As we welcome World Earth week, it begs the question as to whether profit centric strategies can support an organization’s commitment to sustainability? Does the pursuit of profit conflict with making a more progressive and aspirational ESG plan? I could argue that capitalism has no place for sustainability, and that the relentless drive for economic growth is a key culprit for global warming. However the co-existence of profitability and (genuine) commitment to sustainable business isn’t out of the question. It is more than possible.
Re-aligning with consumer demands
The discussion needs to be brought back to the consumer, who are increasingly factoring ESG into purchase decisions, ultimately ruling out brands that aren’t communicating transparently and openly on how they are optimizing their impact on the environment and what they will be doing to drive continuous improvement.
Customers care about sustainability – products that have made ESG related claims have averaged 28% cumulative growth over the past 5 years, versus 20% for products that have made no such claims. As consumers place increasing value and build knowledge on what good looks like, ESG benchmarks across categories will rise exponentially and support profitable growth for the brands that choose to be the trailblazers.
A good example of a brand listening to its customers is John Lewis, who recently announced its plan to open a repair service across all of its stores. Following a trial across a handful of its stores in 2024, the retailer was able to demonstrate that providing a service to extend the life of product drives differentiation over other retailers – increasing future store footfall and boosting lifetime value.
Optimizing the consumer journey is a key lever to driving profitable growth – helping businesses outperform while supporting a more carbon efficient supply chain. Reducing page loads to purchase, improving web/app conversion rates and reducing return rates will undoubtedly hit the bottom line but will also drive carbon efficiency. Measuring and quantifying both the profitability and ESG impact of consumer journey optimization supports a mindset shift in business to view in parallel like never before.
The impact of digital
The environmental impact of digital marketing is not one to be overlooked. The industry relies heavily on expansive, energy guzzling servers for simple marketing activities such as internet searches, email exchanges, and ad delivery – posing a real challenge to the perceived environmental neutrality of digital progress. In a bid to tackle this Google has announced Carbon Footprint for Google Ads to help advertisers better measure and manage their carbon emissions. Providing carbon emission insight for specific media formats to drive a future state of carbon intensity being used as an optimization metric in driving campaign performance.
What shouldn’t be overlooked is the exponential leap in cloud computing processing. Consider LLMs such as Chat GPT consuming more electricity in a year than 117 countries combined – only exacerbated by the recent rise in ‘mainstream AI usage’. AI-generated action figures may seem novel on a surface-level, but the concerns regarding the volume of data and energy this trend has generated should not be underestimated.
AI integration, and the advanced use of cloud computing is enabling brands to outperform their competitors (and categories) – but at what cost? Ensuring processing is optimal and data outputs are actioned to drive smarter outcomes is essential to support a more mature, and sustainable use of LLMs in the future.
Finding the balance between profit, and commitment
While it’s encouraging to see the increasing alignment between profit and ESG, it’s the industry’s responsibility to make it clearer and more visible to senior stakeholders. It is possible to deliver the two concurrently, and to great effect – but it requires increased commitment and re-prioritization.
We would welcome anyone reading this article who’d like to discuss further to reach out to our sustainability team at Incubeta. We dedicate our time to identify value in the space of sustainability that will add value to ecommerce, bringing ideas and initiatives to our clients and partners to support sustainable profitable growth. We’ll continue to share our learning and successes with the industry and are committed to playing a role in what is arguably the most important topic of all.
