It’s consistently been proven that sustainability makes profits and sense. As CSB Director Tensie Whelan has stated, “Across virtually every category of consumer packaged goods, sustainability is where the growth is, which I think tells you something about where consumers are… if you look at our data there is a massive shift in the last five years.”
And it’s become a bigger issue globally. In 2015, all 193 Member States of the United Nations adopted “Agenda 2030,” a plan laying out a path to end extreme poverty, fight inequality and injustice, and protect our planet over the next 15 years. The 17 Sustainable Development Goals (SDGs) are at the heart of this initiative.
Recently, in response to the campaign, 28 companies with a combined market cap of $1.3 trillion have committed to the more ambitious levels of climate targets including Levi Strauss & Co., Unilever, AstraZeneca, Hewlett Packard Enterprise, and more.
The United Nations has used brands like Thomas & Friends, Angry Birds, and The Smurfs to help inform and engage millions of people about this initiative.
Many companies are leading on the initiatives, and the consumer products licensing industry is not behind.
How can licensing bring more sustainability into its business and what are the challenges the industry must overcome to become more sustainable? Here are some sustainable strategies to consider for the licensing industry-
Licensing has the ability to give a voice to what a brand’s trying to do while engaging consumers. Consumers, especially younger consumers, seek out brands that have those goals and initiatives. Each new generation is becoming more conscious of sustainability measures as climate change has become an ever-present part of their daily lives.
Sixty-two percent of Generation Z prefer to buy from sustainable brands. This is on par with The State of Consumer Spending: Gen Z Shoppers Demand Sustainable Retail’s findings for Millennials.
Proctor & Gamble has emphasized sustainability for over a decade. The key to making it a success over the past decade has been how they engage consumers.
As Scott Goodfellow in Global Business Development from Procter & Gamble points out, here are three of the lenses P&G looks through to ensure their sustainability initiatives engage consumers:
- Sustainability has to be good for the individual that uses their products.
- The sustainability message has to be easily communicable to the consumer’s family and friends.
- It has to be true and deliver on the promises given.
One way P&G keeps consumers up to date on their sustainability initiatives is through a dedicated website. They are honest about how far they’ve come (reaching 14 of the 16 goals they set out for themselves in 2010) and layout their future 2030 goals including having 100% recycled packaging, using more refill and reuse bottles, and reducing their greenhouse gas emissions by 50%.
John Shero, the Managing Partner at Brand Licensing Team, worked with a client to really communicate their sustainability efforts in a way that resonated with consumers. For one of the brands they worked with, they took several recycled plastic bottles to create apparel products from the recycled bottles.
They then created a communication so that consumers knew if they recycled a 6-pack they could create a t-shirt.
It became a very tangible activity and action for them while also providing an easy message to engage and get their family involved. This brought the brand’s initiative to life for consumers while also making an easy communication to get retailers involved as well providing a fortified front.
Looking at Sustainability Through a Different Lens
Twenty years ago, most sustainability efforts were centered around packaging reduction.
As this was the core responsibility of licensees, brands helped accommodate these packaging initiatives through packaging approvals or reworking packaging style guides to accommodate packaging reduction.
Now sustainability has evolved from waste, reuse, and packaging to also include people and poverty initiatives.
Sustainability is no longer a fad. According to a recent Retail Industry Leaders Association report, 93% of global consumers expect brands to support social and environmental issues.
Customers want it. Retailers have accelerated their acceptance of sustainability, especially since COVID-19. According to the Bloomberg New Economy Forum and McKinsey & Company, “two-thirds of UK and German consumers saying it has now become even more important to them to limit the impact of climate change.”
Alan Jope, CEO of Unilever, emphasized that ‘any company that wants to stay relevant in the future should think about sustainable behavior.’
The licensing industry is taking notice and providing Sustainability Clinics for the first time at this year’s Licensing Expo Virtual.
According to License Global, “Attendees have the opportunity to participate in 30-minute clinics with experts from Products of Change to garner personalized advice on how to improve their current approach and gain a deeper understanding of what other players are doing in the licensing industry.”
According to Helena Mansell-Stopher, co-founder of Products of Change, humans are currently using two years of resources in one year by the way we produce and consume. Simply stated, we’re overusing what our earth can naturally replenish in a year.
Earth Overshoot Day marks the date each year when human demand exceeds Earth’s supply. For 2021, it falls on July 29th.
Products of Change helps educate and work with licensing and consumer products partners to drive sustainable change. They educate partners on what changes need to be made to ensure that the impact of what we do as an industry doesn’t have a detrimental effect while also connecting peer-to-peer to learn from and inspire each other.
Today, sustainability has a much broader definition with brands than it ever did before.
As brand’s agent John Shero and his team work closely with their clients and take a 40 thousand foot approach to ensure licensing deals align with the company’s sustainability practices. They know that licensing has the opportunity to give a voice to what a brand is trying to do while also engaging consumers.
As most brands have a 2030 sustainability goal, licensing is the vehicle to create a more emotional and personal connection with the consumer.
