Green Marketing and Entrepreneurship [1st ed. 2024] 3031503325, 9783031503320

Table of contents :
Preface
References
Contents
About the Author
1 Green Transition to Sustainable and Circular Economy
1.1 Green Marketing
1.2 From Linear Business Models to Circular Economy
References
2 Business Ethics, the Stakeholder Perspective and Circular Business Models
2.1 Development of Circular Business Models
2.2 Green Entrepreneurship and Creative Destruction
2.3 Circular Business Models
2.4 Competition and Circular Economy
2.5 Green Entrepreneurship in Sharing Economy
References
3 Green Price and Product Strategy
3.1 Green Price Strategy
3.1.1 Price and Demarketing of Unsustainable Products
3.1.2 Marketing Strategy to Curb the Tragedy of the Commons
3.1.3 Resource Depletion and Overexploitation
3.1.4 Emission of Pollutants
3.1.5 Waste Generation and Disposal
3.1.6 Sustainable Practices Versus Short-Term Gain
3.1.7 Collaborative Approaches to Sustainability
3.1.8 Regulation and Governance
3.1.9 What a Green Marketing Strategy Constraint Tragedy of the Commons
3.1.10 Green Demarketing and Marketing Strategy
3.1.11 Utilizing Conjoint Analysis to Unveil Premiums Associated with Environmentally Friendly Products
3.1.12 Green Discrete Choice Modeling
3.2 Green Product Strategy
3.2.1 Developing Sustainable Products with a Competitive Edge
3.2.2 Advancing Sustainable Product Innovation, Entrepreneurship, and Market Strategies
3.2.3 Green Entrepreneurship and Structural Inertia
3.2.4 Word of Mouth (WoM) and Marketing Strategy
3.2.5 The Plastic and Product Packaging Problem
3.2.6 From Third Party Logistics to Fifth Party Logistics, Recycling and Reversed Logistics
References
4 Green Promotion and Marketing Communication
4.1 Marketing Promotion
4.2 Greenwashing
4.3 Green Promotion and Marketing Communication
4.4 Green-Nudging
4.5 Green Brand Extension
References
5 Green Supply Chain Management (Place)
5.1 Supply Chains and Green Management
5.1.1 Waste Management
5.1.2 Return Systems
5.1.3 Circular Supply Chain Management
5.2 The Environment and Green Marketing
5.2.1 Atmosphere
5.2.2 Water
5.2.3 Pollution of Land
5.2.4 Biodiversity
5.3 Social Relationships
5.4 Geopolitics and Sustainable Supply Chains
References
6 Stakeholder Analysis and Certification Strategy
6.1 Certifications and Stakeholders
6.2 Stakeholder Analysis
6.2.1 Strong and Weak Interests
6.3 The Ethics of Reversed Supply Chains
6.4 Sustainable Supply Chains
References
7 Green SWOT Analysis
7.1 Sustainable SWOT and Uncertainty
7.1.1 Structure of Sustainable SWOT Analysis
7.2 Ecological Threats
7.3 Geopolitical Threats
7.4 Using SWOT to Design Strategy
7.5 Internal Sustainability Strengths and Weaknesses
7.6 External Sustainability Opportunities and Threats
7.7 Sustainability Goals and Strategy
References
8 Green Segmentation, Targeting, and Strategic Positioning
8.1 Segmentation and Sustainable Performance
8.2 The Segmentation, Targeting and Positioning Model
8.3 The Health and Sustainability Segment
8.4 Segmentation Measurement Models
8.5 The Green Segmentation Strategy
8.6 Marketing Strategy and Mix (4Ps)
8.7 Age Group Segmentation
8.8 Psychometric Segmentation Models
8.9 Organic Products
References
9 Authenticity, Blockchain Technology and Green Marketing
9.1 Green Products and Authenticity
9.2 Building Green Brands
9.3 Globalization, Information Asymmetry, and “Lemons”
9.4 Technology Safeguarding Green Brands
9.5 Deforestation
References
Index

Citation preview

Arne Nygaard

Green Marketing and Entrepreneurship

Green Marketing and Entrepreneurship

Arne Nygaard

Green Marketing and Entrepreneurship

Arne Nygaard School of Communication, Leadership and Marketing Kristiania University College Oslo, Norway

ISBN 978-3-031-50332-0 ISBN 978-3-031-50333-7 (eBook) https://doi.org/10.1007/978-3-031-50333-7 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Paper in this product is recyclable.

Creating a more sustainable future is not only the right thing to do, it’s good for business. We have to make sustainability something that is attractive and sexy. Elon Musk, Entrepreneur

Preface

The inspiration for this book was a reaction to the increasingly dystopian media, as well as the concerns of activists, researchers, and politicians. We are bombarded with depressing news, research, and issues, which can make us feel like apathetic spectators awaiting an inevitable apocalypse. After 2020, green strategy and entrepreneurship have been impacted by wars, pandemics, inflation, and climate change. As a result, we have included discussions on vulnerability, threats, and uncertainty. What was once a global and complex clock-like business operation prior to the 2020 pandemic is now undergoing significant changes due to external factors that we previously assumed to be stable framework conditions. Markets are currently marked by significant supply chain delays and shortages of crucial components, including microchips. These challenges have been exacerbated by escalating inflation rates and heightened geopolitical uncertainty following the Russian invasion of Ukraine and the war in the Middle East. Anyway, we must control global warming and keep temperatures under the 1.5 °C above pre-industrial levels. So, emissions need to go down now, and be cut by almost half by 2030, if this goal has any chance of being achieved. The solution proposed by the “Climate Change 2023: Synthesis Report”, published in 2023, involves integrating measures to adapt to climate change with actions to reduce or avoid greenhouse gas emissions in ways that provide wider benefits. Thus, we have no time to lose in searching for better and sustainable solutions by applying business methods and theory to help us. According to the 2023 IPBES Invasive Alien Species Assessment report, more than 3500 harmful invasive alien species represent a considerable menace to ecosystems. These invasive species not only imperil the integrity of ecosystems but also pose substantial threats to human well-being and overall quality of life. Notably, a significant proportion of these invasive species have infiltrated diverse environments through marketing channels and supply chains. It is crucial to recognize that the genesis of this issue can be traced to marketing strategies. Therefore, the responsibility for addressing and curbing the spread of these invasive species lies squarely within the domain of marketing strategy.

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Preface

The process of blue ice melting within glaciers (photo) serves as a contemporary global indicator, akin to the historical canary in the coal mine, offering an early alert system for the presence of life-threatening gases. The theory posited that the canary, being more responsive to noxious gases than humans, would perish in unsafe conditions for people, thus alerting miners to evacuate the mine before succumbing to the same peril as the unfortunate bird. This concept, signifying something highly sensitive to adverse conditions, serving as an early warning indicator, has now found a modern parallel in the realm of climate gases and change, with dying glaciers as we see on the photo, taking up the role as the canary bird. Hugonnet and his colleagues (2021) publication in the journal Nature reveal that glaciers have shed approximately 270 billion tons of ice over the course of two decades. The aim of green marketing, entrepreneurship, and strategy should be to counteract this trend. Source Schøning Nygaard Photography

Meanwhile, politicians, activists, researchers, and journalists are focused on managing and controlling markets, trade, production, and supply chains through bureaucratic and centralized means, both nationally and internationally. There is a strong belief that political regulation and control will lead to sustainable solutions. However, the biggest environmental challenges require more than just regulations; they require increased innovation, entrepreneurship, and disruptive change of technology and marketing strategy. Business research suggests that centralized management can discourage creativity and entrepreneurship (Biong et al. 2010). Additionally, centrally controlled bureaucracies often act too late or too early, and with the wrong tools (Drazin & Van de Ven 1985). This book is therefore focused on market-oriented entrepreneurship driven by technological innovations or specific market demands. We believe that this approach can lead to “disruptive” change that will steer us toward sustainable development. We explore how customers, companies, and organizations can become important agents of change to ensure a more sustainable future. We all have a responsibility to future generations, which means that we must analyze the current state of our society and make changes toward a more sustainable future. We must think both short term and long term. The book aims to generate positive energy toward changing behavior through entrepreneurship and innovation, which can occur within every organization and company, as well as in society as a whole and among individual consumers.

Preface

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In various ways, everyone can contribute toward positive change. As the title of this book suggests, it reflects a form of technological and market optimism. Markets provide the necessary dynamics toward powerful change to tackle the challenges we face. The development of the market as an institution has led to positive social changes coupled with economic growth. The term “green marketing, entrepreneurship and strategy” emphasizes that change management is key to combining technological, economic, environmental, and social changes. The subject area of “business research” has been particularly focused on strengthening society’s dynamism toward higher economic growth over the last century. In the 19th century, occupational choices were limited to a few areas such as military, doctor, teacher, and priest, reflecting the general stability of a hierarchical agricultural society. However, the increasing changes in society, such as market development, technological advancements, and economic growth, have created the need for increasingly broad corporate economic competence. Business schools emerged in the last century as a response to this dynamism in the markets. Therefore, it is not surprising that within business subjects, we must take special responsibility to contribute to facilitating theories and models for the transition to a more sustainable society. This book highlights essential models for change management from strategy, organizational studies, and marketing theory. It functions as a comprehensive introductory textbook in this field, appropriate for high school seniors or as a component of an undergraduate program in marketing or strategy. Additionally, it can serve as a supplementary textbook in a master’s degree program or for business managers seeking straightforward decision-making models. Ultimately, I wish to express my heartfelt gratitude to my family, colleagues, Springer Nature publishing house, and the editor for their invaluable insights, comments, and patience during the course of collaborating on this book project. Oslo, Norway

Arne Nygaard

References Biong, H., A. Nygaard, and R. Silkoset. 2010. The influence of retail management’s use of social power on corporate ethical values, employee commitment, and performance. Journal of Business Ethics 97(3): 341–363. Drazin, R., and A.H. Van de Ven. 1985. Alternative forms of fit in contingency theory. Administrative Science Quarterly 30(4): 514–539. Hugonnet, R., R. McNabb, E. Berthier, B. Menounos, C. Nuth, L. Girod, et al. 2021. Accelerated global glacier mass loss in the early twenty-first century. Nature 592(7856): 726–731. Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) Invasive Alien Species Assessment. Geneva, Switzerland; 2023 Sep 04. IPCC. 2023. Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change, 35–115. Geneva, Switzerland: IPCC. 10.59327/IPCC/AR6-9789291691647.

Contents

1 Green Transition to Sustainable and Circular Economy . . . . . . . . . . . . 1.1 Green Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 From Linear Business Models to Circular Economy . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 1 4 13

2 Business Ethics, the Stakeholder Perspective and Circular Business Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Development of Circular Business Models . . . . . . . . . . . . . . . . . . . . . 2.2 Green Entrepreneurship and Creative Destruction . . . . . . . . . . . . . . . 2.3 Circular Business Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Competition and Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Green Entrepreneurship in Sharing Economy . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15 15 17 18 21 26 32

3 Green Price and Product Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Green Price Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Price and Demarketing of Unsustainable Products . . . . . . . 3.1.2 Marketing Strategy to Curb the Tragedy of the Commons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.3 Resource Depletion and Overexploitation . . . . . . . . . . . . . . . 3.1.4 Emission of Pollutants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.5 Waste Generation and Disposal . . . . . . . . . . . . . . . . . . . . . . . 3.1.6 Sustainable Practices Versus Short-Term Gain . . . . . . . . . . . 3.1.7 Collaborative Approaches to Sustainability . . . . . . . . . . . . . 3.1.8 Regulation and Governance . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.9 What a Green Marketing Strategy Constraint Tragedy of the Commons . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.10 Green Demarketing and Marketing Strategy . . . . . . . . . . . . 3.1.11 Utilizing Conjoint Analysis to Unveil Premiums Associated with Environmentally Friendly Products . . . . . . 3.1.12 Green Discrete Choice Modeling . . . . . . . . . . . . . . . . . . . . . .

35 35 36 38 38 38 39 39 39 39 40 41 42 42

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Contents

3.2 Green Product Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Developing Sustainable Products with a Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2 Advancing Sustainable Product Innovation, Entrepreneurship, and Market Strategies . . . . . . . . . . . . . . . . 3.2.3 Green Entrepreneurship and Structural Inertia . . . . . . . . . . . 3.2.4 Word of Mouth (WoM) and Marketing Strategy . . . . . . . . . 3.2.5 The Plastic and Product Packaging Problem . . . . . . . . . . . . 3.2.6 From Third Party Logistics to Fifth Party Logistics, Recycling and Reversed Logistics . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43

4 Green Promotion and Marketing Communication . . . . . . . . . . . . . . . . . 4.1 Marketing Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Greenwashing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Green Promotion and Marketing Communication . . . . . . . . . . . . . . . 4.4 Green-Nudging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Green Brand Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

63 63 64 67 71 76 80

5 Green Supply Chain Management (Place) . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Supply Chains and Green Management . . . . . . . . . . . . . . . . . . . . . . . . 5.1.1 Waste Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.2 Return Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.3 Circular Supply Chain Management . . . . . . . . . . . . . . . . . . . 5.2 The Environment and Green Marketing . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Atmosphere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.2 Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.3 Pollution of Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.4 Biodiversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Social Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Geopolitics and Sustainable Supply Chains . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83 83 84 85 85 87 87 90 92 93 95 96 99

6 Stakeholder Analysis and Certification Strategy . . . . . . . . . . . . . . . . . . . 6.1 Certifications and Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Stakeholder Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.1 Strong and Weak Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 The Ethics of Reversed Supply Chains . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Sustainable Supply Chains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101 101 102 103 106 108 111

7 Green SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Sustainable SWOT and Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.1 Structure of Sustainable SWOT Analysis . . . . . . . . . . . . . . . 7.2 Ecological Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Geopolitical Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

113 113 115 115 121

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7.4 Using SWOT to Design Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Internal Sustainability Strengths and Weaknesses . . . . . . . . . . . . . . . 7.6 External Sustainability Opportunities and Threats . . . . . . . . . . . . . . . 7.7 Sustainability Goals and Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123 123 124 129 135

8 Green Segmentation, Targeting, and Strategic Positioning . . . . . . . . . . 8.1 Segmentation and Sustainable Performance . . . . . . . . . . . . . . . . . . . . 8.2 The Segmentation, Targeting and Positioning Model . . . . . . . . . . . . . 8.3 The Health and Sustainability Segment . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Segmentation Measurement Models . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 The Green Segmentation Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Marketing Strategy and Mix (4Ps) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 Age Group Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 Psychometric Segmentation Models . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9 Organic Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

137 137 138 140 140 141 142 143 145 148 153

9 Authenticity, Blockchain Technology and Green Marketing . . . . . . . . 9.1 Green Products and Authenticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Building Green Brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 Globalization, Information Asymmetry, and “Lemons” . . . . . . . . . . . 9.4 Technology Safeguarding Green Brands . . . . . . . . . . . . . . . . . . . . . . . 9.5 Deforestation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

155 155 157 159 159 161 164

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

About the Author

Arne Nygaard is a professor at Kristiania. He’s a prolific researcher in sustainable development, with over 50 scholarly articles and 7 books. His work on sustainability has been featured in journals like Business Strategy and the Environment, Journal of Cleaner Production, Circular Economy and Sustainability, Journal of Business Ethics, and others. Nygaard also shares his expertise through commentaries and articles in popular press. Furthermore, he has served as a guest editor for sustainability journals like the Journal of Business Strategy and the Environment and the Journal of Business Ethics, as well as an associate editor for the journal Frontiers in Sustainability. Further research on sustainability at: www.researchgate.net/profile/Arne_Nygaard/ www.linkedin.com/in/arne-nygaard www.grønnmarkedsføring.no

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Chapter 1

Green Transition to Sustainable and Circular Economy

Abstract This chapter emphasizes the critical need for a textbook on sustainable marketing, entrepreneurship, and strategy in the contemporary business landscape. It highlights the importance of incorporating the 17 United Nations (UN) sustainability goals to foster sustainable change processes. The interconnectedness of social, environmental, and economic factors is emphasized, stressing the significance of synergizing these dimensions for long-term sustainability. The chapter underlines the textbook’s aim to guide readers in formulating strategies that integrate internal and external factors, culminating in a holistic approach to sustainability. Its inclusion in educational curricula is deemed essential for preparing future leaders to contribute to a sustainable future.

1.1 Green Marketing Introducing a textbook on green marketing, entrepreneurship and strategy is crucial. Such a textbook can be a powerful tool in driving change within businesses and organizations. Given the significant role that companies play in promoting sustainability, it is imperative that future leaders and decision-makers have access to knowledge about sustainable strategies, methods, and instruments. The textbook should provide a comprehensive overview of the essential elements required for creating sustainable change processes, emphasizing the “triple bottom line perspective” that combines social, environmental, and economic results now outlined in the 17 United Nations (UN) sustainability goals. The conventional business model, which solely focuses on financial gains, must shift towards sustainable business practices to achieve these goals. Therefore, it is crucial to include the knowledge imparted in this textbook in syllabus lists to prepare future leaders for contributing towards positive change. The17 UN goals approach of sustainability emphasizes the interconnectedness of social and relational conditions, environmental dimensions, and financial results. Synergizing these performance dimensions is essential to achieve long-term sustainability. This textbook aims to delve into how strategies and decisions can foster sustainable outcomes by considering both internal conditions and external threats

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Nygaard, Green Marketing and Entrepreneurship, https://doi.org/10.1007/978-3-031-50333-7_1

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1 Green Transition to Sustainable and Circular Economy

and opportunities of businesses. It stresses the significance of integrating social and relational conditions with environmental dimensions and financial results to create a cohesive approach towards sustainability. As organic systems, companies respond to changes and uncertainties in their environment. However, interest groups such as WWF, Greenpeace, and others are essential in promoting sustainable efforts and adaptation. Moreover, this textbook analyzes companies’ endeavors to alter consumption patterns. Students will comprehend the link between sustainability and consumption in diverse industries, supply chains, and sectors. The textbook’s objective is to impart an understanding of how strategies related to price, promotion, place (supply chains), product (entrepreneurship, and product development) can yield sustainable outcomes. It emphasizes the effects of sustainability on the organization of economic activities. The concept of a “circular economy” (Fig. 1.1) is crucial in understanding how the product life cycle can recycle materials back into the value chains while also considering environmental factors such as the handling of toxins and waste collection and reversed logistics systems. Corporate responsibility no longer ends at the shopping counter; an advanced waste collection and recycling system contributes to sustainable product life cycles. This approach also helps companies improve their image, brand, and market trust. This textbook emphasizes the importance of understanding strategies for accountability across the entire network of organizations involved in production. After reading this textbook, students should be able to identify “green” values and segments and translate them into sustainable strategies, planning, and decision-making. They should also be able to report sustainable results to various stakeholders, including owners, employees, and customers. According to Kotler (1984), marketing is a management process that aims to satisfy individuals’ and groups’ needs by creating, offering, and exchanging valuable products (Kotler 1984). It involves a set of processes to create, develop, communicate, and provide customers with value, while also strengthening customer relationships for the benefit of the organization and its stakeholders, as defined by the American Marketing Association (Kotler et al. 1991). To begin with, the company evaluates the different groups’ market needs through segmentation analysis. Traditional marketing suggests developing strategies based on the “marketing mix,” consisting of the 4 Ps (price, product, place, promotion). This textbook also focuses on “place,” which refers to the selection and management of supply chains. However, traditional business theory, including models from logistics and marketing channels, has historically taken a consumer-centric approach based on the assumption of consumer sovereignty where buyers make rational choices that benefit themselves and the economy. In a sustainable future organization, retailer, wholesaler, or producer cannot only look at their own businesses. The entire supply chain and the complete life cycle of a product is the new level of strategic analyses. In this chapter, we will examine the negative external effects of only considering business profitability and customer benefits. Sustainability has become a critical factor in companies’ long-term profitability. To delve into the concept of sustainability and its impact on various aspects of business, including logistics, supply chains, marketing channels, and individual consumers, we must also consider the

1.1 Green Marketing

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Fig. 1.1 The Butterfly diagram visually represents the perpetual movement of resources within a circular economy, delineating two primary cycles: the technical cycle and the biological cycle. It serves as a graphical depiction of the recurring processes within a contemporary economy, encompassing industrial production (pertaining to technological cycles) and agriculture, fishing, and trapping (related to biological cycles). Adapted from the Cradle to Cradle Design Protocol by Braungart and McDonough (2002). Source Ellen Macarthur Foundation

potential risks associated with taking a holistic approach. Specifically, there is a risk of what is known as “eco-opportunism,” which refers to the behavior of seeking self-interest through combinations of ecological, social, and financial means with cunning and deception (Nygaard 2022). This issue is particularly problematic due to the complexity of global supply chains, which can make it difficult and expensive for consumers, brand owners, and buyers to monitor operations to prevent eco-opportunism like greenwashing, free riding on green brands, fake certification systems etc. (Ndubisi et al. 2020). The Brundtland report (1987) defines sustainable development as “a development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland Commission 1987). This definition includes caution in dealing with environmental risks, uncertainties, and irreversible processes, as well as the proper evaluation and conservation of natural values. Moreover, sustainability requires the coordination of environmental, social, and economic goals in planning and action, with popular participation in decision-making processes as a means of ensuring long-term sustainability. The report identifies several key

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aspects of sustainability, including preservation, conservation of biological diversity, justice between generations, a global perspective, the obligation to use best practice, no loss of human or natural capital, continuous improvement, and the need for planning and management. In practice, sustainability entails a broader focus on the environment, social conditions, and financial results when managing logistics, supply chains, and marketing channels. This definition of sustainability results in a “triple bottom line performance,” where the result line encompasses environmental, social, and financial dimensions. Thus, sustainability entails a different relationship to profitability. The EU has introduced a new regulation to adapt these principles that seeks to heighten the industry’s accountability in making sustainable assessments and decisions. The regulation is known as the “EU Taxonomy for Sustainable Activities” or the EU’s taxonomy for sustainable activities. Its primary purpose is to influence the validity of sustainability and sustainability reporting. The goal is to combat greenwashing and assist investors in making knowledgeable and sustainable investment decisions across companies and industries concerning circular economy, pollution, water, and biodiversity impacts. The taxonomy regulations mandate strict standards for energy efficiency, life cycle analysis, and circular economy.

