The consumer is king, or queen, when it comes to choosing purchases on the basis of environmental credentials. In a moment, I'm going to talk to Tim Clover, who knows about these things. Just before that, let me catch up on a couple of points.
That Book
First of all I've been fortunate to receive a copy of that book I mentioned last week, How to Blow Up a Pipeline. When I've read it I will come back to you and comment on it in more detail. As I mentioned, the film has just come out, although on very limited release, and that has led George Monbiot to write a review of the book which I will share with you as well.
AI OK?
The other news which broke today is that Geoffrey Hinton has left google where he was one of the principal developers of AI like Chat-GPT, and so on. He warns that there could be dangers from artificial intelligence. He told the BBC some of the dangers of AI chatbots were "quite scary".
"Right now, they're not more intelligent than us, as far as I can tell. But I think they soon may be,” he said.
Didn't I say that a couple of episodes ago?
Consumer Choices.
The cost of living is focusing everybody's mind, but it seems that people are still making very clear choices about what they want to buy and what they don't want to buy.
[00:00:00.570] - Anthony
Well, my guest today is Tim Clover. He's the founder and CEO at Glow, which is a consumer research technology company. We're going to talk about customer choices. We're going to talk specifically about environmental, social, and governance issues (ESG), and how they actually influence customer choices. Now Tim, I would have thought that the overriding incentive for people making choices at the moment is the cost of living because that seems to be hurting people worldwide.
[00:00:33.450] - Tim Clover
Hi Anthony, pleasure to be here. Thanks for having me on the show today. You're right, the cost of living is putting serious pressure on people's wallets. And obviously, the ebb and flow of the economic environment does come into play differently through time. It is a significant concern for people, and obviously making sure that we can make ends meet is going to be a primary need for most people.
[00:01:02.260] - Anthony
But you do detect an influence from ESG, from environmental issues. Well, tell me more.
[00:01:11.030] - Tim Clover
Value
Well, it's interesting regardless of the economic situation, consumers and that's you and I, we're all just people who buy stuff and want to feel good about the things we buy, are increasingly working out amongst the need to manage cost of living and to buy the value lines that we need to buy to make ends meet. We're also trying to find opportunities to trade up the conscious component of our spend so that we can at least not feel terrible about the purchases we're making. And I think what we're seeing is that it gives brands a chance to work out the level of trading down that is likely to happen that we're observing, but also trading down perhaps on price, but not necessarily trading down on some of the environmental or societal impacts that brands can make.
[00:02:12.280] - Anthony
Are we talking about white goods, about big ticket items, about the daily shop? Or are we looking right across the board at all sorts of consumer purchase decisions?
[00:02:23.310] - Tim Clover
Across the Board?
Well, that's a very good question, which we asked when we came up with the social responsibility score. So we wanted to come up with or use or define a metric that would hold across multiple industries. And obviously, in going through the experimentation phase of developing this metric, we've had to work out whether or not it's salient and can be transferred across adjacent categories and industries and sectors. So yes, this metric itself holds across financial services, it holds across food and grocery, retail, white goods, electronic goods, all sorts of different sectors that we didn't think that it would. But people have an opinion. And I guess when you ask enough people and we use quantitative research methods to capture the data we capture, but you ask lots of people in lots of countries a consistent set of questions on this topic, then the results are surprisingly similar. We see that people see food and grocery brands as at the forefront of leading from an industry perspective and taking responsibility for environmental, societal programs and trying to sort of, I suppose, lead industry at the back end you see betting and gambling companies, social media doesn't do particularly well. You start to look at that industry leaderboard and Food and Grocery is at the leading edge, right?
[00:04:11.990] - Anthony
Right, and are we talking about big brands here exclusively or are smaller enterprises, smaller shops and maybe hospitality where the offering comes from quite a lot of smaller independents? So do we see it at the smaller end as well as the global brands?
Major Corporates or SMEs as well?
[00:04:34.390] - Tim Clover
It looks like it holds across all brands of all sizes. The difference of course is that the bigger the brand, the bigger the share they command, the more they've got to win or lose when it comes to consumer choices. When you look at Food and Grocery type brands, whether they're big or small, you see some really strong purpose-driven brands coming through and disrupting categories with a purpose built into their brand agenda. We see companies like, Who Gives A Crap toilet paper coming in and significantly disrupting not just with the home delivery model but also with the fact they give half their profits to clean water solutions in the developing world. So these sorts of purpose-built businesses are doing really well to disrupt. You see, for Food and Grocery you can walk into a store and make a different decision at the shelf day on day. So it's probably something that is a continuous narrative that needs to be provided to the consumers about what's being done which is different perhaps from a car brand where you buy a new car every ten years. So the point of purchase and the size of purchase varies the friction to move, it's more difficult to change bank accounts than it is to pick a different tropical bar.
