most consumers, organisations, governments and business academics, even though the potential costs of inaction are much more serious and pervasive.
The natural environment is a complex all encompassing system integrating air, land, water and all living species.
Marketers understand the importance of business systems and use systems and network thinking extensively to address exchange issues, particularly in the business to business context. The question has to be asked why they ignore these system approaches to understand or integrate the natural environment into strategy formulation.
The mind-set of consumers, firms and governments ensure society adopts an individualist or micro perspective view of the issue in front of them, ignoring the larger interconnected macro factors such as sustainability and the environment.
Consumers for instance will only act on a problem if they believe such actions are in their best interest. So the Y2K bug was a clear issue with a clear deadline for potential disaster.
For environmental issues, no fixed deadline exists and there is no media promotion (or even discussion) of the impending environmental Armageddon. In most cases, consumers believe environmental problems are somewhere in the future and, thus, are not something worry about today.
Even when consumers agree that environmental problems exist, appropriate responses have no guarantees. The scientific community for instance agrees that society will run out of natural resources such as oil in the foreseeable future, however this has not resulted in wholesale change in today’s consumer behaviour, nor press coverage or policy debates.
Consumers also have trouble factoring in future outcomes and consequences in their decision making as well as understanding the impact of what they do at an individual and its consequences at a global level.
More success may be had in addressing environmental problems by using market mechanisms to bring about individual behavioural change.
For instance when the cost of home based rubbish removal is calculated on volume or weight, people reduce their waste and increase their recycling behaviour. If the price of water, energy or petrol tripled, people would certainly find ways to reduce their use. Marketers frequently promote ownership as a way to achieve satisfaction, but increased consumption often results in environmental problems which have costs that need to be paid for by someone.
Wants can be met without ownership. We have seen early examples where car sharing schemes are being developed in which people join a club and purchase time to use cars.
To achieve this however consumers would have to have been encouraged to have ‘wants’ that integrate environmental impacts.. Ownership of goods such as a car or home is currently seen as a reflection of self identity.
Redefining want satisfaction, to something that is responsible and is valued by society as a whole, requires a big shift in thinking and pricing the environment might assist this. Changing how needs are met is one of marketing’s biggest opportunities.
Unless the environment is given value, either as a resource or a cost to be minimised, the environment will continue to be under-considered in corporate decision making.
Mother Nature does not have a checkbook or financial balance sheet, nor does she demand a traditional good, thus unfortunately she is not represented on corporate management boards or considered in corporate decisions.
The introduction of the carbon tax will hopefully see this change because the environment, or rather the pollution of the environment will have a cost that must be addressed by firms.
However will such costs will reflect the true value of the environment? Carbon pricing will stimulate innovation to reduce this cost, although, if we have underpriced carbon or too high subsidies for harmful activities is, paying for pollution will simply be seen as another cost of production.
To simulate the kind of change needed, the costs need to be assigned to all parties in the supply chain (including consumers and producers). This will stimulate everyone to seek out alternatives that reduce cost and harm to the environment. Yes in the short term individuals may feel worse off, but the environmental free lunch may be over.
Given the global interconnections in the natural environment and economic systems regulation needs to be integrated across all nations, but this does not mean we should be inactive until there is global agreement.
Unfortunately, while governments operate at a macro level i.e., they transcend individuals and corporations, globally they are increasingly focussed on the short-term and less willing to undertake radical changes, especially if those changes are likely to result in them losing power.
While governments make some attempts to address environmental issues within their own borders, no overarching coordination or understanding of the complexity of environmental activities occurs.
Businesses can take charge of this issue themselves.
While the WTO regulates commerce, no such World Environmental Organisation exists to regulate nation’s environmental behaviour. The Kyoto Accord does not address the full gambit of environmental problems threatening the earth (biodiversity, water shortages, salinity).
A radical approach would be for businesses to use the independent trans-national organisations that are already shaping corporate behaviour around the world.
For example the International Organisation for Standardization (ISO) has reshaped a number of areas.
ISO 14000 – the standard for environmental management systems – already exists and ISO 14020 environmental labels and declarations is underused on green marketing claims.
These standards work because global organisations adopt them and their supply chain does likewise eventually becoming global practice.
So an environmental pricing mechanism could in fact be driven by firms rather than governments and individual organisations. For instance if large multinationals implement specific supplier programs (such as requiring reporting on carbon footprints) this requirement would be transferred globally to second and third tier suppliers as well.
Marketers need to broaden their activities, creating alternative ways of presenting value and costs, changing the way businesses talk about human interactions and the environment and reframing consumption from a focus on acquiring goods to ways to sustainably achieve want satisfaction.
The worlds biosphere is sustainable, the marketing of human consumption in its present form may not be.
This is based on an address delivered by Professor Michael Polonsky who received the Society for Marketing Advances Elsevier Distinguished Scholar award for 2010. Professor Polonsky is the Chair of Marketing at Deakin University’s School of Management and Marketing.