1.2 From Linear Business Models to Circular Economy The economic growth that followed the Second World War had a significant and positive impact on the standard of living for ordinary people. Consumption, particularly in Western Europe and the USA, experienced significant growth. In the years immediately after the war (1945–1960), the situation was characterized by the production of essential goods. The tremendous excess demand in most countries was addressed through a strong emphasis on planned industrial development, production of necessary goods, clothing, infrastructure, and transport services. The focus for market players, politicians, and academics was heavily geared towards optimizing production conditions and planning to meet the obvious needs in the markets. The postWorld War II economic growth had a strong positive impact on people’s standard of living, particularly in Western Europe and the USA where consumption increased significantly. During the immediate post-war period (1945–1960), the focus was on producing essential goods to meet the enormous excess demand in most countries. Market players, politicians, and academics concentrated on streamlining production conditions and planning to meet obvious needs in the markets. However, the development of large-scale industrial operations, irrigation systems, hydropower, nuclear and coal power, road, and transport systems had significant environmental consequences. The traditional “linear model” (take-make-dispose model) was developed because of the short-term demands for financial growth and prosperity (Bocken et al. 2016). This model was characterized by a relatively short-term mindset regarding the partners in a company, where cooperation was based mainly on transactions with certain links in the supply chain, mostly driven by price. Retailers did not consider where and

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how the products were produced, and producers’ success was determined by their ability to sell the product to a wholesaler. Customers did not consider the effects of the products after they had thrown them away. These “linear systems” had a relatively short-term and isolated focus on bilateral transactions in supply chains. This resulted in a strong correlation between economic growth and the increase of waste, pollution, and fossil fuel consumption (Fig. 1.3). The strong economic growth resulted in significant negative costs inflicted on the social and environmental surroundings by linear systems. The traditional “linear” business model was also reflected in the development of business and marketing theory. The world’s largest professional forum in marketing, the American Marketing Association, defined marketing in 1985 as “the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchange and satisfy individual and organizational objectives” (Marketing News 1985, p. 1). The linear model is based on an “ take-make-dispose” strategy where the consequences of production for actors other than the company’s owners and customers are not particularly relevant. Littering, pollution, and negative social effects of business were not significant parts of the business strategy in such “linear business models”. Essentially, the linear model emphasized transactions among various stakeholders, where customers, often unaware of the social and environmental costs associated with their consumption, held the ultimate authority in selecting products. This mindset presumed that customers were the most knowledgeable about fulfilling their own needs and determining the usage and disposal of products as waste. Under this model, ownership rights for disposal were transferred to customers at each point along the supply chain. Economic growth was not balanced with the negative impacts on society, such as increased waste, pollution, health problems, and environmental damage. Figure 1.3 illustrates the strong correlation between economic growth and waste generation. The challenge lies in finding new technological solutions, innovative business models, and market solutions that can make economic growth more sustainable and disconnected from waste and pollution problems. As competition intensified, companies began differentiating their products, resulting in the development of products with potential health hazards (like cigarettes) and risks (such as cars without safety features). By the 1960s, the market had shifted to a consumer society based on the “use and throw away” premise, leading to the adoption of marketing strategies that targeted new consumer groups and further stimulated the linear business model. The negative consequences of these products were not communicated or reflected in the pricing system. However, from the early 1960s, researchers, activists, and nature conservation groups began drawing attention to the external effects of the linear system. Rachel Carson, a biologist, was one of the first environmental activists (Fig. 1.2). In her book Silent Spring (1962), she documented how DDT pesticides posed a threat to nature, the environment, and birdlife (Carson 1962). Through research, facts, organization, and communication, Carson mobilized one of the first significant environmental movements (Maguire and Hardy 2009). Despite facing opposition from a

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Fig. 1.2 Rachel Louise Carson (1907–1964) was an American zoologist and biologist. In her most renowned book, “The Silent Spring,” published in 1962, she identified the devastating effects of the marketing of products like DDT. Her work had a significant impact on the foundation of the modern environmental movement. Wikipedia Public domain

well-organized chemical industry with enormous economic and political resources, she succeeded in getting restrictions on the use of DDT. Her efforts marked the beginning of the modern environmental movement. Carson’s focus was on the visible, concrete, and tangible destruction of the natural environment, which people could easily experience, feel, smell, and identify as pollution, waste, and damage. The marketing mix, consisting of classic marketing methods (4 P’s) including price, promotion (communication), product (entrepreneurship and innovation), and distribution and supply chains (place), was primarily focused on achieving short-term sales, customer satisfaction, loyalty, and financial profitability within a linear system. The primary message of John Kenneth Galbraith’s classical book (1958) “The Affluent Society” was that the American society of the 1950s and 1960s was too focused on production of goods, and not enough on the public good. Galbraith argued that the country had reached a point of affluence where the focus should shift from the production of goods to the provision of public services, such as education, health care, and environmental protection. He believed that the government should play a larger role in ensuring the provision of these services, and that society should prioritize public needs over private wants. Overall, his book was a critique of the consumer-driven society and a call for a more balanced approach to economic growth and social progress. In a way

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Fig. 1.3 The correlation between waste volume and economic growth. Green marketing and entrepreneurship aim to break this detrimental link. Source Statistics Norway

Galbraith’s critique was ahead of its time. Although the external costs of consumerism had not yet become a potential existential environmental problem it was a visible dilemma (Fig. 1.3). This because the costs of pollution, like Carson described in her book, was carried within the national borders in the US and in Europe. Later, huge production capacity was transferred to the third world. So, the visual effect of production on the destruction of nature became reduced as the growth continued. Especially after China became a member of World Trade Organization in 2001, industries characterized by environmental problems related to waste and pollution “disappeared” to Asia (Ndubisi and Nygaard 2018). But the destructive effects of consumerism did not “disappear” but became invisible for the societies in the west because unsustainable production was hidden behind information asymmetry offered by totalitarian regimes, layers of legal and institutional problems that made it difficult and often extremely costly to monitor as a consumer, a stakeholder, a Non-Government Organization (NGO) or a journalist. Therefore, the linear model continued. However, UN published the Brundtland—report and later effectively achieved a consensus that the world had to respond to environmental, climate and social problems manifested in the 17 UN sustainability goals. The 2030 Agenda for Sustainable Development, unanimously adopted by all United Nations Member States in 2015, offers a collective framework for fostering peace and prosperity for both humanity and the planet, both now and in the future. At its core are the 17 Sustainable Development Goals (SDGs) accompanied by 169 specific targets and 232 indicators (Fig. 1.4), serving as an urgent call to action for nations worldwide, irrespective of their development

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Fig. 1.4 The 17 sustainable development goals adopted by all United Nations Member States in 2015 (UN 2023)

status, in a global collaboration. These goals acknowledge that eradicating poverty and addressing other forms of deprivation must be pursued alongside initiatives that enhance healthcare and education, diminish inequality, stimulate economic progress, all while addressing climate change and safeguarding our oceans and forests. Conspicuous consumption, as defined by Torstein Veblen in 1899, refers to the consumption of luxury goods and services to display one’s financial power, either through income or wealth (Veblen 1899). However, the classic business models were not designed to adapt to stakeholders beyond owners and consumers. For instance, the tobacco industry promoted cigarettes as a modern form of enjoyment, happiness, and freedom, and developed new brands to cater to different customer groups in the market. But the tobacco industry has faced legal challenges in the USA since the 1990s due to selling addictive and cancer-causing products, and has been met with strong resistance from research, facts, stakeholder groups, and public bodies. Although new markets for uninformed customer groups exist in some developing countries, criticism of the growing consumer society has emerged from various quarters. Perhaps the most fundamental criticism of the system came from Veblen, who observed that the nouveau riche in the US spent more money on products to demonstrate their status and power. This was called conspicuous consumption, a way of achieving social status through the ideology of “use and throw away”. Flashy consumption of luxury brands became an identity-creating aspect for consumers, who found their personal style to express their individual identity in the face of society. The development of consumer society in the 1960s and 70s focused on brands that reflected luxury and exclusivity, with products possessing extra value

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Fig. 1.5 Children represent a new customer group for the cigarette industry in Indonesia (Time Magazine, August 18 2014). © Ahmad Naafi/AFP/NTB Scanpix

beyond their intrinsic worth to establish social position and status. This consumer society was based on a linear business model where products were produced for “use and throw away”. However, increased competition in consumer markets led to greater product differentiation and innovation, which did not necessarily satisfy consumers’ long-term interests. For instance, the consumption of cigarettes is an example of how generic products were differentiated through investments in different brands, which drew attention away from the strongly negative long-term health effects of the product (Fig. 1.5). In the 1960s, activists advocating for consumer rights began to criticize the linear model of consumerism mentality. Ralph Nader was a pioneer in advocating for consumer rights in the automobile industry, highlighting the lack of attention to safety, fuel consumption, and pollution in cars like Chevrolet Corvair (Fig. 1.6). His criticism led to a change in the culture of major car manufacturers, who traditionally did not prioritize safety or pollution control. In the 1960s and 70s, the negative consequences of production and consumption became increasingly visible to consumers but were not corrected through market mechanisms. However, shareholders, researchers, and interest groups became important pressure groups for companies, leading to greater regulation of “externalities” such as pollution through rules, follow-up, and control in the 1970s. Externalities are costs or benefits that arise from production or consumption but are not reflected in the market price of goods or services and are therefore not considered by individual actors (Buchanan and Stubblebine 1962).

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Fig. 1.6 Ralph Nader’s 1965 book, “Unsafe at Any Speed,” highlighted safety concerns related to the Chevrolet Corvair. Nader’s conclusions were that the Corvair’s design, particularly its rear suspension, posed stability issues, and it lacked essential safety features like seatbelts. He criticized the auto industry, including General Motors, for prioritizing profits over safety and the environment. Nader’s work catalyzed a call for consumer advocacy and government regulation to enhance automotive safety standards. Source Shutterstock

The linear business model often fails to consider these externalities, resulting in negative consequences that were not factored into the business decisions. This narrow focus on short-term profits without accounting for the long-term impact on society and the environment has been criticized by activists, politicians, and stakeholders alike. The growing awareness of the negative consequences of this isolated thinking has led to a shift towards more sustainable business models that consider the broader impacts of production and consumption (Fig. 1.8). The consequences of the linear business model gradually became more visible as externalities such as pollution and resource depletion became increasingly apparent. One example is the collapse of the ecosystem in the Aral Sea that was the fourthlargest lake in the world (Fig. 1.7). Now, the entire ecosystem, including 500 bird species, 200 types of mammals, 100 species of fish in the region, insects, and invertebrates, has been destroyed. This was further compounded by the exponential growth in both resource use and population, which was analyzed by the “Club of Rome”—a group consisting of Meadows et al. (1972). In the 1960s, 70s and 80s, the negative external effects of marketing became a concern for analysts, politicians, and industry leaders due to the consumption of non-renewable resources. It was realized that the one-sided focus on marketing strategy and tactical business decisions had negative impacts. This development led to a demand for a more comprehensive performance assessment, which includes social and environmental aspects, in addition to the traditional economic profitability criteria. As a result, the

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term “sustainability” was introduced to encompass these criteria, and it was included in the Brundtland report in 1987 (World Commission on Environment and Development 1987). The “World Commission on Environment and Development (WCED)” was established by the UN in 1983 and was led by Norwegian Prime Minister Gro Harlem Brundtland. The commission was tasked with investigating the connection between global environmental, economic, and social development. The resulting Brundtland Commission report introduced a new definition of “sustainable development”. This new definition of sustainable development established a new concept for companies. The report emphasized the importance of environmental risk, uncertainty, irreversible processes, the evaluation of natural values, and the conservation of nature. Sustainability highlights the necessity of coordinating environmental, social, and economic goals in planning and action, and the importance of popular and democratic participation in decision-making processes. Today, sustainability is no longer seen as just a cost element, but a significant opportunity for long-term adaptation and profitable strategic development (Fig. 1.8). For instance, the “green market” in the US, according to the Natural Marketing Institute (https://www.marketresearch. com/Natural-Marketing-Institute-v1549/ 2022) United States Lifestyle of Health and Sustainability (LOHAS) total addressable market (TAM) is estimated to be approximately $472.51 billion. The total addressable market (TAM) for the Lifestyle of Health and Sustainability (LOHAS) in the United States was $355 billion in 2019, up from $290 billion in 2008. The market is predicted to grow at 10% per year (Rogers 2018).

Fig. 1.7 The NASA images show the Aral Sea from 2000 to 2013, one of the world’s largest manmade environmental disasters resulting from irrigation systems to produce cotton and rice, among other things. Source © NASA/Goddard Space Flight Center

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Fig. 1.8 Green marketing strategy and entrepreneurship is about balancing considerations and develop synergies in the triangle between profit and economy, social responsibility, and nature and environment

Case: The Garment Industry and Sustainable Business After the Earthquake in Turkey in 2023 Background: Social responsibility in fashion chains with large markets worldwide has been in focus due to issues related to human rights, especially in connection with production in third-world countries. Social responsibility is an important factor included in the concept of sustainability along with economic and environmental considerations. The textile industry has faced several disasters related to a lack of safety, human rights, and social responsibility. Submission Task 1: Title: Analyzing the Role of International Labour Organizations (ILO) Instructions 1. Provide a brief overview of the Rana Plaza disaster in Bangladesh in 2013. 2. Explain the role of the International Labor Organization (ILO) in securing compensation for the injured and bereaved. 3. Discuss the significance of such international organizations in promoting social responsibility in the fashion industry. 4. Offer suggestions on how the collaboration between organizations like ILO and fashion companies can be strengthened to prevent future disasters. Submission Task 2: Title: The Role of Government Pension Fund of Norway and UNICEF Instructions 1. Describe the partnership between the Government Pension Fund of Norway and UNICEF to promote children’s rights in the global supply chain of the clothing industry.

References

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2. Explain how the Government Pension Fund of Norway leverages its influence as a major investor to influence fashion chains. 3. Discuss the specific initiatives undertaken by these organizations to improve children’s rights, such as access to clean water, sanitation, nutrition, and care. 4. Evaluate the effectiveness of such partnerships in addressing social responsibility issues in the fashion industry. Submission Task 3: Title: Fashion Industry’s Response to the 2023 Earthquake in Turkey Instructions 1. Summarize the key details of the earthquake in Turkey in February 2023 and its impact on the fashion industry. 2. Analyze the responses of fashion chains like Inditex, Louis Vuitton, OTB, and H&M to the disaster. 3. Discuss the ethical and strategic considerations behind these companies’ actions. 4. Provide recommendations on how the fashion industry can further contribute to disaster relief efforts and strengthen its commitment to social responsibility in such crises.

References Bocken, N.M.P., I. de Pauw, C. Bakker, and B. van der Grinten. 2016. Product Design and Business Model Strategies for a Circular Economy. Journal of Industrial and Production Engineering. 33 (5): 308–320. Brundtland Commission. 1987. World Commission on Environment and Development. Our Common Future. Buchanan, J.M., and W.C. Stubblebine. 1962. Externality. In Classic Papers in Natural Resource Economics, ed. C. Gopalakrishnan, 138–154. London: Palgrave Macmillan. Carson R. 1962. Silent Spring. Houghton Mifflin Company. Ellen MacArthur Foundation. How to Build a Circular Economy. Available from: https://ellenmaca rthurfoundation.org/ EU taxonomy for sustainable activities. What the EU is doing to create an EU-wide classification system for sustainable activities. Available from: https://finance.ec.europa.eu/sustainable-fin ance/tools-and-standards/eu-taxonomy-sustainable-activities_en Galbraith, J.K. 1958. The Affluent Society Fortieth Anniversary Edition. New York: Houghton Mifflin Company. Kotler, P. 1984. Marketing Management: Analysis, Planning, and Control (The Prentice-Hall Series in Marketing). Kotler, P., S. Saliba, and B. Wrenn. 1991. Marketing Management: Analysis, Planning, and Control: Instructor’s Manual. Prentice Hall. Maguire, S., and C. Hardy. 2009. Discourse and Deinstitutionalization: The decline of DDT. Academy of Management Journal. 52 (1): 148–178. Meadows, D.H., D.L. Meadows, J. Randers, and W.W. Behrens III. 1972. The Limits to Growth: A Report to the Club of Rome. Google Scholar.

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McDonough, W., and M. Braungart. 2002. Cradle to Cradle: Remaking the Way We Make Things. New York: North Point Press. Marketing News. 1985. AMA Board Approves New Marketing Definition 19 (3): 1. Ndubisi, N.O., and A. Nygaard. 2018. The Ethics of Outsourcing: When Companies Fail at Responsibility. Journal of Business Strategy. 39 (5): 7–13. https://doi.org/10.1108/JBS-03-20180037. Ndubisi, N.O., A. Nygaard, and N.G. Chunwe. 2020. Managing Sustainability Tensions in Global Supply Chains: Specific Investments in Closed-Loop Technology vs Blood Metals. Production Planning & Control 31 (11–12): 1005–1013. https://doi.org/10.1080/09537287.2019.1695921. Nygaard A. 2022. From Linear to Circular Economy: A Transaction Cost Approach to the Ecological Transformation of the Firm. Circular Economy and Sustainability. 1–16. https://doi.org/10.1007/ s43615-022-00158-w. Rogers, G. 2018. LOHAS Consumers. Beyond Healthy Food & Beverage Choices. Natural Marketing Institute. UN. 2023. The Sustainable Development Goals Report 2023: Special Edition Towards a Rescue Plan for People and Planet. Veblen T. 1899. The Theory of the Leisure Class. Project Gutenberg. World Commission on Environment and Development. 1987. Our Common Future. Oxford: Oxford University Press.

Chapter 2

Business Ethics, the Stakeholder Perspective and Circular Business Models

Abstract This chapter outlines the evolution of Corporate Social Responsibility (CSR) and the stakeholder perspective as a response to the limitations of traditional linear business models. It highlights the emergence of the stakeholder model in the late 1980s, emphasizing the need to consider the interests of a broader spectrum of stakeholders beyond the primary groups. The chapter underlines the growing recognition of external influences and their impact on a company’s sustainability. It also addresses the transformation of business focus from solely serving owners and the market to considering sustainable outcomes and societal impacts. Additionally, it discusses the influence of landmark actions against specific industries, prompting a more holistic approach to business, considering its long-term societal and environmental effects.

2.1 Development of Circular Business Models The gradual shift towards Corporate Social Responsibility (CSR), business ethics, and the stakeholder perspective was a response to the criticisms of the traditional linear “use and throw away” business models, which failed to account for the negative external effects of pollution, waste, social injustice, and sustainable development in general. As a result, the stakeholder model emerged in the late 80s, which emphasized the importance of considering the interests of a broader range of stakeholders beyond the traditional primary groups of employees, customers, management, and owners. This model reflected a growing recognition of the influence exerted by external factors such as the media, politicians, lobbyists, and pressure groups, and how they could impact a company’s ability to survive (Pfeffer and Salancik 2003). Gone are the days when business operations existed in a simple and predictable world, where the sole focus was on serving the interests of owners and the market. The 1980s marked the emergence of the “stakeholder” perspective in management literature, which highlighted the need for businesses to consider the broader range of stakeholders impacted by their operations (Freeman 1984). The gradual shift

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Nygaard, Green Marketing and Entrepreneurship, https://doi.org/10.1007/978-3-031-50333-7_2

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Fig. 2.1 The most important stakeholders that influence the business environment. Source Commons: Grochim Freeman (1984), (2010)

towards emphasizing sustainable results and considering the social and environmental impacts of business operations, in addition to economic goals, was partly due to successful actions taken against the tobacco and chemical industries (specifically insecticides) dating back to the 1960s. These actions drew attention to the negative effects of certain industries on society and the environment and prompted a more holistic approach to business that considered the long-term impact of its actions (Fig. 2.1). Customers’ growing concern for product safety was second only to the automobile industry’s exposure to external tests and evaluations for safety and emissions. External pressure from interest groups raised awareness of road safety, prompting strategic changes in the industry. Scandals such as the Ford Pinto Case (Danley 2005), Ford Explorer Case (Bradsher 2001), and Chevrolet Corvair affair (Nader 1965) forced the industry to undergo significant changes to address stakeholder groups’ ongoing pressure and criticism. However, the VW emissions scandal highlighted how management’s short-term focus on financial goals can override social and environmental requirements for adaptation (Moglen 2015). Price collusion and monopolization of markets are both ethical issues that can have negative social and economic consequences, particularly in the food industry where raising prices can harm vulnerable populations. In addition to the social impact, monopolization also leads to a lack of innovation, adaptability, and entrepreneurship, which are critical for sustainable management. Over time, a company’s competitiveness and survival depend on its ability to adapt to external environmental changes. Mintzberg’s (1979) analysis of companies like VW in the 1960s and 70s demonstrated that internal driving forces often fail to respond adequately to emerging changes in external conditions. Management tends to only react when external “shocks” force strategic reorientation. For instance, in the 1970s, VW faced a high risk of bankruptcy, which led them to abandon an outdated

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business model and develop new technology such as front-wheel drive and more energy-efficient cars. The entrepreneurship caused by external shocks is often called a” creative destruction”. The sustainable transition of markets and technology is a creative destruction of the linear model. In his 1942 work, Schumpeter coined the term “creative destruction” to describe the process whereby innovative entrepreneurs introduce new technologies, products, and services that disrupt existing markets and lead to the obsolescence of outdated business models such as the linear business models that persist today. While this process can be disruptive and challenging for businesses and individuals that are negatively impacted, it is also a vital driver of economic growth and development. Disruptive green change refers to a specific type of sustainable innovation that fundamentally transforms an industry or market by initially targeting underserved green customers and then gradually moving upmarket to challenge established competitors (Christensen 1997).