Yes, different. There's also sorts of dynamics going on around the path to purchase. But we are seeing consistency in the application of the metric in multiple industries and we are seeing that for large and for small businesses there's a consideration from the consumer perspective of whether or not that business is meeting the responsibilities or expectations of the public.
[00:06:22.570] - Anthony
The Green Message
So how are these organisations actually demonstrating their green credentials, their ESG status to their target consumers? Is it social media, is it print advertising or radio or television commercials? What are they doing or is it all those things?
[00:06:41.810] - Tim Clover
Surprisingly, it's all of those things and it's an awful lot of noise with not a lot of signal from what we can see. So there are businesses realising that sustainability has become an important agenda item not just for investors but also through their employees and through to their customers and their future customers. Getting that message out in the right way and competing with marketing agendas around launching new products and promoting products through different channels is a difficult one for the sustainability teams to fight for. So they find it quite difficult to get paid advertising to support messaging around key programs that they're running. So there's this magic combination where you're trying to find the right channel to tell the right story, but what we do see is that the right channel usually isn't a 200-page sustainability report that’s sat somewhere at the back of your website.
[00:07:47.190] - Anthony
Greenwash?
Yeah, fair enough. How honest are these companies, are these brands being? Are they just telling a good story or are they telling the truth? Because greenwashing is everywhere. And do you come across that?
[00:08:06.010] - Tim Clover
There is a temptation to greenwash and I think sometimes it's misplaced optimism for what the brand is about. So, for example, you might have a marketing team who understand that the brand has a passion to try and reduce its impact and therefore want to be able to put that into the messaging. And they're maybe lazy about the way they do that. They don't back it up with good data, they don't follow the processes they should follow to make sure they're not exposing the brand to risk. And obviously, with social media where it is, if you put a foot wrong, then you're going to be in the spotlight for all the wrong reasons and that news spreads like wildfire. So sometimes I think it's laziness, other times, if you're cynical, you can say, well, brands are actively attempting to mislead. However, I think increasingly that's going to be more difficult, just with, again, the victory of information on the topic of ESG, more and more websites popping up and tools popping up allowing you to dig in a bit more around what brands are actually doing. I think that Greenwashing has probably had its day. I think that the bigger concern that we see is more around green whispering actually.
There are some brands out there doing fantastic work who are worried about greenwashing, who have invested millions of dollars, pounds, and other currencies into trying to clean up their act and do the right thing through their supply chains, with their employees, with making their businesses better businesses. But they need to know how to tell that story, where to tell it, when to tell it, who to tell it to, which customers or stakeholders want to hear about which programs they're running. It's quite a complex set of communications to manage. So often they just don't say anything. They'll have brilliant work that's happening inside the organization. But a concern perhaps, say if you're a dairy company with the fact that you feel that you're going to get hauled over the coals because cows produce a lot of methane, so it doesn't matter how much plastic you take out, you still got this fundamental supply chain issue of a cow. So trying to explain to people the journey you're on, be honest that you're not perfect, make sure that you're clear and concise in the right media with the right information for those who want to find out more tends to do brands pretty well.
[00:10:42.990] - Anthony
Major Polluters
When you get to the energy companies, and particularly in Australia, when you get to the mining companies, they've got a very, very difficult story to tell. Can they manage it or do they just keep their heads down? Because everything they do is really the antithesis of green, isn't it?
[00:11:04.790] - Tim Clover
That leads to an interesting path of discussion when you start moving further up the supply chain. So if you start talking about mining, most of us use personal devices, laptops, TVs, these contain copper and other vital elements that are required and the mining company is doing a good job of saying that it's essential that we do mine in order to provide you with the things that you use. But it's also essential that we do it in a way that is respectful for the planet, that we clean up after ourselves, that we do the things we need to do. But ultimately, as a consumer, you're not buying from the mining company, you're buying from the people who use that mining company to source their components. The risk for the mining company, which is a similar abstraction of risk, for example, a professional services business, for mining companies it's about trying to make sure that you're able to show governments and investors that you're doing the right thing, that you're worthy of the contracts you're winning, that you're worthy of the investment. You're not going to go and destroy the environment with that and building a track record of that is going to be key.