One company at the forefront of sustainability is Hanes. As of 2020, Hanes diverted 90% of facilities waste from their landfills and is looking to recycle about 75 million pounds of fabric cut parts, corrugated plastics, and other materials annually.
Clardy Palacios, Senior Licensing Manager at Hanesbrands Inc., discussed how the company has truly expanded its sustainability waste initiatives by creating Hanes for Good.
This program allows Hanes to take the proceeds that they save from the recycling process and reinvest that capital in communities through education, healthcare, infrastructure development, and disaster relief (as many of the countries where their facilities are located have had direct impacts of climate change).
Clardy also pointed out that waste has value. When their Champion footwear licensee collaborated with Hanes’ social responsibility teams, they created an upcycled slipper from deadstock inventory and fabric that was sitting unused in warehouses overseas.
The limited-edition patchwork upcycled slipper sold out. Something that was going to be thrown away was re-tweaked and Champion had a sell-out line.
This was possible because Hanes looked at sustainability through a different lens, and took a deep dive into exploring sustainable strategies for licensing. It’s one of the many reasons that Hanesbrands has an A rating from CDP.
Licensing can help engage consumers with these efforts through a more emotional connection while helping push their sustainability initiatives forward in the marketplace.
Sometimes, brands partnering together can make a bigger impact than a brand doing something alone.
The United Nations used Mattel’s Thomas & Friends to introduce their sustainability goals to preschoolers including incorporating some goals into episodic storylines, creating educational videos, and providing parental tips.
Hanes and Tide collaborated to help educate consumers about the benefits of washing their laundry in cold water. Add in a few celebrities like Ice-T and “Stone Cold” Steve Austin cold calling Mr. T to “Turn to Cold” to wash his Hanes tees with Tide.
If three out of four loads of laundry are washed in cold water rather than hot, the reduction of greenhouse gas emissions would be the equivalent of removing 1.3 million cars from the road. Plus consumers could see around $150 in savings per year on their energy bills. A win-win-win for Hanes, Tide, and consumers.
Apparel collaborations continue to proliferate. Peanuts and Vayyu recently launched their “Snoopy Just Got Green” collection. Levi’s and Danish fashion label Ganni are building on the success of their upcycled, rental-only collaboration “Ganni x Levi’s Love Letter” with a new denim collection that’s made to last using cottonized hemp. Adidas and Disney paired up for a footwear collection featuring some of Disney’s greenest characters including Kermit the Frog, The Hulk, Tinkerbell, and Yoda.
Areas for Improvement
While licensing is starting to be more involved in sustainability initiatives, there are still areas that are challenging for the industry.
One is ensuring all stakeholders are on the same page. Many projects usually include a brand team, the licensee, and retailers just to name a few. These entities don’t align as smoothly as we’d like.
To ensure sustainability is a priority, all stakeholders must communicate effectively to make sure that the initiative can succeed.
One place to start, according to Helena Mansell-Stopher, is with licensing agreements.
Licensors can help push sustainability metrics by adding sustainability metrics into their contracts. By having it in the legal structure, holds more weight and can ensure the sustainability measures are implemented. Coca-Cola has been embedding sustainability into its licensing agreements for a while.
It’s time for brands to start implementing sustainability initiatives into their contracts.
It’s also important that licensors are flexible to help licensees handle these changes. Many licensees are challenged to produce packaging more sustainably.
And manufacturers are being squeezed between a retailer that doesn’t want to take a margin increase and licensors that don’t want to reduce royalty. With this imbalance, sustainability initiatives may be poorly implemented.
Licensors may want to consider reducing their royalty or having a tiered royalty to allow manufacturers the room to implement appropriate sustainability measures.
This is something to truly plan for now as legislation changes are coming up that will affect everyone.
For example, in Europe, the packaging tax and extended producer responsibility taxes are coming in 2022 and 2023. Products of Change is working with major companies like Lego, Hasbro, and others to build industry guidelines that showcase the sustainable initiatives they can do to avoid these taxes.
And this legislation is just the start. It is possible in five years there will be more regulation from more countries.
Challenges will continue to come. While it may be true that you can’t make your product cheaper and more sustainable, perhaps other sustainability measures can be explored.
For example, try using recycled plastics or a backer board. Perhaps work with an NGO to add a benefit or societal communication or create a campaign. Scott Goodfellow suggests asking the following questions when dealing with licensed products and sustainability:
- How do we get the benefit or make a difference that drives other benefits and other sustainable qualities?
- What else can we do? Don’t be limited to the old-school thinking that you have to make something out of 100% recycled materials. Maybe it uses less electricity. Or there’s less usage of certain ancillary products from a chemistry perspective that drives environmental deficit like energy production.
- Ask the next why. Keep researching. The key is to keep going and digging into how you can make your licensed product more sustainable. You’ll find a lot of opportunities that way.
Helena Mansell-Stopher shared that 86% of consumers expect brands to be responsible for what they’re producing. The world of not caring about the environment is in the past. If 86% of consumers expect brands to be responsible for what they’re producing and they’re willing to pay more to purchase these products, it makes dollars and sense for the licensing industry to truly embrace sustainability initiatives.