2.2 Green Entrepreneurship and Creative Destruction The notion of green entrepreneurship is intricately linked to the concept of creative destruction due to its engagement in establishing novel enterprises or inventive resolutions for prevailing environmental and social predicaments. Consequently, green entrepreneurship serves as the fundamental force propelling the creative destruction of conventional linear industrial systems. As we embark on a fresh era centered on sustainable development, the pivotal task lies in the identification of emerging prospects and the willingness to undertake calculated risks in the introduction of innovative environmentally friendly products and services. While well-established industrial interests might resist the shift toward sustainability, perceiving innovative changes as potential threats, entrepreneurs discern that such disruptions can forge new avenues, yielding economic, social, and environmental value (Schumpeter 1942). Management often focuses on internal tasks, routines, processes, and changes, and can overlook important external factors such as social, technological, political, and market changes. This is especially true for incumbent management, who may be less likely to recognize and respond to these external driving forces (Achrol et al. 1983). The business economics literature has repeatedly documented this phenomenon. Theodore Levitt was one of the first to point this out in his classic article in the Harvard Business Review back in 1960. He emphasized that the history behind most dead or dying industries shows a cyclical pattern of “self-deception” where false expansion and decay go undetected until it is too (Levitt 1960). This self-deception stems from companies’ inability to analyze the market’s long-term needs rather than simply maximizing sales. The error lies in companies thinking “too short”, resulting in long-term trends such as sustainable technology and consumption being ignored and falling into the blind spot. The inability to “see” changes is rooted in the lack of theory or models to understand upcoming changes. Theories serve as glasses that can see developmental features. Learning is often linked to previous successes, leading to managers being blindsided when driving

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forces change in the markets. For instance, the American railway companies did not disappear because the transport market disappeared, but because management lacked the ability to identify how the need for transport itself changed. Therefore, the inability to change linear strategies to circular strategies does not represent a new management problem, but only a consequence of a problem that has been known for a long time. Moreover, management becomes static, and consensus driven. Managers tend to recruit colleagues who are like themselves in terms of background, experiences, and knowledge. This reinforces the problem of seeing and analyzing new trends in the markets. The consensus effects of group affiliation or “groupthink” are a critical reason for failures and bad management decisions (Janis 1972). Groupthink can be detrimental to green entrepreneurship because it can stifle creativity and innovation. For entrepreneurs to develop groundbreaking new products or services, they must be willing to challenge existing ways of thinking and be open to new and diverse perspectives. Sustainability requires a disruptive and fundamentally new perspective on business strategy. However, groupthink can lead to the rejection or lack of consideration of these new ideas simply because they do not align with the group’s consensus or interests. Moreover, groupthink can create a false sense of security and overconfidence in decision-making, as group members tend to overestimate their collective abilities and knowledge, and overlook potential risks or flaws in their ideas, which can be dangerous in the face of escalating climate change, geopolitical risk, pandemics, and economic crises. To do nothing and stick to linear thinking is the greatest risk that can go unnoticed until it is too late to change to a viable sustainable strategy. Therefore, leadership needs to be aware of the dangers of groupthink and actively seek out diverse perspectives and critical feedback to challenge established assumptions and ideas. By doing so, they can avoid falling into the trap of groupthink and increase their chances of developing successful and innovative green strategies (Porter 1998).

2.3 Circular Business Models The shift towards circular business models is a highly significant and forward-looking trend. Such models are centered around the entire product lifecycle, from design to disposal (Fig. 2.2). A circular business model aims to eliminate resource waste throughout the entire life cycle of a product, from raw materials to consumption and recycling. The goal is to produce goods that can be reused and reprocessed, requiring new technical solutions to efficiently decompose and reintegrate resources into value chains. In essence, a circular business model is defined as (Stahel 2010): A business model that bases its operations on preventing toxic substances in polluting land or water. At the same time, a circular model organizes ways of gathering into and reuse metals, chemical substances, and other components on. A circular model represents the organized reuse of resources for the good of the economy result, the population and nature in general.

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Fig. 2.2 Mintzberg’s model for understanding strategic change as a function of external pressure Mintzberg (1979)

A circular business model enables companies to respond to changes in the ecological, social, and economic environment. By establishing sustainable strategic goals and visions, a company can develop a marketing mix strategy to maximize circular and sustainable results (Fig. 2.2). This approach, known as “green entrepreneurship”, focuses on change management through marketing and strategy. A company’s ability to design a strategy that responds to changes in external conditions is crucial for long-term survival. Systematic measurement and reporting of sustainability results is essential for a new focus on sustainable outcomes. Such measurement includes social, ecological, and economic aspects, and the development of a “triple bottom line” performance target has been underway for the past three decades. Initially, the focus was on Corporate Social Responsibility (CSR) as an important aspect of company performance measurement. CSR was defined as the integration of social and environmental issues into a company’s business and interactions with various stakeholders on a voluntary basis, according to the European Commission (2010). Corporate Social Responsibility (CSR) remains an important aspect of the EU’s sustainability strategy. The EU’s sustainability strategy, also known as the European Green Deal, includes several different initiatives and measures aimed at promoting sustainable development and combating climate change. One of the key pillars of the European Green Deal is the promotion of sustainable finance, which includes the integration of environmental, social, and governance (ESG) factors into investment decisions. The EU Taxonomy Regulation, which is a key part of the sustainable finance initiative, requires companies to disclose their environmental impact and to provide detailed information about the extent to which their activities align with the taxonomy criteria. In addition, the European Commission has proposed a new directive on corporate sustainability reporting, which would require companies to report on a range of sustainability issues, including environmental and social impacts. Overall, the EU’s sustainability strategy places a strong emphasis on the role of the private sector in promoting sustainability, and CSR is seen as an important tool for achieving this goal. By encouraging companies to adopt sustainable practices and to take a proactive approach to managing their social and environmental impact, CSR can help to drive the transition to a more sustainable and resilient economy.

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The EU Taxonomy is a classification system that aims to establish a common language and framework for identifying environmentally sustainable economic activities. It provides a set of criteria and technical screening criteria that companies, and investors can use to assess the environmental performance of economic activities and to determine whether they can be considered environmentally sustainable. The taxonomy includes a list of economic activities that are environmentally sustainable, based on their alignment with six environmental objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. The taxonomy aims to provide guidance to investors, companies, and policymakers on how to transition to a sustainable economy and meet the objectives of the Paris Agreement and the EU’s Sustainable Finance Action Plan. It is a key tool in the EU’s efforts to mobilize private capital towards sustainable investments and to create a more sustainable financial system. The new focus on a three-part results concept challenges companies to think strategically, plan, operate, and organize their entire network of organizations, from raw material production to sales and recycling (See the butterfly model in Fig. 1.1). The previous narrow perspective on customer relationships, transactions, sales, and financial results is outdated. Product Life Cycle Management (PLM) plays an important role in the EU’s sustainability strategy. PLM is a holistic approach to managing products throughout their entire life cycle, from design and development to end-of-life disposal. The goal of PLM is to minimize the environmental impact of products by reducing resource consumption, minimizing waste, and promoting circular economy principles. As part of the EU’s sustainability strategy, there are several initiatives aimed at promoting PLM and encouraging companies to adopt more sustainable product design and development practices. One such initiative is the EU’s Circular Economy Action Plan, which includes several measures aimed at promoting more sustainable product design, such as eco-design requirements and extended producer responsibility (EPR) schemes. Furthermore, it is worth noting that the European Union’s Sustainable Products Initiative (SPI) represents a forthcoming regulatory framework designed with the intention of fostering sustainable product design and diminishing the ecological footprint of products. Within the SPI, several measures have been outlined to bolster Product Lifecycle Management (PLM). These measures encompass prerequisites for product labeling and traceability, in addition to initiatives intended to incentivize more sustainable approaches to product design and production. In a broader context, PLM is recognized as a pivotal instrument for advancing sustainability objectives within the European Union. As the EU remains committed to its sustainability agenda, the significance of PLM is expected to burgeon in the coming years. Consequently, businesses are compelled to adopt a comprehensive outlook on the entire product life cycle (European Union 2021). Management in a product life cycle perspective can be defined as:

2.4 Competition and Circular Economy

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Management of the entire product life cycle (PLS) from introduction, design and production for service of the product and waste management of manufactured goods. Management of PLC integrates people, computer systems, processes and business activities as well to develop information systems for companies and networks of integrated companies can take advantage of this to produce sustainable results. PLM Technology Guide (2012)

2.4 Competition and Circular Economy External factors such as resource availability, political climate, technological advancements, and social relationships strongly influence organizations. However, changes will not occur in a vacuum without risking the survival of organizations. External driving forces, such as market competition, compel companies to become more efficient and develop better technology, organization, and products. Market conditions devoid of competition tend to foster stability, albeit often at the expense of progress towards sustainability. In instances where markets are under the control of a limited number of enterprises, these entities are motivated to safeguard their market dominance and perpetuate their influence. Such monopolistic dynamics frequently result in elevated pricing and diminished service quality. Moreover, insufficient competition exerts a stifling effect on green entrepreneurship and innovation, posing challenges for firms seeking to distinguish their offerings and forge novel sustainable alternatives. This dearth of competitive forces hampers corporations in their endeavors to shift from linear to circular technological paradigms and adopt sustainable solutions (Flygansvær et al. 2019). Dominant companies in a market are also often interested in preventing new entrepreneurs from entering with more sustainable solutions. Barriers to entry, such as those in linear markets, prevent new entrepreneurs from introducing circular products and solutions. Tesla, for instance, has successfully entered the car market with a new, sustainable technology that outperforms traditional cars in terms of speed, cleanliness, and overall functionality. By creating a benchmark in the market, Elon Musk and Tesla have challenged linear technology in the traditional car industry. Competition in open markets without entry barriers is crucial for businesses to transition from linear to circular business models. Companies that make changes earlier than their competitors can get a first-mover advantage if it is willingness to take risk in the markets. Willingness to take risks can help to drive innovation, investment, and market penetration of new green alternatives of technology and business models. This can help to accelerate the transition to a more sustainable economy and society. An article published recently highlights the significance of competition among contractors in the recycling of electronics and electronic products. It is believed that this competition is crucial in driving innovation, reducing entry barriers to sustainable products, and facilitating the shift towards a circular economy in the electronics industry (Flygansvær et al. 2018).

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Tesla has announced its decision to release all patents related to electric cars to increase the pace of change and maintain their competitive edge (Forbes 2014). Musk (2014) said that it is “in the spirit of the open-source movement, for the advancement of electric vehicle technology.” However, knowledge transfer and learning are also essential components of entrepreneurship in all markets. This is often achieved through the presence of exemplified knowledge and experiences visible through competition, as well as through social contacts between employees of competing companies (Dahlstrom et al. 2010). Business clusters, where companies in competing or complementary businesses are geographically close to each other, provide an environment for green innovative processes. Examples of clusters include Silicon Valley, Champagne, Wall Street, and Bangalore. Social networks are a critical aspect of clusters that can influence how information, innovation, and entrepreneurship occur. Therefore, the success of the green shift to a circular economy will depend on the effectiveness of such clusters in facilitating the dissemination of information. Business clusters demonstrated the crucial role that social relationships play in creativity, performance, and financial results. The combination of social relations and competitive intensity can lead to increased innovation, financial results, and growth. Different combinations of expertise within a network of companies can create new products and differentiate services and concepts. This will be especially important in the transition from a linear to a circular economy. Developing clusters of diverse companies can have a strong positive effect on innovation capacity, productivity growth, and competitiveness (Porter and Kramer 2011). Porter and Kramer (2011) highlight the crucial role of sustainability in integrating environmental and social responsibility with the aim of achieving sustainable economic growth. However, as Janis (1972) points out, groupthink can occur when a group prioritizes consensus and conformity over critical thinking and open discussion. Similarly, a business cluster can lead to this issue when individuals only interact with those who share their views, resulting in the reinforcement of their own beliefs and a lack of exposure to diverse perspectives. Consequently, groupthink within a cluster poses a significant threat to the diversity and dissemination of green ideas and, therefore, serves as a constraint to green entrepreneurship and change. Companies have the potential to be active contributors to sustainable solutions, rather than being the root cause of environmental and social issues. By taking on responsibility for their environmental and social impact, companies can improve their financial success and long-term competitiveness. For example, clothing chain GAP has implemented a strategy to employ thousands of young people from high-risk groups and launched the Closing the Gap initiative to empower the next generation of fashion leaders. Adidas is committed to ending plastic waste through innovation and partnerships, while Cisco and Telenor have worked together to address societal challenges related to digital skills and inclusion, safe connectivity, youth empowerment, education, and sustainability. By leveraging their core competences, it is essential for companies to play a significant role in transitioning to a sustainable economy (Fortune Magazine 2018).

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The development of learning and knowledge through networking within industry clusters is an essential requirement for sustainable growth. These clusters, by encouraging competition and collaboration, can drive social and environmental responsibility and promote entrepreneurship. They can also facilitate communication and exchange of ideas, knowledge, and innovations, creating opportunities for green entrepreneurship. The success of a cluster is determined by the strength of the social network, with personal relationships acting as the adhesive that binds it together (Dahlstrom et al. 2010). Any gaps in the network can limit the flow of information. Recent studies suggest that competition can have a positive effect on companies within a co-located cluster, contrary to the previous belief that it could harm them through downward price spirals, lower profitability, and customer dissatisfaction (Ingram and Baum 1997). Innovative practices in a business cluster result in better adaptation to the environment and increased customer satisfaction. For instance, a network of companies operating tourist destinations must prioritize the development of sustainable tourism products that meet international expectations. It is not sufficient for only hotels to operate based on sustainable business principles. All units in a destination must conform to external expectations of sustainability and green values, which are conveyed through the destination’s brand. Thus, social networks signal green values that guide decisions and promote sustainable growth and entrepreneurship. However, some entities may be mere “free riders” in a network (cluster), resorting to green-washing, eco-opportunism, and pollution. For example, a tourist destination promoting itself as sustainable and environmentally responsible may include polluting companies in its cluster. The cruise industry has faced considerable criticism for its unsustainable business practices, particularly concerning its environmental impact (Fig. 2.3). Cruise ships are renowned for their substantial fuel consumption, which contributes significantly to both air and water pollution. Furthermore, they are linked to the problem of overtourism, a situation that arises when a destination is inundated with an excessive number of visitors, resulting in adverse effects on the environment, wildlife, and local communities. Cruise operations have been accused of generating substantial waste, encompassing sewage and garbage, which has the potential to inflict harm upon marine ecosystems. Additionally, the discharge of ballast water from these vessels can introduce invasive species into local ecosystems, posing risks to indigenous flora and fauna. Furthermore, the construction of new cruise ships and the development of port infrastructure can lead to habitat destruction and alterations in land use, further exacerbating the industry’s environmental footprint. Efforts are being made to address these environmental concerns by implementing stricter regulations and adopting sustainable practices. Cruise Lines International Association (CLIA), the largest cruise industry trade association, has set a target of reducing carbon emissions by 40% by 2030 compared to 2008 levels and achieving

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Fig. 2.3 “Harmony of the Seas” is an Oasis-class cruise ship with a gross tonnage of 226,963, making it one of the largest passenger ships globally, accommodating 6780 passengers and employing 2300 crew members. The ship is anchored in the Department du Nord in Haiti. Royal Caribbean, the ship’s owner, exclusively hires residents for their private port of call in Labadee, Haiti. Additionally, they provide opportunities for Haitian artisans to showcase and sell their products, thereby stimulating the local economy and offering stable, well-paying employment. Sustainability has become a fierce battleground within the cruise industry, necessitating the management of complex issues such as over- tourism, pollution, ocean plastic, as well as addressing social and political concerns in destination areas to secure a competitive edge in the tourism market of the future

net-zero carbon emissions by 2050. There is now a competitive race among companies to adopt more sustainable practices, with complex technological decisions driving disruptive change. Market orientation is a key driver in the pace of sustainable adaptation. Cruise companies are building ships that align with their responsible environmental strategy to prevent the destruction of destinations and maintain customer loyalty. For example, Ponant, a luxury French cruise line, launched the Le Commandant Charcot in 2021, a hybrid expedition ship that runs on LNG and electric battery power, with plans for a “zero-impact” ship by 2025. Hurtigruten, a green-energy leader, launched the world’s first hybrid battery electric-powered cruise ship in 2019 and has plans for the world’s first zero-emissions cruise ship by 2030 (Lewis 2023). These efforts are a step in the right direction towards a more sustainable future for the cruise industry. To achieve sustainable outcomes, entrepreneurship and innovation must not only focus on the product, but also adapt the entire supply chain, from raw materials to finished goods and recycling. In addition, new recycling solutions are necessary to address new toxins in circulation and handle new products. As certain metals become increasingly scarce, there is potential for “urban gold mines” to become more profitable. In South Africa, gold mining companies extract only around 5 g of

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gold per ton of gold ore, whereas mobile phones contain 200–300 g of gold, as well as other valuable metals such as copper, silver, and palladium (Stølen 2011). According to a report from the European Parliament (EU 2015), discarded mobile phones in the EU are estimated to contain around 3–4 tons of gold each year, which could potentially be recycled. This gold is worth billions of euros and could significantly reduce the environmental impact of gold mining, which often involves the use of toxic chemicals and has negative social and environmental consequences. To achieve a circular economy, entrepreneurship is essential not only in the production and distribution of goods but also in the recycling and repurposing of discarded products. The United Nations Environment Program (UNEP) and WRAP (Waste and Resources Action Program) recently published a report titled “Food Waste Index Report 2021,” which provides updated estimates of global food waste. The report shows that in 2019, around 931 million tons of food, or 17% of total food available to consumers, went to waste. This includes 61% from households, 26% from food service, and 13% from retail. The report also estimates that reducing food waste by 25% would be enough to feed all the world’s malnourished people. Estimates suggest that 8–10% of global greenhouse gas emissions are associated with food that is not consumed. As there are 748 million people without access to fresh water, the UN has urged countries to reduce waste in food chains by half by 2025 (The United Nations World Water Development Report). It is important to note that only around 4% of water resources on earth are fresh water, making water waste from production a major issue. Therefore, stimulating entrepreneurship upstream and downstream in the waste pyramid towards raw material sources and recycling systems is crucial to building a sustainable circular economy. Establishing circular systems that prevent natural resources from being wasted is crucial given the substantial resources needed for production. The retail sector and merchandise trade play a vital role in achieving this goal, necessitating the promotion of entrepreneurship to reduce environmental harm, waste, and increase recycling and reuse while minimizing composting. Green entrepreneurship involves inverting the “waste pyramid” to ensure that a maximum number of resources return to the value streams. A waste pyramid, also known as the waste hierarchy or waste management hierarchy, is a concept that represents the preferred order of managing and dealing with waste in a sustainable and environmentally responsible manner. It is typically depicted as a pyramid with different levels or tiers, each indicating a preferred waste management approach from the most desirable at the top to the least desirable at the bottom (Fig. 2.4). The production and distribution of goods consume significant resources, and it is crucial for the retail and merchandise trade to establish circular systems that prevent wastage of resources. To ensure sustainable practices, it is necessary to focus on innovating for reduced consumption and promoting entrepreneurship that supports reuse. For instance, companies like Ebay have contributed to increased reuse, while apps like TooGoodToGo help sell surplus food from restaurants at a lower price. By rescuing unsold food from waste, TooGoodToGo promotes consumption and prevents waste from ending up at the bottom of the waste pyramid, thereby moving more products up the waste pyramid.

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Fig. 2.4 The figure illustrates how green entrepreneurship in recycling serves as a strategic approach to shifting waste volumes higher up in the waste pyramid, closer to reuse and reduced consumption. This approach aims to minimize the quantities of waste ending up in landfills and disposals Flygansvær et al. (2019)

Levi’s and Patagonia are among the companies making significant efforts to promote sustainable fashion by reducing consumption and offering repair services for their products. Levi’s offers repair services through their Tailor Shops, which can be found worldwide, including in London, Manchester, and Glasgow. While the emphasis seems to be on customization, they also offer repair services for their products. Patagonia, on the other hand, focuses on making outdoor gear that lasts longer, encouraging consumers to get more use out of their existing wardrobe. Under their Ironclad Guarantee, the brand offers repair services for wear and tear damages for a reasonable fee. Both brands aim to reduce the amount of waste produced from fashion and promote a more sustainable approach to fashion consumption.

2.5 Green Entrepreneurship in Sharing Economy As depicted in the pyramid below, the main challenge is to promote entrepreneurship and innovation that will move us up the pyramid. Our goal is to reverse the pyramid and minimize consumption, thereby reducing waste. Sharing economy is one form of entrepreneurship that can aid in reducing consumption. “Sharing economy” is a business model that can be beneficial in reducing consumption. As the name suggests, sharing economy aims to utilize resources more efficiently by sharing services, knowledge, assets, property, resources, or capital without transferring ownership rights (Fig. 2.5). The sharing economy utilizes digital platforms to facilitate peer-to-peer transactions, reducing the need for consumption, investments, and capital with little use. By doing so, the sharing economy has the potential to minimize waste by moving

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Fig. 2.5 A widely recognized urban green sharing economy model involves the use of rental bicycles, which are prominently positioned in a linear arrangement along the sidewalks of cities like Paris. Source Shutterstock

volumes upward in the waste pyramid. Also, sharing economy decreases pollution and CO2 emissions. For example, sharing economy platforms such as bike-sharing and car-sharing can reduce the number of vehicles on the road and decrease resource consumption, including fuel and materials for manufacturing new vehicles, leading to reduced resource consumption. Similarly, sharing economy services that enable people to share rides, stay in shared accommodations or use shared transport, can reduce the carbon footprint of transportation by reducing the number of vehicles on the road and increasing vehicle utilization, leading to lower carbon emissions. Furthermore, the sharing economy can contribute to waste reduction by facilitating the exchange of second-hand goods, such as clothing, furniture, and electronics, keeping items in use for longer and moving up the waste pyramid. However, it is important to note that the overall environmental impact of the sharing economy depends on various factors such as implementation, usage, and the broader social and economic context in which it operates. Thus, entrepreneurship is crucial for the development of the sharing economy. A study by the European Commission (2016) found that peer-to-peer sharing of tools and equipment could lead to significant reductions in resource use and waste generation. Another study by the Ellen MacArthur Foundation (2015) found that the sharing economy models could help to create a more circular economy by facilitating the sharing and reuse of goods. Timber is another example of sharing economy platforms that contribute to less use of resources (Meijkamp 1998). Both Uber and Airbnb have caused disruptive changes in the transportation and hospitality industries. However, they have also brought about positive impacts such as a reduction in carbon emissions, the creation of more employment opportunities, and increased sustainability (Cannon and Summers 2014).