If you're running a professional services organization, it's all about people. So you're going to be thinking, well, I want my future employees to want to come and work for me because we have ethics built into the way we do business. Whereas for consumer goods companies, they're at the coalface of the billions of us to go out and buy every day and obviously they've got more risk through a bigger set of stakeholders who they need to manage through the communications process.
[00:12:56.710] - Anthony
Where Now?
Right, so where do we go from here? Are you seeing winners and losers or has everybody come to the conclusion that they've all got to have an ESG offering and they're all working towards the same sort of goal? How do you see the perspective?
[00:13:13.630] - Tim Clover
I think there'd be leaders and followers which will result in winners and losers. Perhaps we talk about a rising tide of consumers and a tipping point that's on the horizon. So currently there's anywhere between maybe eight and 12% of us who actively category to category are shifting our spend towards more ethical and sustainable products and services that creeps towards the 15% to 20%. You hit this tipping point and the tide is rising. So those who lead will find it easier to win in the long term. Those who follow will have to throw in a lot more resources and will be less efficient in acquiring market share and riding the wave. So I don't think it's that companies are going to turn their backs on them. The biggest struggle and part of the reason we came up with this KPI, this metric of the social responsibility score, was to create a standard that could be deployed for businesses that are increasingly investing in chief sustainability officers, in sustainability managers who are out there trying to do the right thing. But sustainability the job of sustainability is not done until you've run your investment programs till you've made the impact of the changes you want to make and that you've communicated them.
Because if you don't communicate you have made the change you will have had an impact but you won't be benefiting as an organization. Which means that your sustainability program itself won't be sustainable. It should be able to pay for itself through more investors, through better teams and talented employees, through more customers if you do it properly. So if you want to create a self-funding ESG program then communicate it and measure the fact that it’s resonating with the people to whom you're pitching the various programs you're running.
[00:15:20.950] - Anthony
Optimistic for the Future?
Tim, that's been very interesting. Before we go, I have to ask you the question I asked most people at the end of the interview. Looking at the big picture, the global picture, are you optimistic for our future?
[00:15:40.750] - Tim Clover
I am optimistic for our future amongst the disruption that we're seeing without going into a diatribe about our current economic model and some of the geopolitical situation that we find ourselves in at the moment. But if you look at the general sense of can we do this? There is a strong belief that we can turn the direction of the ship. I think this is unlikely to come really from the government. I think all of us play a part. I think if governments legislate in the right way and are able to hold businesses that are otherwise less ESG aligned to account, then I think there'll be a larger cohort of businesses that will just act in order to benefit commercially from being good businesses. I think that naturally will just play out through the way that free markets work. And I think as consumers we have a role to play. But increasingly, as you talk to people, as I said, that tide is rising around a general sense that we all need to play our part. So I feel confident that we can turn the ship. I think we probably need a little bit of luck to do it in time, not to have certain things kick in, such as the two degrees of global warming, and to have to deal with the millennia of disruption that will cause.
[00:17:24.250] - Anthony
Well, Tim. Thank you. That's good to hear. That was Tim Clover, founder and CEO at Glow, a consumer research technology company. Thanks again, Tim. Thanks for being with us.
[00:17:35.040] - Tim Clover
Thanks, Anthony.
Glow
You can find out more at glowfeed.com
That's it for this week, and of course there will be another Sustainable Futures Report next week. I hope you enjoyed your bank holiday on Monday and, if you're in the UK, I hope you'll enjoy another one next Monday. In the meantime of course, King Charles III will be crowned. I'm sure there is a very great deal to be said about the whole institution of monarchy, but that's not the purpose of the Sustainable Futures Report. However, if you’d ever like to meet me in a pub sometime I'll be more than happy to debate the issue with you.
So that's it for this week.
I’m Anthony Day.
Until next time.
Sources
Father of AI quits Google
https://www.bbc.co.uk/news/world-us-canada-65452940
Crown picture
Image by <a href="https://pixabay.com/users/openclipart-vectors-30363/?utm_source=link-attribution&utm_medium=referral&utm_campaign=image&utm_content=2024598">OpenClipart-Vectors</a> from <a href=“https://pixabay.com//?utm_source=link-attribution&utm_medium=referral&utm_campaign=image&utm_content=2024598">Pixabay</a>
Consumer picture
Image by <a href="https://pixabay.com/users/stevepb-282134/?utm_source=link-attribution&utm_medium=referral&utm_campaign=image&utm_content=879498">Steve Buissinne</a> from <a href="https://pixabay.com//?utm_source=link-attribution&utm_medium=referral&utm_campaign=image&utm_content=879498">Pixabay</a>
