Climate as a brand hygiene factor

 “The essence of strategy lies in creating tomorrow’s competitive advantages faster than competitors mimic the ones you possess today.” (Hamel and Prahalad, 2010) 
 
The concept of competitive advantage is a key driver of my approach to organisational success. It is the first attribute I examine when completing due diligence on a prospective board or advisory, or employment role. It determines how easily the business will be able to sustain its performance, as well as grow. 
 
It is a simple question. What do you or your organisation, or your brand, do that is better and different?

In the early 1980s, Harvard professor Michael Porter coined the concept of competitive advantage – “anything that enables you to charge higher prices or secure lower costs or both.” Forty years later the principle still applies, but the context has softened and broadened. 
 
Competitive advantage is what makes an organisation unique, compelling and more successful than its rivals. This could be innovation, cost advantage, customer service or brand strength. It is the unique mix of attributes and execution that sets it apart. 
 
There is no disputing that consumers expect organisations to take seriously their sustainability responsibilities. 
 
PWC’s 2024 International Voice of the Consumer Survey (20,000 consumers in 31 countries) found 85 per cent were experiencing first-hand the disruptive effects of climate change and were prioritising consumption that integrates sustainability-focused practices.

More than 80 per cent said they were willing to pay more for sustainably produced or sourced goods, while 46 per cent said they were buying more sustainable products to reduce their own footprint, as well as 32 per cent eating different foods and 31 per cent travelling less or differently. 
 
Consumers are assessing organisational sustainability practices tangibly, looking at production methods (40 per cent), eco-friendly packaging (38 per cent), increasing fruit and vegetable consumption (52 per cent) and making a positive impact on nature and water conservation (34 per cent). 
 
So, if 85 per cent are prioritising sustainable consumption and 80 per cent are willing to pay more, then surely a brand can charge more to cover the cost of its climate transition or sustainability efforts. Climate and sustainability, on the face of it, is a competitive advantage. 
 
But here is the rub and it’s called the value- action gap. Research by Kantar shows 92 per cent of people want to live a more sustainable life, but only 16 per cent are actively changing their behaviour. PWC continues that only 9.7 per cent of consumers will pay the sustainability premium. 
 
So, does a 9.7 per cent uplift in revenue (not margin) pay for your organisation’s sustainability and transition efforts? In my experience, this is not the case. But given that 85 per cent of consumers are prioritising sustainable consumption, your organisation must be on the front foot in delivering real sustainability change and demonstrating this with integrity and data. 
 
Hygiene factors are everything a consumer or customer expects to receive when purchasing a product or service. Sustainability and looking after our precious Papatūānuku (Earth Mother) is a hygiene factor. It is what organisations do with it and how you make it useful for your customers and stakeholders that creates the competitive advantage. 

Sarah Ottrey CFInstD is Chair of Christchurch International Airport and Whitestone Cheese, and a Director for Skyline Enterprises and Mount Cook Alpine Salmon.