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2 Business Ethics, the Stakeholder Perspective and Circular Business Models The sharing economy involves conducting economic transactions through digital platforms that enable the exchange or provision of services, expertise, assets, property, resources, or capital. These transactions typically occur between private individuals, without the transfer of ownership rights. NOU 2017:4 Sharing Economy, p. 9

The sharing economy is an economic system based on sharing, swapping, renting, and lending goods and services among individuals and organizations using online platforms or other intermediaries (Sundararajan 2016). In the sharing economy, people are connected through digital platforms that allow them to access and use goods and services without having to own them outright. The sharing economy often involves underutilized assets or resources, and it can enable individuals to monetize or generate value from their unused or underused resources. Examples of the sharing economy include peer-to-peer platforms for ridesharing, home-sharing, tool-sharing, co-working, and peer-to-peer lending. The sharing economy has grown rapidly in recent years, fueled by advances in technology, changing attitudes towards ownership, and a desire for more sustainable and affordable consumption patterns. The sharing economy has the potential to create new economic opportunities, reduce resource consumption, and increase social connections and community engagement. The sharing economy has the potential to address the growing sustainability challenges in urban areas, which have seen an increase in urbanization and a rise in single-person households without children. This trend has led to greater consumption, waste, and investments, exacerbating climate and pollution problems. In the past, large families had an informal and efficient sharing economy, where they shared resources such as cars, homes, and TVs. However, smaller families and more households have resulted in a loss of this natural sharing economy. The sharing economy as a disruptive business model can help reduce environmental and climate problems by facilitating resource-sharing among private individuals (Yeo 2017). The shift in population demographics has created a demand for innovative sharing economy solutions. The potential for the sharing economy in urban areas is significant, as cities are often characterized by high population densities, limited resources, and environmental challenges. The sharing economy can help address these issues by promoting more efficient and sustainable use of resources, reducing waste, and improving social connections and community engagement. The sharing economy has already transformed the way people get around in cities through services such as ridesharing, bike-sharing, and car-sharing (Table 2.1). These services can reduce traffic congestion, decrease carbon emissions, and provide more affordable and convenient transportation options. Home-sharing platforms allow residents to monetize their underutilized living spaces, such as spare rooms or vacation homes, while providing visitors with affordable and unique lodging options. This can help alleviate housing shortages and provide a boost to local economies. Urban farming and community gardens can promote local food production and distribution, reducing the environmental impact of food transportation and providing fresh and healthy food options for residents. Food-sharing platforms can also help reduce food waste by connecting surplus food from restaurants, grocery stores, and individuals

2.5 Green Entrepreneurship in Sharing Economy Table 2.1 Top six sharing economy companies worldwide (2021)

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Company

Industry

Airbnb

Accommodation

Uber

Transportation

Lyft

Transportation

Didi Chuxing

Transportation

Grab

Transportation

TaskRabbit

Task Services

with those in need. Sharing platforms for goods, such as tools, appliances, and electronics, can reduce the need for ownership and promote more sustainable consumption patterns (Yeo 2017). This can also help reduce waste and increase resource efficiency. Co-working spaces and shared offices can provide affordable and flexible workspaces for entrepreneurs and small businesses, promoting innovation and collaboration (Table 2.1). The sharing economy has the potential to significantly improve market sustainability by utilizing the capacity of assets and capital through its business models like airbnb (Fig. 2.6). For instance, a study published in the Journal of Urban Economics found that the introduction of UberX in New York City led to a 25–30% reduction in the number of taxi trips, corresponding to a reduction of approximately 15,000– 20,000 taxis on the road (Cramer and Krueger 2016). Another study by the University of California, Berkeley found that the introduction of ride-sharing services in San Francisco led to a 13% reduction in the number of vehicles on the road during peak hours (Rayle et al. 2016). These initiatives also lead to improved service quality while reducing traffic congestion and promoting cleaner air (Conner-Simons 2017).

Fig. 2.6 Airbnb is a prominent sharing economy platform that connects individuals with spare accommodations, enabling hosts to rent out their homes or rooms to travelers, fostering a collaborative and decentralized approach to lodging. This innovative model empowers individuals to participate in the hospitality industry while offering unique and cost-effective accommodation options. Source Shutterstock

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Moreover, sharing economy models may introduce self-driving cars that can anticipate increased demand and move accordingly, potentially reducing traffic congestion. This approach serves as an entrepreneurial way to minimize environmental impact by reducing production, distribution, and waste. However, debates persist about the social implications of such models. For instance, Uber has faced accusations of engaging in social dumping (Trevland 2016), impairing the social consequences of its activity. Analyzing the sustainability of a sharing economy project should include assessing its social responsibility aspect. In the transport sector, sharing economy initiatives contribute significantly to sustainability. For example, Getaround, an online car-sharing service that connects drivers who need to reserve cars with car owners who share their cars in exchange for payment, allows customers to access the car they need when they need it, reducing consumption, emissions, and waste. As of 2019, the company had five million users and approximately 20,000 connected cars worldwide (Dillet 2019). In China, over 60 companies offer bike-sharing services through mobile apps. During the peak of the bike-sharing trend in 2017, the country boasted over 200 million registered users for these services. Notably, Ofo and Mobike, two major players in the industry, each had millions of users. For instance, in 2017, Ofo reported over 200 million registered users, while Mobike reported more than 100 million (Jiang 2018). These sharing economy models play a crucial role in advancing sustainable transportation, mitigating climate emissions, and advancing waste management strategies (Campbell 2018). Case Assignments and Excursions Excursions 1. Visit the local waste disposal site. Feel free to take a quiz on how different products should be recycled. Discuss how the waste hierarchy pyramid can be improved in your area through entrepreneurship and innovation. 2. Visit an industrial company, an industrial area, or a shopping center to learn how waste management, energy systems, emissions, and recycling are organized. 3. Check out the website of a chain that describes itself as sustainable. Invite a store manager to present something about how sustainability is put into practice in the retail sector. CASE: “Levi’s Sustainable Business Transformation: Analyzing and Advising a Heritage Retailer” Background: Levi Strauss & Co., a renowned heritage retail company, has embarked on a journey to transform its business sustainably in response to changing consumer preferences and global sustainability challenges. By analyzing Levi’s sustainability initiatives on their official website, your task is to assess the progress made by the company, identify areas of improvement, and provide a strategic plan for further sustainable business transformation.

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Project Tasks 1. Company Assessment: Begin by examining Levi’s sustainability initiatives as outlined on their official website. Analyze their current sustainability efforts, including sourcing, production, and environmental commitments. 2. Market Research: Investigate market trends and consumer preferences related to sustainable fashion, drawing from Levi’s website as a primary source. What is the significance of sustainability in consumer purchasing decisions? 3. Sustainability Integration: Utilize information from Levi’s website to propose strategies for enhancing sustainability within the company. This may include suggestions for sustainable materials, responsible sourcing, and environmental impact reduction. 4. Marketing and Branding: Explore how Levi’s communicates its sustainability efforts on their website and other marketing channels. Assess the effectiveness of their messaging and propose improvements if necessary. 5. Financial Analysis: Refer to Levi’s annual reports and financial disclosures on their website to estimate the financial implications of sustainability initiatives. Create financial projections showcasing the potential ROI of sustainability investments. 6. Implementation Plan: Based on Levi’s current initiatives and future goals outlined on their website, outline a detailed implementation plan for the company’s sustainable transformation. Include timelines, responsibilities, and KPIs. 7. Risk Assessment: Consider potential risks and challenges associated with Levi’s sustainability efforts and recommend strategies to mitigate these risks. 8. Presentation and Recommendations: Prepare a presentation and a written report summarizing your findings and recommendations. The presentation should be designed for executive-level stakeholders. Sources • Levi’s official website (www.levi.com) • Levi’s sustainability report, annual reports and financial disclosures available on their website. Deliverables • • • •

Written report Presentation Financial projections Implementation plan.

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Evaluation Criteria: Students will be evaluated based on the quality of their analysis, the creativity and feasibility of their recommendations, their ability to use Levi’s website as a reliable source of information, and their understanding of sustainability principles within the context of a well-established retail brand like Levi’s. Using Levi’s as a real-world example and drawing information from their website will provide students with practical insights into sustainability initiatives and strategic planning within the fashion industry.

References Achrol, R., T. Reve, and L. Stern. 1983. The Environment of Marketing Channel Dyads: A Framework for Comparative Analysis. Journal of Marketing. 47 (Fall): 55–67. Bradsher K. 2001. S.U.V. Tire Defects Were Known in ‘96 But Not Reported. The New York Times. Campbell, C. 2018. The Trouble with Sharing: China’s Bike Fever Has Reached Saturation Point. Time Magazine. Apr 2. Cannon, S., and L.H. Summers. 2014. How Uber and the Sharing Economy Can Win Over Regulators. Harvard Business Review 13 (10): 24–28. Christensen, C.M. 1997. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business School Press. Conner-Simons, A. 2017. How Ride-Sharing Can Improve Traffic, Save Money, and Help the Environment. MIT-News, Jan 4. Cramer, J., and A.B. Krueger. 2016. Disruptive Change in the Taxi Business: The Case of Uber. American Economic Review 106 (5): 177–182. Cruise-næringens uakseptable forurensning. Norge må velge kvalitetsturisme og lønnsomme nisjer fremfor masseturisme. VG. 2018 Aug 2. Dahlstrom, R., R. Silkoset, H. Nilsen, and A. Nygaard. 2010. Venner og kjente – Hvordan Hjelper de deg til bedre lønnsomhet i næringsklynger? En studie av kjøpesentre i Norge. Magma 5: 46–53. Danley, J.R. 2005. Polishing Up the Pinto: Legal Liability, Moral Blame, and Risk. Business Ethics Quarterly 15 (2): 205–236. Dillet, R. 2019. Drivy Rebrands To Getaround Six Months After Acquisition. TechCrunch. Retrieved 2019 Oct 17. Ellen MacArthur Foundation. 2015. Towards a circular economy: Business rationale for an accelerated transition. European Commission. 2016. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Next steps for a sustainable European future (COM(2016) 739 final). Strasbourg. Flygansvær, B., R. Dahlstrom, and A. Nygaard. 2018. Exploring the pursuit of sustainability in reverse supply chains for electronics. Journal of Cleaner Production. Jul 10, 189: 472–84. Flygansvær, B., R. Dahlstrom, and A. Nygaard. 2019. Green Innovation in Recycling–A Preliminary Analysis of Reversed Logistics in Norway. World Review of Entrepreneurship, Management and Sustainable Development. 15 (6): 719–733. Forbes Investing. 2014. Tesla Goes Open Source: Elon Musk Releases Patents To ‘Good Faith’ Use. Jun 12. Freeman, R.E. 1984. Strategic Management: A Stakeholder Perspective. Pitman. Ingram, P., and J.A. Baum. 1997. Chain Affiliation and the Failure of Manhattan Hotels, 1898–1980. Administrative Science Quarterly. 42 (1): 68–102. Janis, I.L. 1972. Victims of Groupthink: A Psychological Study of Foreign-Policy Decisions and Fiascoes. Oxford: England.

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Jiang, S. 2018. Chinese Bike-Sharing Firm Ofo’s Global Expansion Hits Roadblocks. [Internet] Retrieved from https://www.scmp.com/tech/start-ups/article/2158621/chinese-bikesharing-firm-ofos-global-expansion-hits-roadblocks. Levitt, T. 1960. Marketing Myopia. Harvard Business Review. Lewis, N. 2023. An electric cruise ship with gigantic solar sails is set to launch in 2030. CNN, June 8. Make the World Great Again. 2018. Fortune Magazine, Sep. Meijkamp, R. 1998. Changing Consumer Behavior Through Eco-efficient Services: An Empirical Study of Car Sharing in The Netherlands. Business Strategy and the Environment. 7 (4): 234–244. Mintzberg, H. 1979. Patterns in Strategy Formation. International Studies of Management & Organization. 9 (3): 67–86. Musk, E. 2014. All Our Patent Are Belong To You. Tesla Newsletter, June 12. Nader R. 1965. Unsafe at Any Speed the Designed-In Dangers of The American Automobile. Grossman Publishers. Pfeffer, J., and G.R. Salancik. 2003. The External Control of Organizations: A Resource Dependence Perspective. Stanford University Press. PLM Technology Guide. 2012. https://plmtechnologyguide.com/. Porter M.E. 1998. Clusters and the new economics of competition. Boston: Harvard Business Review, Nov 12. Porter, M.E., and Kramer, M.R. 2011. The Big Idea: Creating Shared Value. Harvard Business Review. Rayle, L., D. Dai, N. Chan, R. Cervero, and S. Shaheen. 2016. Just a Better Taxi? A Survey-Based Comparison of Taxis, Transit, and Ridesourcing Services in San Francisco. Transport Policy 45: 168–178. Schumpeter, J.A. 1942. Capitalism, Socialism And Democracy, 2nd ed. Floyd, Virginia: Impact Books. Stahel, W.R. 2010. The Performance Economy. Basingstoke, England: Palgrave Macmillan. Sundararajan, A. 2016. The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. Mit Press. Stølen, S. 2011. En cocktail av kjemikalier. Cappelen Damm. Trevland, Ø. 2016. Pirattaxi er ikke delingsøkonomi. Øystein Uber er rigget for skatteunndragelser, sosial dumping og ansvarsfraskrivelse. Uber pop er organisert pirattaxi. Aftenposten, Nov 5. Volkswagen’s Diesel Fraud Makes Critic of Secret Code a Prophet. NY Times on Eben Moglen, 2015 Sep 22. Yeo, S. 2017. The Sharing Economy Helps Fight Climate Change (But Not as Much as You Think). Washington Post, Sep 18.

Chapter 3

Green Price and Product Strategy

Abstract The fusion of green marketing and entrepreneurship forms a foundational framework for achieving sustainability in business. This framework centers on the marketing mix, originally known as the 4 P’s (Price, Place, Promotion, Product), which has evolved to emphasize sustainability as the 3 P’s (Planet, People, Profit) in alignment with the United Nations’ 17 sustainability dimensions. Additionally, the service industry has adopted the 7 P’s, enriched by Kotler to include “people, processes, programs, and performance”. This chapter explores how these concepts have adapted to the shift towards sustainability by integrating entrepreneurial strategies into the marketing mix. The marketing strategy, built on the four core P elements, guides companies in aligning supply with market demand. Market segmentation analysis is crucial in crafting a strategy that caters to the growing demand for sustainable products. A green pricing strategy plays a central role in shaping the market for sustainable goods, with governments, municipalities, and businesses using pricing tactics to influence demand and secure positions in sustainability-focused segments. Lastly, the chapter thoroughly examines the green product strategy, emphasizing its critical role in ensuring the authenticity of sustainable product quality. These concepts are vital in the continuous pursuit of sustainability.

3.1 Green Price Strategy The green marketing strategy and entrepreneurship encompass a strategic set of corporate actions that management can formulate and employ to drive sustainable outcomes. This set of variables, commonly referred to as the “marketing mix,” serves as a pivotal framework for businesses to meticulously strategize and oversee their marketing initiatives.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Nygaard, Green Marketing and Entrepreneurship, https://doi.org/10.1007/978-3-031-50333-7_3

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This model emerged within the marketing literature in the 1950s when companies aimed to enhance financial performance through competitive strategies in the market (AMA 2022) The original model, known as “the 4 P’s” (Price, Place, Promotion, Product), has since evolved to emphasize the creation of sustainable results. It is now often denoted as “the 3 P’s” (Planet, People, Profit), which the United Nations has operationalized into 17 distinct dimensions comprising their sustainability goals. Moreover, the term “marketing mix” has expanded to encompass additional dimensions, particularly within the service industry, where the concept of “the 7 P’s” is frequently employed (Booms and Bitner 1981). Notably, marketing expert Kotler has revised the 4 P model and augmented it to incorporate “people, processes, programs, and performance” as integral elements of the marketing mix (Kotler 2012). Despite the ongoing professional debate, our presentation will connect back to the initial point and examine how these concepts have adapted to the “green shift” movement by utilizing entrepreneurial strategies within the marketing mix model. The marketing strategy through the combination of 4 P elements serves as a decisionmaking model that guides companies in meeting market demand with appropriate supply. Thus, market segmentation analysis is a crucial starting point for companies looking to develop a strategy and intention to satisfy the demand for sustainable products. A green pricing strategy is particularly influential in shaping the market for sustainable goods. Governments, municipalities, and individual companies all utilize pricing tactics to influence demand and generate interest in eco-friendly products, while businesses leverage pricing to position themselves within segments that prioritize sustainability.

3.1.1 Price and Demarketing of Unsustainable Products Sustainable demarketing refers to tactics aimed at discouraging consumers from purchasing a product in the market. It refers to strategies to reducing or controlling the demand for unsustainable products or services that are harmful to individuals, environment, or society.

Demarketing strategies, which aim to reduce or manage the demand for harmful products, encompass a range of effective approaches. These include anti-smoking campaigns that advocate for a smoke-free lifestyle, higher taxes on alcohol and tobacco products to discourage excessive consumption, advertising bans on items like cigarettes and prescription drugs to prevent misleading information, and restrictions on the marketing and sale of sugary or high-calorie foods coupled with the promotion of healthier alternatives. These strategies collectively discourage the use of harmful products while encouraging healthier and more sustainable consumption patterns. Various demarketing strategies can be employed to promote sustainable and responsible consumption patterns that contribute to the green transition. These strategies include:

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• Promotion campaigns that encourage responsible drinking and discourage drunk driving. • Labeling and information for harmful products, such as warning labels on tobacco products or calorie labels on fast food items. • Demarketing to discourage the use of fossil fuels and promote the use of renewable energy sources such as solar, wind, and geothermal power. • Encouraging sustainable transportation through demarketing that reduces the demand for private cars and promotes the use of public transportation, bicycles, and walking. • Demarketing to encourage waste reduction by promoting the reuse, recycling, and responsible disposal of products, and discouraging the use of disposable and single-use items. • Promoting sustainable food consumption by reducing the demand for products that contribute to deforestation, such as meat and soy, and promoting plant-based diets. • Discouraging harmful practices by reducing the demand for products that have a negative impact on the environment, such as pesticides and synthetic fertilizers, and promoting eco-friendly alternatives. By implementing these demarketing strategies, more sustainable and responsible consumption patterns can be encouraged, thus contributing to the green transition and a more sustainable future. Green demarketing is an approach that utilizes pricing mechanisms along with other marketing mix elements to curb the consumption of harmful, unsustainable products. For instance, increasing tobacco prices can reduce the consumption of tobacco products. In addition, reducing promotion through the prohibition of tobacco and alcohol advertising can also be an effective demarketing strategy. Moreover, demarketing can be used to encourage sustainable alternatives to harmful products, such as promoting the use of public transport over private vehicles (Fig. 3.1).

Fig. 3.1 Green marketing strategy consists of a mix of «4 p’s» that affects the UN 17 sustainable goals Kotler (2012)

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3.1.2 Marketing Strategy to Curb the Tragedy of the Commons The Tragedy of the Commons is a concept that originates from the field of economics and refers to a situation in which shared resources in water, air, and land, such as a common grazing land or a shared fishery, are overused and depleted because individuals or businesses act in their own self-interest without considering the longterm consequences for the collective good (Hardin 1968). The problem is often related to competitive business strategies in most markets that produce pollution, climate gas emissions and social problems. Tragedy of the Commons serves as a cautionary tale for businesses embarking on the path of sustainability. It emphasizes the need for businesses to consider the collective impact of their actions and make choices that promote long-term ecological and social well-being, even in the face of short-term individual gains. Collaboration, responsible resource management, and regulatory interventions are crucial tools to prevent the Tragedy of the Commons from negatively impacting the transformation of business sustainability (Ostrom 2009) (Fig. 3.2). By leveraging the power of green marketing, businesses can inspire and empower consumers to make choices that contribute to the sustainable use of resources, thereby helping to curb the Tragedy of the Commons. These green marketing strategies can create a positive cycle where responsible consumer behavior drives demand for sustainable products and services, encouraging businesses to adopt more environmentally friendly practices.

3.1.3 Resource Depletion and Overexploitation In the context of business sustainability, the Tragedy of the Commons can be seen when companies overexploit or deplete natural resources without considering the broader environmental impact. For instance, businesses might excessively extract water, minerals, or other resources from the environment without proper management or conservation efforts, leading to long-term damage and reduced availability for future generations.

3.1.4 Emission of Pollutants Companies that emit pollutants or greenhouse gases into the atmosphere contribute to a shared environmental resource - the air we breathe. If each business acts solely in its own interest without regard for the overall pollution levels, it can lead to a deterioration of air quality and exacerbate issues like climate change, which can ultimately harm all businesses and communities.

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3.1.5 Waste Generation and Disposal In the context of waste generation, the Tragedy of the Commons can manifest when businesses indiscriminately produce waste without investing in proper recycling or waste management practices. This can result in the pollution of shared land and water resources, leading to negative impacts on the environment and public health.

3.1.6 Sustainable Practices Versus Short-Term Gain The concept can also be applied to cases where businesses prioritize short-term profits over long-term sustainability. For example, if companies engage in unsustainable practices to achieve immediate financial gains, such as overfishing or clear-cutting forests, it can lead to the depletion of resources and have negative repercussions for the entire ecosystem.

3.1.7 Collaborative Approaches to Sustainability Just as the Tragedy of the Commons illustrates the negative consequences of individual self-interest, it also highlights the importance of collective action and cooperation. In the context of business sustainability, collaborative efforts, such as industrywide agreements, certifications, and shared best practices, can help prevent the Tragedy of the Commons by ensuring that businesses collectively work towards sustainable solutions.

3.1.8 Regulation and Governance To avoid the Tragedy of the Commons in the realm of business sustainability, regulatory frameworks and governance mechanisms are often necessary. These mechanisms can establish rules and incentives that encourage businesses to adopt sustainable practices, limit resource overuse, and mitigate negative externalities like overtourism (Fig. 3.2).

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Fig. 3.2 Popular tourist destinations like here at the Acropolis in Athens, Greece, have also been subject to overtourism over the years. This historic site attracts many tourists from around the world due to its significant cultural history and architectural beauty. The high influx of visitors has led to wear and tear on the structures and the environment surrounding the area. “Overtourism” eventually harms the destination itself. Overtourism destroys what tourists truly love. This is a typical “Tragedy of the Commons” problem where tourists and travel operators overexploit and deplete this unique and shared historical heritage because individuals and individual businesses act in their self-interest without considering long-term consequences. Source Shutterstock.com

3.1.9 What a Green Marketing Strategy Constraint Tragedy of the Commons Marketing strategy can play a significant role in curbing the Tragedy of the Commons by influencing consumer behavior, promoting sustainable practices, and fostering a sense of shared responsibility through the mix of the 4 Ps (Price, Product, Promotion, Place). Within business corporations, marketing communication (Promotion) holds the potential to drive sustainable practices and mitigate the Tragedy of the Commons. Educational campaigns can enlighten consumers about the ecological repercussions of overconsumption, advocating resource preservation and eco-friendly decisions. Marketers can propel sustainable products and services (Product), spotlighting their reduced environmental footprint, lower emissions, and ethical sourcing, thus motivating responsible choices. Behavioral economics can be harnessed through tactics like default options, social norms, and rewards, nudging consumers toward ecoconscious behaviors. Green brands can amplify transparency, offering insights into

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product impact, supplemented by third-party certifications to guide informed decisions. Engaging consumers through eco-challenges, recycling drives, and community involvement fosters shared responsibility. Emotional storytelling can underscore resource protection’s significance, prompting empathy and conscious consumerism. Brands genuinely rooted in sustainability values can influence long-term consumer behavior, fostering alignment with eco-friendly practices. Incentives like rewards, discounts, and loyalty points further encourage green choices (Price), while collaborative efforts with stakeholders amplify impact. By showcasing positive outcomes and progress, marketers can underscore the collective effect of individual actions, ultimately steering supply chains (Place and distribution) away from the Tragedy of the Commons through informed and responsible choices.

3.1.10 Green Demarketing and Marketing Strategy Green demarketing (Kotler and Levy 1971) aims to promote sustainable alternatives, such as fruits and vegetables, paperless systems, bicycles, public transportation, and electric cars, while encouraging sustainable consumption habits, such as reducing freshwater usage and minimizing oil heating and car usage. Pricing plays a crucial role in demarketing by decreasing the consumption of non-durable goods through a combination of marketing mix dimensions. Green-nudging, which we will discuss further, is an active and practical form of demarketing that guides and educates consumers about sustainable options while still allowing them to choose from existing alternatives. Moreover, green nudging aims to enhance consumers’ internal motivation to make eco-friendly choices, recognizing that consumers do not always make rational decisions in line with their intentions. This approach facilitates green choices for those who are motivated but tend to act based on habitual behaviors. Green nudging will be further discussed in the next chapter under promotion and market communication. It is increasingly prevalent, as demonstrated by its application at checkout points where nutritious foods are placed alongside sugary snacks. Likewise, energy-efficient products are being advertised aggressively using pricing tactics such as subsidies for electric bicycles and heat pumps, which offer incentives for consumers to purchase them. Moreover, toll charges for cars that emit CO2 serve as a means of price discrimination that favors electric vehicles, which are less expensive to buy thanks to government tax breaks in some countries. Overall, these pricing strategies raise awareness and encourage the purchase of eco-friendly products.

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3.1.11 Utilizing Conjoint Analysis to Unveil Premiums Associated with Environmentally Friendly Products Conjoint analysis and discrete choice modeling are research techniques commonly used to understand consumer preferences and estimate the value consumers place on different product attributes, including the environmental or green aspects of a product. These methods can help in estimating the price premium consumers are willing to pay for green products. Conjoint analysis is a survey-based research method that presents respondents with different product profiles or scenarios composed of various attributes and levels. By analyzing respondents’ choices or preferences, it determines the relative importance of different attributes and their impact on overall product preference. To assess the price premium associated with environmentally friendly products using conjoint analysis, it is imperative to incorporate environmental attributes as a fundamental component within the study. For instance, one can contemplate attributes such as product composition, adherence to circular economy principles, energy efficiency, carbon footprint, or gauge consumer willingness to pay based on sustainability certifications (Nygaard 2023). The fierce competition within the fashion industry, solely driven by unsustainable pricing practices, has come under scrutiny for its alleged contribution to hazardous working conditions and exploitative labor practices in third-world production facilities (Siegle 2016a, 2016b). Given the fashion industry’s spotlight by the United Nations, it is imperative for stakeholders to pivot towards green marketing strategies, forsaking unsustainable pricing models in favor of sustainable price, product, place, and promotion strategies (Holter 2017). In the survey design, respondents would be presented with distinct product profiles, each characterized by variations in the attributes along with their corresponding price points. Through a meticulous analysis of respondents’ choices, one can effectively quantify the trade-offs consumers are willing to make between price and the environmental attributes, thereby yielding valuable insights into the price premium associated with eco-friendly features.

3.1.12 Green Discrete Choice Modeling Discrete choice modeling is a statistical technique used to analyze choices made by consumers when presented with different product alternatives that vary in attributes and prices. It involves building a mathematical model that predicts consumer choices based on the attributes and prices of the alternatives.

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To estimate the price premium for green products using discrete choice modeling, you would construct choice scenarios that include various product attributes, such as price, environmental features, brand, performance, etc. Respondents would be asked to choose their preferred alternative from each scenario. By analyzing the choices, the model can estimate the importance of different attributes and quantify the price premium consumers associate with the green features. Both conjoint analysis and discrete choice modeling provide insights into consumer preferences, trade-offs, and the value they assign to different product attributes, including the environmental aspects. These methods allow for the estimation of price premiums by assessing the impact of price and green attributes on consumer choices. It’s worth noting that these techniques require careful study design, appropriate sample sizes, and statistical analysis expertise to yield reliable results. Consulting with experts or market research professionals experienced in conjoint analysis and discrete choice modeling is recommended to ensure accurate estimation of price premiums for green products (Silkoset 2023).

3.2 Green Product Strategy This dimension refers to the tangible and observable aspects of a product, including its design, technology, branding, packaging, and visible quality. From an environmental perspective, it also includes quality criteria such as eco-labeling and energy labeling. Another important factor is the product’s lifecycle, including disposal and reuse options. The ethical implications of production, such as animal testing in the cosmetics industry, also affect customer satisfaction with the product. Companies like Body Shop have defined ethical standards in the product innovation, production, and sale of their products. Body Shop communicate that products nourish, enrich and uplift but never make false promises and are never tested on animals. The company’s products are inspired by the diversity of nature and customs of people around the world. Body Shop presents themselves as experts in caring for all different skin types and take pride in knowing how to make them feel so good (Fig. 3.3). The fashion industry has encountered difficulties in the use of fur and leather products. Some brands have taken a stance against using real fur, while others opt for sheepskin, pig, and cattle materials. It is crucial for this information to be conveyed transparently in product marketing. The origin of products is also an essential aspect for consumers to know. H&M, for instance, makes a point of providing information on the origin of its products. However, the intricate delivery networks and the global nature of markets and suppliers make it challenging to ensure complete transparency and traceability. The identification of chemical substances used in products can also pose a challenge. The “channel captain,” which is the company responsible for overseeing the entire supply chain, plays a critical role in setting requirements and monitoring all parties involved in the product life cycle. This entity can be a manufacturer, wholesaler, or retailer that wields significant power and influence in the channel due to

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Fig. 3.3 The body shop Signage at Kuala Lumpur International Aiport (KLIA). The Body Shop, is a British cosmetics and skin care company owned by L’Oreal. Source Shutterstock

their size, market share, or expertise. Therefore, the sustainable marketing strategy of the powerful role as a channel captain is pivotal in establishing standards for the entire supply chain. The channel captain sets the strategic direction for the distribution channel, makes decisions regarding the selection of other channel members, negotiates terms of trade, and manages the flow of goods and information within the channel. To ensure the effective and efficient functioning of the entire supply chain, the channel captain also coordinates an integrated marketing strategy through activities between channel members, such as promotion, merchandising, and pricing. The role of the channel captain is critical in managing conflicts and ensuring that all members work towards the common goal of maximizing customer value and sustainable performance. One way in which channel captains can enforce demands on all suppliers is by incorporating a list of prohibited chemical substances into the contracts. For example, H&M, which can be characterized as a channel captain due to their market power, banned all perfluorinated compounds in their products. Other large companies like Walmart have also taken significant steps to improve the sustainability and safety of the products they sell. For instance, Walmart established a chemical policy that requires suppliers to disclose the ingredients in their products, including any hazardous or restricted substances. The company has also committed to reducing greenhouse gas emissions from its supply chain and achieved 100% sustainably sourced palm oil in 2020. Monitoring manufacturers has proven to be difficult, particularly since many major brand owners do not own or manage their production facilities. These partnerships with production partners are typically governed by formal contracts that may include environmental provisions, such as a list of banned environmental toxins in the production process or final product. Such contracts can be exploited by those seeking to take

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advantage of asymmetric information. The increased distances, cultural barriers, and technological complexity in supply chains have further increased the potential for eco-opportunism. This trend has been facilitated by the simultaneous development of the last three decades, the globalization of supply chains, and the heightened focus on complex and abstract sustainability performance measures (Nygaard 2022). Ecoopportunism refers to companies in the supply chain that appear to be environmentally sustainable to consumers but operate in a socially and/or environmentally unacceptable manner. This greenwashing practice can also undermine social conditions by exploiting workers. Eco-opportunism can also involve the restriction or prevention of free trade unions and political parties, which are crucial for promoting fair social development in a country. In many production countries, workers struggle to make ends meet with their wages. Brands that promote themselves as sustainable while producing in lowcost countries can be guilty of greenwashing and eco-opportunism if they do not adequately address working conditions and wages. To combat this, some brands like H&M now exercise greater control over their suppliers’ working conditions and wages. H&M requires its suppliers to respect workers’ rights and allows them to negotiate their employment and pay conditions through democratically elected union representatives. H&M also employs inspectors who evaluate working condition and environment-related factors. Non-profit organizations like the Fair Labor Association monitor producers to prevent discrimination, exploitation, child labor, and gender discrimination. The world’s biggest fashion chain Inditex proclaims in (2022 Sustainability report) that “We have ambitious sustainable targets for our key raw materials. Our move to innovative, organic, or recycled raw materials is a key path to transform our industry, reduce our emissions and use clean energy and water.” Still Zara (Inditex) claims that capturing and repurposing carbon emissions from industrial processes limits the direct release of these emissions into the atmosphere and helps limit the use of virgin fossil resources. However, the brand has previously come under fire for its role in the fast fashion industry, fueling a culture of overproduction and the ‘buy to wear once mentality’. Input factors in production countries are critical for sustainable products. Cotton production is a vital part of the global textile industry, providing the raw material for many of the clothes we wear every day. However, cotton production also has significant sustainability challenges that can have negative environmental, social, and economic impacts. One of the most significant sustainability challenges associated with cotton production is water use. Cotton is a very water-intensive crop, and cotton production can exacerbate water scarcity in regions where water resources are limited. This can lead to competition for water resources between cotton farmers and other water users, such as communities or wildlife. Another sustainability challenge associated with cotton production is pesticide use. Cotton production relies heavily on the use of pesticides, which can have negative impacts on both the environment and human health. Pesticides can contaminate soil and water sources, harm wildlife, and cause health problems for farmers and workers who handle them. Cotton production can also contribute to soil degradation, particularly if monoculture farming practices are used. This can reduce soil fertility, increase erosion, and degrade soil structure,

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which can make it more difficult for crops to grow in the future. The cotton industry is known for labor rights violations, including child labor, forced labor, and exploitation of workers. Cotton production can be physically demanding and often involves long hours and low pay, particularly in developing countries where labor laws may be less strictly enforced. This can make it difficult for cotton farmers and workers to earn a fair wage and improve their living standards. Finally, cotton production can also contribute to climate change through greenhouse gas emissions from fertilizer use, transportation, and other aspects of the production process. This can contribute to global warming and have negative impacts on the environment and society. Addressing these sustainability challenges requires a range of strategies, including improving water efficiency in cotton production, reducing pesticide use, promoting sustainable farming practices, protecting labor rights, and reducing greenhouse gas emissions. Initiatives like the Better Cotton Initiative (BCI) are working to promote more sustainable cotton production practices and improve the social and environmental impacts of cotton farming. While cotton production is a vital part of the global textile industry, it also has significant sustainability challenges that need to be addressed. By promoting more sustainable cotton production practices and improving the social and environmental impacts of cotton farming, we can help create a more sustainable and equitable future for cotton farmers, workers, and communities around the world. Numerous stakeholder organizations are actively engaged in advancing sustainability within supply chains. Among these, the Better Cotton Initiative (BCI) stands out as a prominent entity dedicated to enhancing the sustainability of global cotton production. BCI’s overarching objective is to enhance the well-being of the individuals involved in cotton production, promote environmental stewardship in its cultivation, and contribute to the long-term viability of the industry. Durable products can also have superior efficiency due to their functionality.

3.2.1 Developing Sustainable Products with a Competitive Edge Tesla’s cars are an excellent example, with faster acceleration, greater safety, nicer design, lower noise, fewer emissions, and better driving characteristics than other cars in the same class. These advantages are direct consequences of sustainable technology. According to Elon Musk, electric cars should look exciting so that customers genuinely want them (Motoring 2016) (Fig. 3.4). Sustainable products have the advantage of not only being sustainable, but also having additional benefits. For instance, organic potatoes that are small are not only sustainable but also have a gourmet appeal for food enthusiasts. Similarly, LED lights not only save energy but also have a small battery capacity and weight, making them easy to carry in a hat. LED light bulbs are a sustainable technology that outcompetes

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Fig. 3.4 Elon Musk presents the product as attractive precisely because it is sustainable. Source https://commons.wikimedia.org/wiki/File:Tesla_Model_S_(28898945604).jpg

traditional incandescent bulbs. They use less energy and last longer than incandescent bulbs, which makes them more cost-effective in the long run. Water-efficient irrigation systems are a sustainable technology that outcompetes traditional irrigation systems. These systems use less water and are more efficient at delivering water to crops, which can reduce water usage and improve crop yields. Energy-efficient appliances, such as refrigerators, washing machines, and light bulbs, are sustainable technologies that outcompete traditional appliances. These appliances use less energy than traditional appliances, which can save consumers money on their energy bills. These examples demonstrate how sustainable technology can outcompete traditional products in terms of cost-effectiveness, efficiency, and sustainability. As consumers become increasingly aware of the environmental impact of their purchases, we can expect to see more sustainable technology in a variety of industries. Changes in product design should aim to have economic, social, and environmental benefits. Innovative products should be designed for reuse, re-production, and recycling. Consumers prefer to be active participants in the circular system by recycling. To facilitate this, companies and organizations must create effective ways for consumers to participate in recycling. Consumers also want to avoid conflicts between being a “consumer” and having ethical values as a “human being”. The design, technology, and components used in a product can make it easier and more efficient to facilitate sustainable practices such as recycling. Electronic waste not only contains potentially harmful components but also rare metals like platinum, ruthenium, indium, and bismuth, which have great value in the market. “Urban mining,” which refers to recycling resources back into the industrial value chains, is therefore a viable alternative to traditional mining that often pollutes the environment and releases large amounts of CO2 . For example, every year, 152 million mobile

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phones and 52 million computers are thrown away globally, creating a commercial opportunity for skilled entrepreneurs (Kalvø 2016). Similarly, paper recycling can have significant environmental benefits, as every ton of paper recycled can save 17 trees, produce 4000 kilowatts of energy, and reduce water and oil consumption.

3.2.2 Advancing Sustainable Product Innovation, Entrepreneurship, and Market Strategies Green entrepreneurship requires a green marketing strategy that includes the innovation and development of new sustainable products to satisfy under-served market segments or niches. Achieving this objective necessitates a comprehensive approach involving the four key elements of the marketing mix: product design, promotion, pricing, and distribution (often referred to as “place”). A pivotal aspect of green marketing entails the seamless integration of reverse distribution and recycling processes, a vital step in establishing a circular economy within the supply chain. For instance, consider the case of the Audi e-tron, a vehicle purposefully crafted with closed-loop technology in mind. This innovation was seamlessly woven into the initial production framework of Audi’s inaugural fully electric car. The meticulous management of the circular economy for critical components and materials is indispensable in ensuring the triumph of sustainable product initiatives (Nygaard 2022). Achieving this objective necessitates a comprehensive approach involving the four key elements of the marketing mix: product design, promotion, pricing, and distribution (often referred to as “place”). A pivotal aspect of green marketing entails the seamless integration of reverse distribution and recycling processes, a vital step in establishing a circular economy within the supply chain. For instance, consider the case of the Audi e-tron, a vehicle purposefully crafted with closed-loop technology in mind. This innovation was seamlessly woven into the initial production framework of Audi’s inaugural fully electric car. The meticulous management of the circular economy for critical components and materials is indispensable in ensuring the triumph of sustainable product initiatives (Nygaard 2022) (Fig. 3.5). The concept of urban mining is an innovative approach that responds to the need for resource recovery in the production of new products. Urban mining refers to the process of recovering valuable resources, such as metals, plastics, and other materials, from waste streams generated by urban areas, including discarded electronics, appliances, and construction waste. It involves the extraction, processing, and recycling of these materials to create new products, rather than relying solely on virgin materials from mining operations. Urban mining is a sustainable practice that reduces waste and conserves natural resources while creating economic opportunities for businesses and communities (Fig. 3.6).

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Fig. 3.5 Photo Audi e-tron 55 quattro SUV with high voltage battery and electric engine motor at Brussels Motor Show in 2019. Source Shutterstock

Fig. 3.6 Urban Mining like computer processors with gold plated pins, retrieved from a waste stream. Source Image © Ondˇrej Martin Mach via Wikimedia Commons licensed under CC BY-SA 3.0

In today’s consumer markets, the product life cycle has significantly shortened due to various factors. For example, the rapid introduction of new models, such as smartphones with a full model change every other year, has become common. This trend is driven by increased competition, evolving consumer preferences and behaviors, and the rising pressure for new sustainable products. Companies are compelled to

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Fig. 3.7 The product’s life cycle and profitability over time. Source Shutterstock

introduce new products frequently to stay ahead of the competition, while consumers quickly adopt new products, leading to the rapid obsolescence of older products. Additionally, technological advancements have accelerated product development and shortened life cycles. As consumers become increasingly aware of the environmental impact of their purchases, there is growing demand for sustainable and environmentally friendly products. Consequently, companies are introducing products that are designed for shorter life cycles, are easily upgradable, repairable, or recyclable. This trend towards shorter product life cycles creates a demand for innovation and entrepreneurship in recycling to produce new products. However, it can also lead to conflicts between old and new technology and knowledge, as established power structures may resist change and defend outdated technical solutions and environmental standards. Tensions and conflicts can arise between those promoting “green” products and those defending traditional practices. In this context, it is crucial to continuously invest in sustainable technology knowledge and the market for “green products”. The key is to navigate the introductory phase, move into the growth phase, and convert customer demand for sustainable products into continued growth. Established companies must restructure and innovate their products to refine and develop new sustainable features. Therefore, the most significant change agents in the market are established industrial structures, not new contractors. However, disruptive innovations can also revolutionize existing structures, and traditional companies in the market often ignore these changes until it’s too late and too expensive to adapt to their position (Fig. 3.7).

3.2.3 Green Entrepreneurship and Structural Inertia Established industrial structures, companies and institutions often face challenges in adapting to changes due to their long and slow lines of communication and command. The age of a company can also be a factor that contributes to inertia and an inability

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to identify and adapt to changes in the market. Strategies based on past successes can further complicate the process of adaptation and identifying new challenges in new green markets. Frequently, disruptive technologies are disregarded by dominant players who are unable to grasp how swiftly changes can happen. Kodak, for example, the global leader in photo-film, shifted its focus to digital solutions too late, resulting in filing for bankruptcy protection in 2012. Ironically, Kodak was the first company to create a digital camera in 1986. Disruptive changes can create a “blind spot,” rendering even well-established and efficient companies unable to anticipate the impact of technological innovations. Similarly, Blockbuster, the leading player in the movie rental market, lost its market position to Netflix, a new streaming technology company for the same reason. Blockbuster declared bankruptcy in 2010 because its top management neglected new technology for too long, ultimately ruining their business. Nokia, which had about 30% of the market, ignored the rise of smartphones and as a result, when Apple introduced smartphones in 2007, Nokia became a shadow of its former self. The emergence of new green technology and markets heralds a new era of disruptive change and significant industrial system restructuring (Fig. 3.5). Sustainability has become an increasingly important factor in the global economy, and as a result, many industries are experiencing disruptive innovations in sustainable technology and markets. These innovations are challenging traditional business models and transforming industries as we know them (Christensen and Overdorf 2000). One of the most significant disruptions in the automotive industry is the rise of electric vehicles (EVs). With the increasing demand for environmentally friendly vehicles, more companies are investing in EVs, and traditional automakers are shifting their focus to electric cars to stay competitive. The rise of EVs has disrupted the traditional automobile industry, challenging the dominance of gasoline-powered cars (Fig. 3.8). The shift towards renewable energy sources, such as solar and wind power, has disrupted the traditional fossil fuel industry. The costs of renewable energy have decreased dramatically over the past few years, making them more affordable and attractive to consumers. As a result, more and more people are choosing renewable energy sources over traditional fossil fuels. The development of efficient energy storage systems, such as lithium-ion batteries, has revolutionized the way we store and use energy. These systems make it possible to store excess renewable energy generated during off-peak hours and use it during peak hours, reducing reliance on the power grid and traditional fossil fuels. This innovation has the potential to transform the energy industry and make renewable energy sources more reliable and accessible. The concept of a circular economy, where waste is reduced and resources are reused or recycled, is disrupting traditional linear business models. Companies are finding new ways to design products that can be easily recycled or repurposed, reducing waste and environmental impact. The circular economy is challenging the traditional linear “take, make, dispose” model and transforming industries across the globe.

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Fig. 3.8 The figure illustrates the disruptive transformative evolution of market share from fossil fuel cars to Electric Vehicles (EVs) from 2010 to 2023 in Norway. This significant shift in the automotive landscape in Norway can be attributed to a combination of factors within the green marketing mix (Fig. 3.1). These include competitive pricing strategies, a commitment to outstanding product quality and design, the establishment of accessible service distribution networks, wellstructured marketing and supply channels, and the development of an extensive electric charging infrastructure. Source OtvStatistikk.no

The shift towards sustainable agriculture practices, such as regenerative agriculture, is disrupting traditional industrial farming practices. These practices focus on building healthy soil, reducing chemical inputs, and promoting biodiversity, resulting in healthier ecosystems and more resilient food systems. Sustainable agriculture is challenging the traditional industrial farming model and transforming the way we produce food. A disruptive green innovation refers to a pioneering innovation that can be marketdriven or technology-driven, and it can disrupt and change an existing market by making an existing business model obsolete (Christensen and Bower 1995). At the beginning, new actors based on new, sustainable, and disruptive technology may only serve a narrow segment or a niche in the market and be overlooked by the established players who focus on serving the mass market. The green shift is a disruptive change in many ways. For instance, the major players in the automotive industry have ignored the growing niche of electric cars over time. In accordance with the visual representation provided, it is evident that emerging technologies typically exhibit immaturity, unreliability, and are fraught with various technological obstacles during their initial phases. For instance, electric vehicles have encountered hurdles pertaining to their range, safety, and design. Nevertheless, with advancements in technology, there is a corresponding enhancement in product quality. Aligning this with the marketing strategy model (Fig. 3.1), one can discern that product quality undergoes enhancement, prices experience a reduction, promotional efforts bolster sales volumes, and the distribution aspect ensures the accessibility of sustainable products to a broader consumer base.

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However, the theory of disruptive sustainable innovation cautions against declaring any technological winner, as technological development is complex and decentralized. There are various technological concepts being experimented with today, such as hydrogen gas cars, electric cars, and other concepts that can all help solve or reduce the CO2 problem in the transport sector. The demand for new “green” products in the market at an early stage will be particularly dependent on conditions (Rogers 1976): • The success of a product in the market can be evaluated based on its advantages and disadvantages, which include: • Risk associated with buying the product • User-friendliness of the product versus its complexity of use • Speed at which benefits are realized • Visibility and measurability of benefits • Testability of the product’s qualities • Price • Requirement for behavioral changes related to the purchase and any associated costs. The successful introduction and adoption of sustainable products in the market will largely depend on how innovative early adopters are and how well their behavior is emulated by other segments of the market (Christensen and Oberdorf 2000).

3.2.4 Word of Mouth (WoM) and Marketing Strategy The effectiveness of promotion and Word of Mouth (WoM) can impact the success of sustainable products in the market (Mahajan et al. 1995). Word of mouth marketing (WOMM) is a promotional strategy that relies on individuals sharing information about a product or service with others. In this type of marketing, satisfied customers become brand advocates and promote the product or service to their friends, family, and acquaintances. The speed of WOMM promotion of green products online can be astonishing. So can also dissatisfaction. Word of mouth marketing can happen both online and offline and can be amplified through social media and other digital platforms. Word of mouth marketing is based on the idea that people are more likely to trust recommendations from their friends and family than they are to trust traditional advertising. When someone has a positive experience with a product or service, they are more likely to share that experience with others, leading to increased brand awareness and customer acquisition. Word of mouth marketing can be encouraged through various tactics, such as providing excellent customer service, offering incentives for referrals, and creating shareable content. The key to successful word of mouth marketing is to create a positive experience for customers and provide them with something worth sharing. By doing so, green brands can harness the power of customer advocacy and turn their satisfied customers into powerful brand ambassadors.

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Certainly, it is imperative to acknowledge that Word-of-Mouth Marketing (WOMM) wields considerable influence, notably within the domain of green marketing, especially when deployed in the initial phases of a green marketing strategy (Belz and Peattie 2012). This stems from the escalating significance of environmental concerns and sustainability in the consumer landscape. As consumers place greater emphasis on these values, their propensity to disseminate information and express sentiments pertaining to companies and products that espouse environmentally responsible practices is notably heightened. Encouraging sharing is a key component of word-of-mouth marketing. Brand management can incentivize green customers to share positive experiences with their products or services, either through social media or by providing referral bonuses. By doing so, they can reach a wider audience and potentially attract new customers who share their values. Working with influencers who are passionate about sustainability can also be an effective way to spread the word about a brand’s green initiatives. Influencers can help create buzz around a brand and can often reach a highly engaged and targeted audience. Creating a community of like-minded individuals can also be a powerful way to foster word-of-mouth marketing. Green brands can provide a platform for customers to connect and share their experiences and opinions with others. By creating a sense of community, brands can tap into the power of customer advocacy and encourage customers to share their positive sustainable experiences with others. However, it’s important to remember that green marketing efforts must be authentic and transparent to be successful. Customers can quickly spot greenwashing, which can damage a brand’s reputation. By focusing on genuinely sustainable practices and communicating them clearly to customers, a brand can build trust and credibility, leading to more positive word of mouth (Kotler and Levy 1971) (Fig. 3.9). Sustainable product development can be driven by a variety of sources, including innovative ideas, employee expertise and needs, large buyers, consumer groups, suppliers, public actors, and interest groups. Some factors that fuel innovation is internal, while others are external. Internal factors that drive sustainable change may arise from uncertain and unforeseen circumstances. Regulatory policies can be characterized by uncertainty, such as the government’s encouragement of diesel car purchases over petrol cars, which quickly led to issues with NOx air pollution in urban areas during cold weather. In hindsight, it is easier to understand such unintended conditions than it was at the time of policy implementation. Similarly, the prohibition of studded winter tires in metropolitan areas to mitigate airborne dust has created a need for new products and solutions. Recycling car tires into rubber pellet granulate to construct track and field or soccer fields led to a release of rubber and microplastics into waterways. This mistaken idea of recycling car tires resulted in costly rebuilding of sports fields. In 2017, the Norwegian authorities banned the use of rubber granulate made from recycled car tires on artificial turf pitches due to environmental and health concerns. After the ban, alternative materials such as cork, coconut fiber, or sand were sought for use on artificial turf pitches, resulting in several pitches being upgraded. In 2020, the European Union also adopted a ban on the use of recycled rubber granulate on artificial turf pitches due to potential

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Fig. 3.9 The long-term impact of disruptive green innovations on product quality enhancement. Source Public domain

health and environmental risks associated with hazardous substances such as heavy metals and polycyclic aromatic hydrocarbons (PAHs). Moving up the waste pyramid through innovation is a technically complex project that involves both economic and sustainability risks.

3.2.5 The Plastic and Product Packaging Problem The dead plastic whale found on the coast of Norway in early 2017 was a wake-up call that triggered increased focus on the issue of plastic pollution in the oceans. The whale had more than 30 plastic bags and other plastic waste in its stomach, which is believed to have contributed to its death. The incident received widespread media attention and highlighted the urgent need for action to address the growing problem of plastic pollution in the world’s oceans. Since then, there has been increased public awareness and political momentum to address this issue, leading to initiatives such as plastic bag bans, single-use plastic regulations, and increased efforts to promote recycling and reduce plastic waste (Fig. 3.10). Plastic is a material that has been essential in product design, cost-effectiveness, and food preservation. However, it has also become synonymous with pollution and environmental harm. Large amounts of plastic, which take a long time to degrade, are carried by ocean currents to colder and more vulnerable areas. Entrepreneurship has shifted from recycling to prevention of plastic use, as seen in the waste pyramid.

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Fig. 3.10 Plastic pollution constitutes an existential menace to marine life and our oceans. The photograph in question captures a poignant example of this crisis, depicting the state of Kuta Beach in Bali, Indonesia, on February 12, 2017, where a substantial accumulation of refuse besmirches the shoreline. Source Shutterstock

Since the plastic whale incident in 2017, the European Union (EU) has introduced several initiatives aimed at reducing the use of plastics and mitigating their environmental impact. One such initiative is the Single-Use Plastics (SUP) Directive, which was passed in 2019. This directive seeks to limit or ban certain single-use plastics and requires producers to pay for their clean-up and recycling. Another initiative is the Plastic Packaging Waste Directive, which was updated in 2018. The directive aims to increase recycling targets for plastic packaging waste and promote the use of recycled plastics in new products. In 2019, the EU also introduced a restriction on the intentional use of microplastics in cosmetic and personal care products. Additionally, several EU countries, including France, Italy, and Belgium, have implemented bans on single-use plastic bags. The EU has also introduced Extended Producer Responsibility (EPR) schemes, which hold producers accountable for the environmental impact of their products, including plastics. These schemes are designed to encourage producers to design products that are easier to recycle. All these initiatives are part of the EU’s broader strategy to transition towards a circular economy and reduce the environmental impact of plastic waste. By reducing the use of plastics and promoting sustainable practices, the EU is working towards a more sustainable future (Fig. 3.11).

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Fig. 3.11 Long-term disruptive cycles in industrial history. Source Starke (2008), Tibben-Lembke and Rogers (2002)

3.2.6 From Third Party Logistics to Fifth Party Logistics, Recycling and Reversed Logistics While the term Fifth Party Logistics (5PL) may not explicitly include circular economy principles, logistics providers and supply chain actors can incorporate circular economy practices into their operations, regardless of the terminology used (Barringer and Bluedorn 1999). The focus should be on integrating sustainable and circular practices into the overall logistics and supply chain strategies to achieve environmental goals and optimize resource utilization.“5PL” (Fifth Party Logistics) is a term that is not widely recognized or established within the logistics industry. It does not have a universally accepted definition or framework like 3PL (Third Party Logistics) or 4PL (Fourth Party Logistics). However, it is sometimes used to refer to a concept beyond traditional logistics outsourcing models. In this book, we have emphasized the essential value of the entire supply chain as a strategic level of analysis. To do so, the coordination of all organized decisions from raw materials to the circular end-of-life operations are of great importance to achieve sustainable performance. Thus, a 5PL—strategy is part of the sustainable management in the supply channel. In some instances, “5PL” may be used to describe an arrangement where a primary logistics provider (3PL or 4PL) outsources certain logistics functions to other logistics service providers (such as carriers, warehouses, or technology providers) to create a comprehensive logistics solution. This arrangement essentially involves the coordination and integration of multiple logistics service providers to deliver end-to-end supply chain solutions.

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The term “5PL” can also be associated with the use of advanced technologies and analytics to optimize supply chain operations and enable better decision-making. It may involve leveraging data analytics, artificial intelligence, machine learning, and other innovative tools to enhance visibility, efficiency, and collaboration across the supply chain. It’s important to note that the usage and definition of “5PL” can vary, and it may not have a standardized meaning across the logistics industry. As logistics and supply chain practices continue to evolve, new terminologies and concepts may emerge to describe evolving business models and strategies. As mentioned earlier, “5PL” is not a well-established or widely recognized term within the logistics industry. Since it does not have a universally accepted definition, it is not specifically associated with circular economy practices. However, in the context of logistics and supply chain management, circular economy principles can be integrated into various levels of logistics operations, including 3PL, 4PL, or other logistics arrangements. Circular economy focuses on reducing waste, maximizing resource efficiency, and promoting the reuse, recycling, and repurposing of materials throughout the product lifecycle. Logistics providers and supply chain actors can adopt circular economy practices by implementing strategies such as reverse logistics (managing product returns and recycling), product life extension (refurbishing and repairing products), remanufacturing (rebuilding products using recovered components), and implementing closed-loop supply chains (Table 3.1). As product development and innovation continue to increase and the life cycle of products becomes shorter, there is a rise in the number and variety of discarded products. This calls for recycling companies to innovate. The EU has mandated all member states to establish recycling systems that provide free recycling services to customers. Recycling is a form of reverse logistics designed to facilitate a circular economy. Typically, logistics involves transporting goods from producers to customers, but reverse logistics involves operations that transport products from customers back to distributors and manufacturers. Reverse logistics is a process that involves the planning, implementation, and control of the movement of goods from their typical destination, back to their point of origin or to another destination for purposes such as disposal, recycling, or reuse. It is essentially the opposite of traditional logistics, which focuses on the movement of goods from their point of origin to their intended destination. Reverse logistics may include activities such as the collection of used or defective products from customers, the management of returned or unsold inventory from retailers, or the recycling or disposal of materials from production processes. The goal of reverse logistics is to recover value from products or materials that might otherwise be discarded or wasted, and to reduce the environmental impact associated with their disposal. Reverse logistics can be complex and require specialized processes and systems to manage effectively, particularly when dealing with hazardous or regulated materials.

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Table 3.1 Presents the evolution of supply chain coordination from 1 party logistics to 5 party logistics that is essential alternative to achieve sustainable performance objectives (Horzela 2018) Logistics provider level

Time period

Characteristics

Examples

1PL

Historical

Self-operated

Manufacturer directly manages its own logistics operations, including transportation and warehousing

2PL

Historical

Specialized service Outsourcing specific logistics functions to providers external service providers, such as carriers or warehouse operators

3PL

Present

Comprehensive logistics services

Outsourcing end-to-end logistics functions to third-party providers, including transportation, warehousing, and value-added services

4PL

Present

Integrated supply chain management

Strategic coordination and management of multiple logistics service providers to provide comprehensive supply chain solutions. Acts as a single point of contact and oversees the entire supply chain

5PL

Emerging

Supply chain orchestration and optimization

Utilizes advanced technologies, data analytics, and optimization techniques to enhance supply chain operations, enhance visibility, and facilitate data-driven decision-making for improved sustainability throughout the entire supply chain. Involves collaboration with multiple logistics providers and leveraging innovative solutions to achieve sustainable performance objectives

However, it can also present opportunities for businesses to improve their sustainability, reduce costs, and build customer loyalty through efficient and responsible product management. The recycling industry plays a critical role in achieving sustainable distribution systems and protecting the public from toxic components in various products. However, the rapid growth of new product introductions and imports creates increased demand for innovation and dynamism among recycling companies (Flygansvær et al. 2018). To meet these requirements, recycling companies must accept risk, innovate, and compete with others in the industry. Reverse logistics is concerned with increasing collection rates, organizing landfills, and addressing distribution problems in the after-market for products. As new products continue to grow and life cycles become shorter, there is a need for increased entrepreneurship in the recycling system. This requires the capacity to accept risk, innovate, and introduce new recycling systems to the market (Barringer and Bluedorn 1999). Reverse logistics encompasses not only the processes involved in collecting and redistributing

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damaged or outdated products, but also those that aim to reproduce or prepare products for reuse. Essentially, any process that occurs after the initial purchase can be considered part of the reverse logistics chain (Van Riper 2005). While traditionally the focus has been on the return of damaged or unwanted goods, studies have shown that 4–6% of all purchases are returned, this concept has evolved to encompass a wider range of activities that aim to bring resources back into the value chain and protect society from the harmful effects of toxic materials. Business Case Assignment: Reducing Plastic Waste in Beverage Packaging: Carlsberg’s Snap Pack Initiative In this business case assignment, we will analyze Carlsberg’s innovative “Snap Pack” initiative aimed at reducing plastic waste in beverage packaging. The assignment will encompass a detailed examination of the background, significance, challenges, and potential outcomes of this sustainability-driven strategy. Please ensure to follow the structure, guidelines, and referencing standards provided below. Table of Contents 1. Introduction • Background information on the global issue of plastic waste. • Overview of Carlsberg’s Snap Pack initiative. • Purpose and scope of the assignment. 2. Literature Review • A review of literature related to the environmental impact of plastic waste. • An analysis of industry trends in sustainable packaging solutions. 3. Company Overview: Carlsberg Group • History, mission, and values of Carlsberg. • Sustainability agenda and previous environmental initiatives. 4. Snap Pack Initiative • Detailed description of Carlsberg’s Snap Pack. • Objectives and expected outcomes. • Technological aspects and innovations involved. 5. Industry Analysis • Examination of other beverage companies’ sustainability efforts (e.g., Starbucks, Disney, McDonald’s). • Regulatory landscape and the role of the European Union in addressing single-use plastics.

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6. Challenges and Risks • Identification and assessment of potential challenges and risks associated with the Snap Pack initiative. • Strategies for mitigating these challenges. 7. Benefits and Opportunities • Discussion of the environmental and financial benefits of the Snap Pack. • Market positioning and consumer perception. 8. Implementation and Timeline • Steps taken by Carlsberg to implement the Snap Pack. • Timeline for the rollout in different markets. 9. Evaluation and Measurement • Metrics and key performance indicators (KPIs) for assessing the success of the initiative. • Monitoring and reporting mechanisms. 10. Conclusion • Summary of the key findings and insights. • Recommendations for Carlsberg and other companies in the beverage industry. Guidelines • • • •

Ensure the assignment is well-structured, logical, and free from opinions. Use formal language and maintain a neutral tone. Provide accurate and up-to-date references to support your analysis. Aim for a professional and academically rigorous presentation.

References AMA. 2022. The Four Ps of Marketing [Internet]. [cited 2022 Dec 7]. Available from: https://www. ama.org/marketing-news/the-four-ps-of-marketing/ “China forst ut med plastbesparende verdensnyhet” [Internet]. [cited date]. Available from: https:// ringnes.no/nyheter/norge-forst-ut-med-plastbesparende-verdensnyhet/ “Motoring” (2016, January 26). Barringer, B.R., and A.C. Bluedorn. 1999. The Relationship between Corporate Factors Affecting Motivation Market Organizational Facilitation and Support And Strategic Management. Strategic Management Journal 20 (5): 421–444. Belz, F. M., and K. Peattie. 2012. Sustainability Marketing: A Global Perspective. 2nd ed. John Wiley & Sons.

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Booms, B.H., and M.J. Bitner. 1981. Marketing Strategies and Organization Structures for Service Firms. Marketing of Services. 25 (3): 47–52. Christensen, C. M., and J. L. Bower. 1995. Disruptive Technologies: Catching the Wave. Harvard Business Review. Christensen, C., and M., M. Overdorf. 2000. Meeting the Challenge of Disruptive Change. Harvard Business Review. Flygansvær, B., Dahlstrom, R., and A. Nygaard. 2018. Exploring the pursuit of sustainability in reverse supply chains for electronics. Journal of Cleaner Production. 189: 472–484. Hardin, G. 1968. The Tragedy of the Commons. Science 162 (3859): 1243–1248. Horzela, A., Kolinski, A., Domanski, R., and W. Osmolski. 2018. Analysis of use of communication standards on the implementation of distribution processes in fourth party logistics (4PL). Business Logistics in Modern Management. 2018 Dec 20. Holter, M. 2017. World’s Biggest Wealth Fund Turns Attention to Fashion Houses. Bloomberg. Holter, M. World’s Biggest Wealth Fund Turns Attention to Fashion Houses. Bloomberg. Inditex. 2022. Sustainability Report [Internet]. [cited date]. Available from: https://www.inditex. com/itxcomweb/en/sustainability Kalvø, L. 2016. Urban Mining—det skjulte gullet [Internet]. Available from: https://renas.no/detskjulte-gullet-urban-mining. Kotler, P. 2012. Marketing Management, vol. 25. Pearson Education. Kotler, P., and S.J. Levy. 1971. Demarketing, Yes, Demarketing. Harvard Business Review 79: 74–80. Mahajan, V., E. Muller, and F.M. Bass. 1995. Diffusion of New Products: Empirical Generalizations and Managerial Uses. Marketing Science 14 (3): G79–G88. Nikkei Asian Review. 2016. Nygaard, A. 2023. Is Sustainable Certification’s Ability to Combat Greenwashing Trustworthy? Frontiers in Sustainability 30 (4): 1188069. Nygaard, A. 2022. The Geopolitical Risk and Strategic Uncertainty of Green Growth after the Ukraine Invasion: How the Circular Economy Can Decrease the Market Power of and Resource Dependency on Critical Minerals. Circular Economy and Sustainability 3: 1099–1126. https:// doi.org/10.1007/s43615-022-00181-x. Ostrom, E. 2009. A General Framework for Analyzing Sustainability of Social-Ecological Systems. Science 325 (5939): 419–422. Rogers, E.M. 1976. New Product Adoption and Diffusion. Journal of Consumer Research. 2 (4): 290–301. Siegle, L. 2016. Ethical and Green Living: Am I a Fool to Expect More than Corporate Greenwashing? The Guardian. Siegle, L. 2016. Ethical and Green Living Am I a Fool to Expect More Than Corporate Greenwashing? The High Street Clothes Retailer Is Launching a Recycling Week That Clashes With a Campaign To Help Exploited Workers. The Guardian. Silkoset, R. 2023. Pricing: A Guide to Pricing Decisions. De Gruyter, Berlin/Boston. Starke, L. (Ed.). 2008. State of the World: Innovations for a Sustainable Economy. A Worldwatch Institute Report on Progress Toward a Sustainable Society. W.W. Norton & Company, New York, London. Tibben-Lembke, R.S., and D.S. Rogers. 2002. Differences Between Forward and Reverse Logistics in a Retail Environment. Supply Chain Management: An International Journal 7 (5): 271–282. Van Riper, T. 2005. Reseller Sees Many Happy Returns.

Chapter 4

Green Promotion and Marketing Communication

Abstract Marketing, often criticized for contributing to unsustainable development, holds the potential to promote sustainability. Promotion, a powerful marketing tool, aims to influence consumer perceptions of sustainable products. However, marketing communication via promotion encompasses diverse channels, necessitating a unified, culture-rooted strategy to prevent conflicting messages. While traditional advertising remains vital, technological advancements enable personalized, interactive communication through transaction tracking and custom offers. Authenticity and traceability are essential in sustainable market communication, meeting customer demands for evidence of sustainability across the supply chain. Advertising has evolved from oneway communication to interactive engagement, while personal sales leverage social media and global networks for two-way interactions. Public Relations (PR) shapes product and company attitudes based on reputation. Consistency across communication forms is crucial for a successful strategy. A unified sustainable approach should encompass advertising, personal sales, and PR, creating a positive interaction effect. Companies engaging in “greenwashing” risk reputation damage. A 2021 Consumer Protection Cooperation Network (CPC) report highlighted the inadequacy and potential misleading nature of over half of environmental claims in digital markets. To promote sustainability, marketing must adopt authentic, consistent, and transparent practices across all communication channels.

4.1 Marketing Promotion Marketing often comes under scrutiny for its role in unsustainable development, yet it also possesses the potential to curb it. One of the most prominent tools in the marketing arsenal is promotion. Promotion aims to sway, educate, or remind prospective buyers and shape their perceptions regarding sustainable products (McCarthy 1964). However, marketing communication through promotion isn’t a singular form but rather a medley of diverse channels. To ensure a consistent and coherent message reaches the market, a unified strategy must be adopted, deeply ingrained in the company’s culture to avert conflicting messages from different organizational sectors.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Nygaard, Green Marketing and Entrepreneurship, https://doi.org/10.1007/978-3-031-50333-7_4

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While advertising is a pivotal mode of communication, it remains one-way and impersonal. Advancements in technology enable personalized communication, such as tracking individual transactions using bank card or loyalty card data, and creating custom offers via email or social media, which can enhance interactive and bilateral communication. In sustainable market communication, authenticity, origin, and provenance are key. Sustainability has led to a customer demand for evidence and reliability of information about sustainable quality across the supply chain. Additionally, the integrity of the data is essential for customers to make purchasing decisions based on the most sustainable products that align with their preferences. Advertising has transitioned from being one-sided to more interactive. Personal sales, although historically limited by physical constraints, now benefit from social media platforms to enable two-way interactions throughout the buying process. With seamless solutions, global networks can provide personal service around the clock, and videos can aid in facilitating personal service and sales. Public Relations (PR) is a reputation-based form of communication that influences attitudes towards products and the company. A consistent approach across all communication forms is key to a successful promotional and communication strategy. A unified sustainable strategy should encompass advertising, personal sales, and PR, each supporting the others to create a positive interaction effect. Companies’ attempts to deceive consumers through advertising and sales, also known as “greenwashing,” can harm their reputation. The Consumer Protection Cooperation Network (CPC) report from 2021 based on European data from digital markets revealed that over half of the environmental claims lacked sufficient information to assess their benefit, and 42% of the claims may be exaggerated, incorrect, or misleading.

4.2 Greenwashing The act of greenwashing, which involves presenting non-existent or inadequate sustainability as “green,” is a lucrative marketing strategy known as “ecoopportunism” (Nygaard 2022). This unethical behavior is driven by hidden selfinterests and aims to mislead consumers who are attracted to sustainable products (Kahle and Gurel-Atay 2014). The objective is to gain access to profitable segments and charge premium prices for green products. The downside risk of this behavior is the potential destruction of green markets when consumers are unable to distinguish green products from non-green ones. Over time, this could lead to a loss of confidence in the market for sustainable products. Companies that engage in greenwashing also risk facing boycott actions if exposed (Friedman 1985). The Natural Marketing Institute has reported that 40% (a 21% increase since 2015) of American consumers and 58% of Millennials have stopped purchasing products after discovering that the company/brand does not practice environmental responsibility (Natural Marketing Institute, 2022 Consumer Trends Report). Earlier studies suggest that while many consumers support boycott motives, few are likely to boycott due to cost–benefit

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Fig. 4.1 A multitude of counterfeit brand bags observed at an Istanbul bazaar in Turkey. Genuine brands serve as indicators and guardians of consistent quality while also offering assurances of sustainability. The proliferation of counterfeit markets poses a significant threat to the green transition of markets, making it both expensive and highly challenging for environmentally unaware consumers to discern and select genuinely sustainable products. Source Shutterstock.com

evaluations (Klein et al. 2004). In today’s market, unethical behavior’s word-ofmouth impact on social media may have a stronger negative effect on willingness to buy than before (Arndt 1968). Moreover, the purchase of counterfeit consumer goods (Fig. 4.1), such as falsely labeled ecological food, is likely to be perceived as a greater expense when compared to more remote issues that lack strong personal relevance and associated costs. Green promotion and marketing communication (Kotler 1973) involves promoting a company’s products, ideals, and strategies as sustainable through various marketing channels. However, “greenwashing” is a marketing tactic where a company misleads consumers by portraying themselves as more environmentally friendly than they are, often through PR, sales, and advertising efforts. Companies that engage in greenwashing prioritize investing in marketing themselves as environmentally responsible over actually implementing environmentally friendly business practices. Essentially, greenwashing is a form of eco-opportunism where companies deceive customers by withholding information about the true nature of their products, production methods, and distribution practices. The current competition to develop new “green” products and markets has created incentives for companies to engage in unethical behavior by falsely presenting their products as sustainable. The market segment of consumers who prioritize sustainability in many countries has become an attractive force behind greenwashing. According to a recent report by McKinsey and Company (2020), 66% of respondents, and a significant 75% of millennial respondents, reported that their purchase decisions

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were influenced by the perceived sustainability of a product. As the market for green products grows, millennials represent a consumer segment that can support their purchasing decisions with information from social media and other digital sources. Companies producing “green” products have expanded their businesses to cater to this growing market of sustainable consumers. Therefore, these same companies see significant opportunities in aligning their business with environmental, social, and governance factors. Greenwashing occurs when companies market their products as environmentally friendly, even when they are not truly eco-friendly. Companies may manipulate their marketing communication through tactics such as blue branding, misleading brand names, and advertisements that cannot be verified or contain errors (Kahle and GurelAtay 2014). This can involve misrepresentation through greenwashing techniques like green profiling, environmentally friendly design, and manipulating figures to present a false eco-friendly image. It is important that marketing communication is accurate and verifiable, as it is a complex process. To support and document green marketing claims, co-branding can be used by partnering with certification marks (Chang 2009). Eco-co-branding is a useful tool for consumers when navigating a market with numerous brands that are difficult to evaluate in terms of environmental impact (Fig. 4.2). This type of branding can involve pure eco-brands or social labeling. Eco-labels indicate a standard of quality in terms of food safety and environmental impact, while social labeling indicates that the product aligns with human and labor rights. From a consumer perspective, eco-co-branding can help reduce uncertainty associated in markets for sustainable, ecological, or organic products. Companies can achieve sustainable eco-co-branding by combining the product’s brand name with that of a certification body or environmental organization (Chang 2009). Green brands, sustainable labels and certifications signal a standard sustainability benchmark quality in the market (Keller 1993). To ensure that basic market communication is reliable and valid, it is crucial to facilitate communication that captures and analyzes all elements, activities, and interests within a corporate environment. A corporate environment is shaped not only by the market, but also by technological advancements, social and cultural shifts, policy regulations, and a network of suppliers and competitors. These factors introduce uncertainty that can affect a company’s marketing communication. With the rise of social media, the level of transparency and openness has increased. Globalization has previously made it easier for companies to conceal environmental harm and irresponsible practices, especially in developing countries ruled by authoritarian regimes. However, the emergence of stakeholder groups and social media has led to improved scrutiny and accountability, which will be further discussed in the section on stakeholder analysis.

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Fig. 4.2 Eco-co-branding is a cooperative venture involving a product brand and a certification brand. To exemplify this concept, consider the visual representation of an unopened Cadbury Dairy Milk chocolate bar. This chocolate bar prominently features both the Cadbury product brand and the Fairtrade certification, thereby emphasizing the mutually beneficial relationship between the two entities. Substantial empirical evidence (Nygaard 2023) underscores the notion that certifications contribute positively to the augmentation of brand value and a heightened consumer willingness to pay for sustainable and environmentally friendly products. Keller (1993). Source Shutterstock.com

4.3 Green Promotion and Marketing Communication Marketing communication cannot be reduced to a simple choice between PR, personal sales, or advertising. Rather, it is a dynamic process that begins when a consumer recognizes a need and continues through the search for alternatives, evaluation of options, purchase decision, and post-purchase evaluation. To promote sustainable consumption, it is crucial to understand the various stages of this buying process and the potential effects of different forms of communication on each stage. It is likely that various forms of communication and platforms impact different stages of the buying process in distinct ways. Social media has become increasingly important as a communication platform. Influencers, bloggers, Twitter, Pinterest, Snapchat, Instagram, and Facebook are all effective channels that hold potential in various phases of the buying process. For instance, when customers encounter a problem or need, they may opt to use Instagram, Facebook, or blogs. Sustainable marketing communication can be divided into different phases, as illustrated in Fig. 4.3, to better understand the purchasing process (Engel et al. 1968). To ensure consistency, all communication must be well-coordinated and have a unified message. However, it can be challenging to provide different customer groups with consistent information on various social media platforms. Integrated marketing communication aims to optimize a cohesive message across different channels, targeting consumers, stakeholder groups, and society. The primary objective of this strategy is to create a synergistic effect between various communication forms

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Fig. 4.3 The model depicts the consumer purchasing process, covering stages from initial problem recognition to post-purchase evaluation. To shape sustainable consumer behavior, marketing communication should actively involve all these stages by utilizing various digital platforms. Source Shutterstock.com. Engel et al. (1968), Belch (2014)

and channels to achieve a clear, holistic, and consistent message. The Newport Folk and Jazz Festivals stand out as premier events in the United States, having hosted legendary artists such as Bob Dylan, Joni Mitchell, and Duke Ellington. Notably, the festival has achieved Department of Environmental Management (DEM) certification as a green event in 2023. The renowned Newport Jazz Festival is setting a commendable example in the realm of sustainability. They are actively implementing environmentally friendly practices, including the reduction of single-use plastic items such as water bottles, bags, and straws, offering extensive recycling facilities, collaborating with local food vendors, minimizing food wastage, and promoting eco-friendly transportation options such as biking, walking, water taxis, and carpooling to reduce greenhouse gas emissions. This commitment to sustainability has become an integral component of the Newport Jazz brand as a green event. Concrete solutions that reflect powerful marketing communication can be seen in areas such as transportation (excluding petrol-powered vehicles), printed materials, and financing options. An integrated advertising and communication strategy

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is implemented through various social media channels such as Twitter, Facebook, and Instagram (Belch 2014). In addition to a communication strategy, an effective marketing message is also important. A successful message is concise (less than twelve words), uses simple language, and is adapted to various communication channels. Examples of successful messages include campaign, like The Body Shop’s “Enrich Not Exploit” campaign. Other brands use slogans to emphasize their commitment to sustainable strategy like Adidas “Made to be remade”, Coca-Cola, “World Without Waste”, H&M, “Close The Loop” and Ikea, “Circular Ikea”, Unilever, “Sustainable Living”. Campaigns like this promotes commitment to sustainable sourcing and ethical practices. This explicit message connects the company’s sustainable strategy with the product and the market. Product placement in movies or TV shows can be an effective marketing strategy to connect products with positive contexts, but it is essential that the message aligns with the company’s sustainability values. For instance, Tesla successfully placed their electric car in the 2018 Marvel movie “Avengers: Infinity War,” where the character Tony Stark (played by Robert Downey Jr.) is seen driving a Tesla Model S. In the movie “The Day After Tomorrow,” the main characters drive a Toyota Prius, which is known for its hybrid technology and fuel efficiency. Additionally, some TV shows have taken up the cause of promoting eco-friendly products and sustainability initiatives to their audience. For instance, “The Ellen DeGeneres Show” frequently features eco-friendly products and initiatives, such as interviews with ecoconscious celebrities, segments on topics like recycling, composting, and reducing plastic waste. Another show that promotes sustainability is “Jamie Oliver’s Food Revolution,” where the celebrity chef advocates for sustainable and healthy eating habits through segments on topics such as reducing food waste, supporting local agriculture, and eating plant-based meals. Demonstrating the superior functionality of sustainable products is crucial for them to gain an advantage over non-sustainable ones, especially for customers who prioritize functionality over sustainability. Product placement can be a powerful tool for showcasing these advantages. To differentiate themselves and appeal to customers, many companies have developed and introduced new sustainable brands or brand extensions with a “green” image. For example, Patagonia, known for their sustainable and durable outdoor clothing, has expanded their brand to include sustainable food products through Patagonia Provisions. This brand offers responsibly sourced and produced food items like wild salmon and organic soup. Another example is Polestar, which started as a performance brand for Volvo cars but was later spun off as a separate electric vehicle company in 2017. Volvo has positioned Polestar as a premium electric vehicle brand that embodies sustainability and modern design. Brand extensions can alleviate customers’ uncertainty about trying new and sustainable products (Biong et al. 2010). Sustainable brand names should indicate a standardized added value that encompasses environmental, social, and economic benefits. Therefore, it’s crucial to have clear targets and indicators of sustainability

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that can be documented, tested, and validated in the market. Ambiguous sustainability measures can tempt manufacturers to engage in greenwashing through superficial branding and the use of green and leaf colors, which tend to attract less attention than warm colors like red and yellow (Kotler 1973). This can cause environmentally friendly products to receive less attention compared to less sustainable ones. Brand development helps customers recognize and remember the product, reinforced by frequent marketing communications like advertising. Effective market communication of the brand also helps differentiate sustainable products from less sustainable ones. Green brands contribute to consumer confidence in the company’s long-term ability to reshape the market. Developing brand value that signals environmental sustainability can lead to an emotional connection with the brand. Two-way involvement in marketing can also contribute to building green brand value. The development of brand value depends on the ability to demonstrate the environmental advantages of the product compared to competing products. When consumption of sustainable products feels natural and in harmony with the environment, it can create a sense of satisfaction that strengthens long-term loyalty to the product (Keller 1993). Green products signal an emotional attitude based on both social and environmental criteria, which can trigger socially conspicuous consumption. For example, buying an electric car can signal values such as responsibility, care, and family orientation, while also being associated with middle-class values (Akerlof 1970). Sustainable consumption balances selfish and altruistic motives, and successful marketing communication targeting consumers’ complex motives depends on good empirical insight. Brands signal a standardized quality in the market, allowing customers to make more informed choices between products. In markets without brands, customers often struggle to distinguish sustainable products from those that represent an environmental threat. Trademark (brand) owners act as guarantors of the standardized quality communicated in the market. Tests can be conducted to determine if a product meets the quality standards signaled and communicated through a brand. Such “objective” criteria help customers navigate a market with many alternatives. However, sustainability increases the complexity of communicating standardized quality in the market as social and environmental responsibility become important dimensions in addition to technological and economic criteria throughout the product life cycle, from raw materials to recycling. Brands like Nike can no longer be evaluated solely based on customer satisfaction with their sneakers. Factors like production through subcontractors in Africa and its impact on freshwater reserves must also be considered. It is even challenging for brand owners to ensure the entire production and distribution process is sustainable. The fast-approaching globalization further complicates this issue (Biong et al. 2010). The intricacies of the global industrial network, compounded by geographical, linguistic, and cultural divides, alongside diverse legal and political landscapes, create opportunities for concealing information and distorting facts. Manufacturers and distributors situated far from Western European and American markets may have incentives to deceive and provide false information to meet sustainability criteria imposed by brand owners. To address this, various strategies are deployed to ensure that brand owners remain well-informed

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about a range of issues across the entire product life cycle, spanning from raw materials to recycled materials. Some companies establish partnerships with stakeholder groups to gain an additional, independent assessment of actual conditions. However, in many production countries, freedom of the press, freedom of expression, and freedom of association are absent. The Rana Plaza tragedy in 2013 in Dhaka, Bangladesh, where an eight-story commercial building collapsed, killing 1134 people, and injuring more than 2500 mostly young garment workers manufacturing fashion for fashion chains like Benneton, Mango, Walmart, and others, highlighted the challenges in monitoring and improving hazardous working conditions in manufacturing countries (Kasperkevic 2016). The entire product life cycle, from sourcing raw materials to recycling, involves a vast network of suppliers and subcontractors spanning the globe. Meanwhile, brands serve as a standardized representation of a product’s sustainability standards in the market. However, these brands may fall prey to free riding by other actors in the network who subcontract tasks and disregard environmental and social responsibilities (Røise 2016). The situation has improved dramatically the last 10 years. During the earthquake tragedy in Turkey in 2023, fashion chains that had production in the area were among the first to start funding help organizations, send equipment and supplies and other help.

4.4 Green-Nudging In this book, we have emphasized the potential negative effects of using rewards, penalties, fees, and control mechanisms to promote sustainable behavior. Such approaches can backfire and result in unintended consequences (Biong et al. 2010). Control measures can be unproductive and even reduce the popularity of a behavior. Moreover, coercive measures such as laws, rules, and control can have unintended consequences that may be counterproductive to the desired outcome (Biong et al. 2010). Previous research has suggested that forceful coercion can have a negative impact on ethical attitudes within organizations. Therefore, it is important to consider alternative approaches that are more positive and empowering when promoting sustainable behavior (Thaler and Sunstein 2008). One such approach is nudging, where sustainable options are made the default choice. For example, many cities have implemented opt-out recycling programs, where residents are automatically enrolled in recycling services unless they choose to opt-out. This has resulted in increased recycling rates. Encouraging sustainable behavior through positive and empowering approaches can be effective in nudging people towards more sustainable choices. One approach is highlighting social norms that support sustainable behavior, such as informing hotel guests that many guests choose to reuse towels. Feedback and information on sustainable behavior, such as smart home systems that provide feedback on energy usage, can also be effective. Making sustainable behavior more engaging, such as through mobile apps that track carbon footprint and allow users to compete with

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friends, can be another effective approach. Incentives, such as tax credits for installing solar panels, can also encourage sustainable behavior. It is important to avoid negative approaches such as penalties, fees, and control mechanisms, as these can have unintended and counterproductive outcomes. The idea of “nudging” has emerged as a positive method to encourage consumers and users to make environmentally conscious choices. This approach stands in contrast to the negative impact of coercion through laws, rules, and control, which can result in unwanted behavior. Nudging has become a crucial tool for sustainable entrepreneurship and sustainable marketing, providing an alternative to patronizing political governance and control (Thaler and Sunstein 2008; Verplanken and Wood 2006). Retailers have long used larger shopping carts to increase sales, but this approach does not align with efforts to reduce waste. Instead, smaller shopping carts can lead to lower consumption and less waste. Similarly, using smaller dinner plates can reduce calorie intake, waste, and ultimately CO2 emissions and pollution throughout the production and distribution system. These examples demonstrate the effectiveness of nudging towards more conscious consumption. According to Thaler and Sunstein’s (2008) definition, this approach can be applied to “green nudging”: Nudging influences people’s behavior by reinforcing viable alternatives in a positive way that does not prevent them from making other choices or from changing their finances incentives. For us to be able to create grounding, the impact must be convenient and possible for consumers to avoid if they wish. Nudging is not coercion or instruction. Thaler and Sunstein’s (2008)

The introduction of a “sugar tax” is an example of regulatory “nudging” and demarketing of sugar-based products in favor of healthy alternatives. However, as we have previously discussed, green pricing strategy is an important element in green marketing that can have overall positive effects by shifting demand towards healthier alternatives. In the UK, the sugar levy is hailed as a huge success, having prevented thousands of obesity cases according to the World Cancer Research Fund International (WCRF 2023). Globally, an increasing number of countries, including 16 European nations, have implemented a “sugar tax” on soft drinks. A country like Mexico, grappling with one of the world’s largest obesity problems, introduced a “sugar tax” in 2014 and has reduced the consumption of sugary beverages by nearly 10% while increasing the consumption of water. Demarketing of sugary drinks, alongside nudging water as an alternative, has had a significant positive impact. The point is not to eliminate sugary products but to support non-sugary products through pricing, placement, and promotion. The introduction of the “sugar tax” was not a form of nudging, but rather a controlling political measure. Green nudging would involve replacing sugary candy with healthier options at children’s eye level in store checkouts. Consumers often make purchasing decisions based on habits, routines, and cognitive biases, which may account for up to 45% of their behavior (Verplanken and Wood 2006). This means that many consumer decisions are automatic and made without rational thought or evaluation. In these situations, consumers can be influenced to go in a

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different direction, either by being nudged or pushed. Often, these decisions do not require high involvement or a lot of information. In fact, it’s often the opposite (Fig. 4.4). For example, shopping after a tiring day at work is characterized by little information and little involvement in evaluating alternatives. Consumers are often required to make many quick and trivial decisions. However, the sum of all these decisions can have significant consequences for individual sustainable consumption and society (Fig. 4.4). The use of smaller plates can motivate individuals seeking a healthier diet to attain their desired outcomes. A study conducted in hotels revealed that minor adjustments to the placement and arrangement of food items can encourage guests to select more nutritious options. This illustrates how entrepreneurship can leverage nudging techniques to encourage sustainable behavior without resorting to coercive measures. Kallbekken and Sælen (2013) discovered that employing green nudges, such as smaller plates, led to a reduction in waste and consumption (Kallbekken and Sælen 2013). Supplying smaller portions resulted in a 20% reduction in food waste, which also increased corporate profitability. Active facilitation of cycling as a transportation alternative has proven effective in Denmark, Germany, and the Netherlands (Pucher and Buehler 2008).

Fig. 4.4 While the specific case at the urinal at Schiphol Airport might not have directly contributed to the development of nudging theory, it serves as a practical example of how these principles can be applied in real-world scenarios. The management at the airport addressed cleanliness problems around urinals with a clever “nudging” approach. They etched a small housefly image near the urinal center, providing a target for urination, which reduced spills and enhanced restroom cleanliness. This strategy tapped into the human tendency for target-based aiming, disrupting automatic cognitive behavior and resulting in a cleaner and more pleasant experience. These nudging techniques can also encourage sustainable behaviors by positively influencing decision-making. Source Shutterstock.com

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In Sweden, the shift from duplex copying to one-sided copying led to a remarkable 30% reduction in paper consumption, illustrating how minor adjustments can yield substantial sustainability benefits (Egebark and Ekstrøm 2016). Likewise, contemporary washing machines and dishwashers frequently include an eco-program as the default setting, allowing users to select a regular program for faster or more intensive cleaning if they prefer. This exemplifies nudging, as users must consciously choose the regular program, while the eco-friendly option is the default selection. Table 4.1 provides several examples of nudging strategies designed to encourage sustainable behavior. An example of providing consumers with alternatives is seen in schools where efforts are made to increase the proportion of fruit in children’s diets. A simple intervention, such as verbally asking the children if they want fruit at lunch, can lead to a significant increase in consumption. For instance, at one school, fruit consumption increased by 70% when children were asked, while at another school where children were not asked, the increase was only 40%. This demonstrates the power of nudging interventions to positively influence consumer behavior towards more sustainable choices (Lehner et al. 2016). Information on the importance of reusing towels in hotels is one mild request which has had a great effect (Goldstein et al. 2008) (Table 4.1) (Fig. 4.6). We also see that for example, recycling increases when neighbors influence each other’s behavior (John et al. 2013). “Green nudging” can influence automatic and seemingly trivial decisions related to energy use, as revealed by Momsen and Stoerk 2014. Despite expressing a desire to use renewable energy sources, electricity customers often select nonrenewable options. However, the study found that informing customers about the choice between renewable and non-renewable energy sources could boost renewable energy consumption by 44% (Momsen and Stoerk 2014). Green nudging is a non-coercive communication practice that reinforces sustainable choices through positive signals, such as posters. For example, choosing stairs over elevators can interrupt automatic behavior, leading to environmental sustainability, cost reduction, and significant health benefits. In addition to physical design, digital green space is emerging as a novel approach that leverages comprehensive innovations to promote Table 4.1 Methods of nudging and examples illustrating their impact on enhancing sustainability performance Lehner et al. (2016) Nudging for sustainability

Examples

Simplification and facilitation of information

Simple information about energy consumption when purchasing electronics, cars, or houses

Changes in the physical environment

Use of key cards in hotels for turning lights on and off the size of plates in the restaurant

Offer sustainable alternatives to the standard/ routine choice

Use of energy-saving programs in washing machines and dishwashers as an alternative to the standard program

Use of social norms

Sign saying ‘Most of our guests reuse towels’ in the hotel room

4.4 Green-Nudging High Degree of Intervention

75 Eliminate choices.

Completely exclude alternatives.

Restrictive choices.

Regulations of undesired alternatives for specific groups or situations.

Guiding choices through

Using disincentives to influence

disincentives.

people not to make undesirable choices.

Influencing choices through

Rewarding people through

incentives.

incentives to make desired choices.

Nudging by altering default

Influencing decisions by making

choices.

desired choices the default option.

Nudging by including desired

Increasing people's opportunities

choices as alternatives.

to change alternatives.

Nudging by informing decision-

Inform and educate decision-

makers about various

makers to make rational choices.

alternatives. Low Degree of Intervention

Follow up and gather

Delay development to see if

information about the current

undesirable consequences result

situation.

from a strategy.

Fig. 4.5 The figure depicts the progressive evolution of influence, ranging from minimal intervention to a substantial degree of intervention in consumer decision-making. This progression involves a gradual shift from subtle nudging with no intervention towards a substantial reliance on financial, administrative, and regulatory coercive measures. Nuffield Council on Bioethics (2007)

healthier diets, more sustainable products, and consumption. With the increasing digitization and e-commerce, new and powerful tools are available to make sustainable alternatives visible and accessible (Huyghe et al. 2017). Digital nudging can create a more reflective decision-making situation that empowers consumers to make more deliberate and sustainable choices, making them more determined, motivated, and less susceptible to impulse purchases through guidance and suggestions (Lades 2014). Digital nudging provides consumers with

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Fig. 4.6 The “Save water” sign in hotel rooms encouraging guests to reuse their bath towels is a gentle and informative method of nudging aimed at influencing behavior. Source Shutterstock.com

detailed information about alternative choices and their consequences. However, it is crucial that consumers have the freedom to choose both viable and non-viable alternatives. This can be facilitated by health technology in many areas. For instance, the increasing number of dementia patients can be aided by technology to make sensible choices. Entrepreneurship can help by exploring how different choices are linked. Through design, technology can make the healthiest option the easiest option (Egebark and Ekstrøm 2016). Transportation systems are another area where design and facilitation can play a critical role in promoting sustainable choices. The level of intervention in consumer decisions can vary depending on its significance to the individual and society. The most effective way to influence consumer choice is by eliminating unfavorable alternatives (Lehner et al. 2016). Figure 4.5 illustrates the gradual development of influence, spanning from minimal intervention to a significant degree of involvement in consumer decision-making (Fig. 4.6).

4.5 Green Brand Extension One approach to standardizing sustainability quality is the implementation of “green trademarks” and collaboration through co-branding with environmental brands. Brand extensions like Audi’s “e-tron” or Mercedes’ “EQ” can effectively communicate a brand’s dedication to sustainable technology (Fig. 4.7). Companies should prioritize standardized quality signals through comprehensive output, product, and

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service measurements, as well as rigorous controls that encompass the entire production network. Failing to implement such measures puts companies that invest in green trademarks at risk, as some network companies may reduce their efforts and cut costs associated with the production and marketing of sustainable products. Brand extension of electric car brands provides numerous advantages that contribute to their success in the market (Fig. 4.7). Firstly, established brands benefit from leveraging their existing reputation and brand equity, which helps build trust and credibility among consumers. By extending their brand into new electric car models or product lines, they can tap into new customer segments, increase their market share, and cater to a wider range of preferences. This strategy also strengthens customer loyalty as satisfied customers are more likely to consider and choose the brand’s extended electric car models. Additionally, brand extension streamlines marketing efforts by utilizing the existing brand’s marketing infrastructure and customer base, resulting in cost efficiencies and synergies. The familiarity of the brand simplifies the consumer decision-making process as customers can easily associate the same attributes with the extended electric car models, reducing perceived risk and uncertainty. Furthermore, brand extension drives innovation and differentiation within the electric car industry by introducing new features, technologies, and design elements. Overall, brand extension offers strategic advantages by leveraging brand equity, increasing market share, enhancing brand loyalty, streamlining marketing efforts, simplifying consumer decision-making, and fostering innovation and differentiation. Therefore, companies may enjoy cost reductions and achieve better outcomes compared to other participants in the network by reducing their efforts towards sustainability. However, this situation gives rise to a “free-rider problem” where

Fig. 4.7 EQ is a brand extension of Mercedes that heralds a new era in electric mobility, seamlessly integrating sustainability with cutting-edge innovation. Source Shutterstock.com

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other companies continue to benefit from the positive image associated with a “green brand” without actively contributing to sustainability efforts. Organizational factors come into play when addressing both the issue of reduced effort and the free-rider problem. One approach to tackle the problem of reduced effort is to increase incentives through results-based management, such as implementing performance-based pay and bonuses. However, it’s important to be cautious as this approach may lead to an excessive focus on financial results. To address this, some companies include sustainable development indicators in their management incentive packages, responding to investor demands and influencing decision-making towards sustainability. Additionally, external pressures, such as regulatory requirements, often play a crucial role in driving the adoption of sustainable practices and promoting a green transition. Environmental certifications, such as the ISO environmental certification, can serve as effective motivators for change. Various regulations aim to impose external costs of pollution on polluters, encouraging them to reduce emissions through the adoption of innovative sustainable technologies. Early adopters of sustainable technology can also gain a competitive advantage in markets by being the “first-movers”. However, the challenge lies in the fact that many countries with significant biological diversity and extensive rainforests are often ranked as the most corrupt economies globally. The globalization of markets has intensified international competition among companies and increased consumer access to information about alternative solutions. While this has generally resulted in cost reductions and improved products, it has also led to longer production chains and more complex networks of goods and services. The growing cultural divide between different stages of production has resulted in increased coordination and monitoring expenses, leading to higher information asymmetry and a rise in opportunistic behavior, including eco-opportunism. Eco-opportunism refers to hidden self-interested actions taken by companies that disregard their social and environmental responsibilities, potentially allowing less sustainable products to outperform their more sustainable counterparts. This situation creates what can be referred to as “green lemons” markets, where sellers possess knowledge about the true sustainability of products, while customers lack the necessary information to assess the sustainability of individual products (Akerlof 1970). Eco-opportunism refers to the intentional and covert actions undertaken by companies to gain advantages while disregarding their environmental, social, and economic responsibilities. These actions impact all stakeholders involved in the production and recycling of the product across its entire lifecycle (Nygaard 2022). In such markets, products with misleading green claims (referred to as “lemons”) tend to dominate, while genuinely sustainable products are undervalued or scarce. The counterfeit medicine market serves as a distressing example of this issue, resulting in an estimated 100,000 deaths annually in Africa, as reported by the World Health Organization. These actions affect all stakeholders involved in the production and recycling of the product throughout its life cycle (Nygaard 2022). In such markets, “greenwashed” products with misleading and false claims gradually dominate, while genuinely sustainable products are being outcompeted. The illegal pharmaceutical market is a

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frightening example of how such issues have evolved, resulting in, for instance, an estimated 500,000 deaths annually in Africa, according to the UN (Jerving 2023). It is estimated that around 10% of all medicines traded in developing countries are counterfeit. This is, among other things, due to counterfeit malaria and antibiotic medicines being marketed as genuine. To address this problem, sustainability must be treated as an outcome goal, which includes comprehensive documentation of the entire product life cycle from raw materials, production, consumption, and recycling. Greenwashing through “green” markets for counterfeit “lemons” products represents a new form of eco-opportunism and poses a significant threat to the green transition. To address this problem, sustainability must be treated as a performance metric, encompassing comprehensive documentation of a product’s entire life cycle, including production, consumption, and recycling. Greenwashing within green lemons markets represents a new form of eco-opportunism and poses a significant threat to the progress of sustainable practices. Case: “Nudging Sustainability: A Marketing Communication Challenge” Case Scenario: Imagine a multinational fast-food chain that is facing criticism for its unsustainable practices, particularly regarding excessive packaging waste and unhealthy food choices. They have realized the need to transform their image and make their offerings more environmentally friendly and health conscious. However, they face resistance from both consumers and some internal stakeholders. Assignment Task Problem Statement: Begin by identifying and framing the sustainability-related problems faced by the fast-food chain. This should include issues related to packaging waste, unhealthy food options, and the negative public perception. Nudging Strategies: Explore various nudging strategies that can be employed to encourage customers to make more sustainable and healthy choices when dining at the fast-food chain. Discuss how these strategies align with behavioral economics principles. Marketing Communication Plan: Develop a comprehensive marketing communication plan that includes the following elements: Messaging: Create persuasive and informative messages that highlight the chain’s commitment to sustainability and health. Channels: Determine the most effective communication channels (e.g., social media, in-store signage, mobile apps) for reaching the target audience. Campaign Execution: Describe how the marketing campaign will be executed, including the timing, frequency, and coordination of messages. Measurement: Outline key performance indicators (KPIs) to assess the success of the campaign. Consumer Segmentation: Identify different consumer segments (e.g., healthconscious, eco-friendly, price-sensitive) and tailor your marketing communication approach to each group.

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Ethical Considerations Discuss the ethical implications of nudging and marketing communication in the context of sustainability. Address concerns about transparency and consumer autonomy. Challenges and Recommendations: Anticipate potential challenges and provide recommendations for mitigating them. Consider how to handle any resistance from internal stakeholders or external critics. Outcomes and Evaluation: Predict the potential outcomes of your marketing communication plan and suggest methods for evaluating its effectiveness. What metrics will indicate a positive change in consumer behavior? Conclusion: Summarize your findings and discuss the broader implications of using nudging and marketing communication to promote sustainability in the fast-food industry.

References Akerlof, G.A. 1970. The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics 84 (3): 488–500. Arndt, J. 1968. Word-of-mouth advertising and perceived risk. In Perspectives in consumer behavior (pp. 330–336). Scott Foresman Belch, G.E. 2014. Advertising: An Integrated Marketing Communication Perspective. McGraw Hill. Biong, H., R. Silkoset, and A. Nygaard. 2010. The Influence of Retail Management’s use of Social Power on Corporate Ethical Values, Employee Commitment, and Performance. Journal of Business Ethics 97 (3): 341–363. Chang W-L. 2009. Roadmap of Co-branding Positions and Strategies. Journal of American Academy of Business, Cambridge (JAABC) 15: 77–84. Egebark, J., and M. Ekstrom. 2016. Can Indifference Make the World Greener? Journal of Environmental Economics and Management 1 (76): 1–13. Engel, J.F., D.T. Kollat, and R.D. Blackwell. 1968. Consumer Behavior, 1st ed. New York: Holt, Rinehart and Winston. Environmental Pressures from European Consumption and Production. A Study in Integrated Environmental and Economic Analysis. EEA Technical Report No 2/2013. Friedman, M. 1985. Consumer boycotts in the United States, 1970–1980: Contemporary events in historical perspective. Journal of consumer affairs.19 (1): 96–117. Goldstein, N.J., R.B. Cialdini, and V. Griskevicius. 2008. A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels. Journal of Consumer Research 35 (3): 472–482. Huyghe, E., J. Verstraeten, M. Geuens, and A. Van Kerckhove. 2017. Clicks as a Healthy Alternative to Bricks: How Online Grocery Shopping Reduces Vice Purchases. Journal of Marketing Research 54 (1): 61–74. Jerving, S. 2023. Two Types of Drugs Kill Nearly 500,000 in Sub-Saharan Africa Each Year. Devex, Feb 2. John, P., S. Cotterill, L. Richardson, A. Moseley, G. Smith, G. Stoker, and H. Nomura. 2013. Nudge, Nudge, Think, Think: Experimenting with Ways to Change Civic Behaviour. A&C Black. Kahle, L.R., and E. Gurel-Atay. 2014. Communicating Sustainability for the Green Economy. New York: M.E. Sharpe.

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Chapter 5

Green Supply Chain Management (Place)

Abstract The transportation system within supply chains plays a pivotal role in the marketing mix, particularly regarding its environmental impact, including CO2 emissions. Embracing sustainable transportation options is crucial for promoting ecofriendly practices. “Green distribution” today encompasses both traditional distribution methods and “reverse distribution,” involving the reuse, recycling, composting, or elimination of environmental toxins in products. Implementing a circular supply system and sustainable practices across the distribution process, from transport to reverse distribution, composting, and toxin elimination, is paramount. Challenges arise in the logistics of Fast-Moving Consumer Goods (FMCG), especially perishable food products, due to their time-sensitive nature, potential quality loss, and dynamic consumer preferences. Over-supply in the market leads to food wastage, exacerbating global hunger concerns highlighted in the latest FAO and UNEP reports. Approximately 14% of the world’s food is lost post-harvest, while an additional 17% is wasted in retail and households, a substantial loss that exacerbates global food security challenges. Addressing food waste necessitates holistic intervention along the entire supply chain, underscoring the urgency of implementing sustainable practices.

5.1 Supply Chains and Green Management The transportation system used in supply chains (place) has a crucial role in the marketing mix due to its potential environmental impact, particularly in terms of CO2 emissions. Opting for sustainable transportation options is essential for promoting environmentally friendly practices. Distribution involves organizing supply chains to reach specific market segments through retailers in a designated geographic area, including developing storage and transportation systems. In today’s world, the concept of “green distribution” encompasses traditional distribution methods and “reverse distribution,” which entails reusing, recycling, composting, or eliminating environmental toxins in products. To achieve green distribution, implementing a circular supply system and sustainable practices in all aspects of the distribution

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process—such as transport, warehousing, reverse distribution, composting, and toxin elimination—are crucial.

5.1.1 Waste Management Low-cost consumer goods, such as Fast-Moving Consumer Goods (FMCG), present significant logistical challenges, especially perishable food products that require continuous market trading and quick quality loss. The time horizon is critical for success in these markets as consumer preferences may change rapidly, and estimating demand can be problematic, leading to poor service quality and dissatisfied customers. Over-supply in the market can also cause environmental problems, mainly in the food industry, where a significant amount of food is wasted in shops and by consumers. This issue is pressing given the latest report by the Food and Agriculture Organization of the United Nations (FAO) and the UN Environment Program (UNEP) on The State of Food Security and Nutrition in the World (SOFI) in 2022. The report revealed that hunger affected as many as 828 million people in 2021, an increase of about 46 million since 2020 and 150 million since 2019. Overall, an estimated 3.1 billion people lack access to a healthy diet. According to the FAO’s State of Food and Agriculture (2019) report, around 14% of the world’s food, valued at $400 billion per year, is lost after harvest and before reaching the market. Furthermore, the UNEP’s Food Waste Index Report highlights that an additional 17% of food is wasted in retail and households by consumers, especially in households (Pierskalla and Roach 2008). FAO estimates suggest that the food lost and wasted could have fed 1.26 billion hungry people annually. The issue of food waste poses a significant environmental challenge that the entire supply chain, from production to consumption, must address. It is estimated that approximately 25% of all food ends up in the waste bin (Stensgard and Hanssen 2016). The UNEP’s Food Waste Index Report (2019) states that an additional 17% of food is wasted in retail and households by consumers, especially in households. According to FAO estimates, the food lost and wasted annually could have fed 1.26 billion hungry people. Several strategies can help reduce food waste, including providing better storage options. The current date stamp system has received criticism for being too rigid and security-oriented, but new sensor technology can help reduce waste by revealing the product’s actual quality for consumers. Improving demand estimates and accelerating production turnover can also be effective, particularly for seasonal goods. Dynamic pricing, where prices drop as the last use-by date approaches, has been adopted in shops. Social engagement and contributions to aid organizations can also help reduce this problem. Innovations such as the Togoodtogo app offer surplus food in the market at a low price instead of throwing it away, contributing to reducing food waste. The issues faced by the Fast-Moving Consumer Goods (FMCG) industry are not unique. The clothing industry also contributes significantly to waste production before customers make a purchase, a phenomenon known as “speculation” or “fast

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fashion” (Ellen MacArthur Foundation 2017). Popular chains like H&M or Zara can quickly bring affordable clothing to the market to keep up with the constant evolution of fashion trends, designs, and collections. Unfortunately, this fast-paced product lifecycle leads to rapid obsolescence. To promote more sustainable clothing consumption, some clothing chains have implemented “pledge schemes.“ These programs, offered by companies such as Ikea, Telia, Bergans, Apple, and H&M, incentivize customers to recycle their used items by offering cash or discounts on new purchases. This deposit scheme concept has long been used in certain European markets for items such as beer or mineral water, contributing to a circular economy and reduced waste.

5.1.2 Return Systems More and more countries are introducing deposit return systems (DRS) to reduce plastic pollution and protect the environment. Typically established through legislation passed by state or national governments, over 40 regions around the world operate a DRS, and calls are increasing for other countries to follow suit. Countries that have adopted DRS are setting a great example. For instance, Norway achieved a total return rate of 92.3% in 2021 (across both cans and plastic bottles) through its deposit system. The European Union (EU) has set targets in the Single-Use Plastics Directive for member states to collect 90% of plastic bottles by 2029. Infinitum, which operates a “return-to-retail” model, uses reverse vending machines to facilitate manual and automatic return points for recycling beverage containers. The textile industry has played a pivotal role in fostering employment growth and driving economic development, particularly in developing nations, due to the forces of globalization. Nevertheless, this industry faces sustainability challenges attributable to its linear product cycle and the diminishing utilization of sold units, as depicted in Fig. 5.1. Notably, this sector is a significant contributor to greenhouse gas emissions, surpassing the combined emissions of global air and sea transportation. Additionally, it contributes to environmental pollution through the release of microplastics.

5.1.3 Circular Supply Chain Management Hence, it is imperative to embrace disruptive innovation within the textile industry, transitioning from linear to circular supply chain systems. This transformation necessitates innovative entrepreneurship aimed at crafting technologies and service concepts capable of effectively managing waste within circular systems. To facilitate consumer engagement in the circular economy, innovative solutions are essential. However, the promotion of sustainable consumption demands a comprehensive approach that entails the measurement and analysis of all activities associated

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Fig. 5.1 Growth of clothing sales and decline in clothing utilization since 2000. Source Ellen MacArthur Foundation, Euromonitor international Apparel and Footwear 2016 Edition, World Bank, World development indicators, 2017

with a product’s production, distribution, and consumption. This goes beyond the conventional focus on individual businesses within the distribution chain. Instead, it calls for the evaluation of sustainability consequences throughout the entire supply chain, encompassing activities beyond transportation, including those of producers, wholesalers, and retailers. Attaining sustainability necessitates adopting a holistic perspective that encompasses the entire lifecycle of a product, spanning from its inception (“farm to fork” or “cradle to grave”), covering everything from production to disposal. Product Life Cycle Management (PLM) serves as the framework for orchestrating a diverse array of organizations and institutions involved in overseeing the entire process, encompassing design, production, utilization, recycling, and waste management. In contrast to a narrow corporate focus centered solely on economic profitability, PLM mandates vigilant scrutiny, control, and continuous monitoring to uphold sustainability standards. Nevertheless, assessing the outcomes of such a comprehensive approach, which harmonizes all 17 of the United Nations’ sustainability goals within the dimensions of “planet,” “people,” and “profit,” poses considerable challenges. The measurement and effective communication of sustainability’s impact at the consumer level, facilitating informed and sustainable decision-making, further compounds this complexity.

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5.2 The Environment and Green Marketing 5.2.1 Atmosphere The impact of operations on the entire supply chain is crucial concerning current climate changes. While natural climate change continues, scientists agree that human activities also contribute to the phenomenon. Sunlight hitting the earth creates a greenhouse effect that increases global warming, and this effect is trapped inside a layer of greenhouse gases. Carbon dioxide (CO2 ), methane (CH4 ), and nitrous oxide (N2 O) are the most significant contributors to this effect. Activities that lead to CO2 emissions, such as logistics and marketing channels, are particularly problematic. Transport is a major contributor to greenhouse gas emissions, with car traffic being the primary source. The IPCC’s 2023 report emphasizes the urgent need for tangible action rather than mere rhetoric, particularly in areas that necessitate a significant change in direction. The escalating impacts of climate change pose a threat to both human wellbeing and environmental health. However, there is still a rapidly narrowing “window of opportunity” to secure a sustainable future for all. Climate experts emphasize the importance of implementing specific measures. Unfortunately, the IPCC’s prognosis is bleak, as preventing the planet from warming beyond 1.5 °C appears to be nearly impossible. Despite worldwide commitments to mitigating global warming, the planet has already warmed by 1.1°, making it highly probable that the 1.5° threshold will be exceeded by the 2030s. Therefore, it will be crucial to develop logistics and distribution solutions that can reduce emissions in the coming years. The cost of transportation, which leads to increased emissions, is likely to increase, necessitating companies to strategically address their transportation needs. This will not only impact costs but also brand reputation, environmental image, and customer preferences for sustainable consumption. To reduce the environmental impact of logistics and distribution, it is crucial to adopt solutions that incorporate public transportation and strategic retail locations. A shift from air and road transportation to rail, tram, subway, and sea transport can set new standards for logistics and distribution solutions. Retailers, including shopping centers and shops, should consider both passenger and distribution transport solutions that offer environmentally friendly alternatives in the long term. This will reduce reliance on private car transport and create more affordable and sustainable logistics systems. Additionally, promoting the use of more efficient vehicles, such as biodiesel, hydrogen, bioethanol, and electric cars, can significantly reduce carbon emissions and foster an environmentally responsible brand image. Cars are highly visible and can signal a company’s commitment to sustainability, so promoting sustainable transportation options is crucial. McDonald’s, with its vast customer base of over 10 million in Europe, has the potential to significantly reduce climate emissions. The company has already established a positive environmental profile through its use of green “Zero Waste” cars visible throughout Europe. To further reduce their environmental impact,

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McDonald’s plans to increase its use of boat transport, which is in line with the EU’s goal of replacing 50% of road transport with sea and rail transport by 2050. A report on the “Climate effects when transferring goods from road to sea” suggests that up to one-third of goods transport in Europe could be shifted to boat transport (Fig. 5.3). Replacing current aircraft with more eco-friendly options can help to minimize emissions in air freight (Fig. 5.2). Additionally, implementing strategies like enhancing taxiing efficiency, decreasing emissions during takeoff and landing, and modifying approach routes can also help mitigate climate emissions. The airline industry is increasing its efforts to raise awareness of emissions and taking steps towards receiving environmental certifications such as ISO14001 and EMAS. By doing so, airlines are fostering an eco-conscious internal culture and making environmental concerns a priority in their decision-making processes. The use of logistics and marketing channels to make strategic decisions can pose a local pollution risk. The increased transportation can lead to higher levels of particulate matter and nitrogen oxides in major cities, which can contribute to respiratory disorders, cardiovascular disease, and increased mortality rates. Vehicles with internal combustion engines, especially diesel engines, are a significant source of particulate matter and NOx emissions. The combustion process in diesel engines produces a high concentration of tiny harmful particles such as PM2.5 and PM10, while NOx emissions result from the high-temperature combustion process. However, it’s worth noting that newer vehicles must comply with increasingly strict

Fig. 5.2 Saab and Heart Aerospace have formalized a collaborative agreement encompassing the provision of subsystems and the exploration of additional collaborative opportunities. These extend to areas such as certification and manufacturing, aligning seamlessly with Saab’s commitment to advancing sustainable aviation practices. Heart Aerospace specializes in the development of the ES-30, a regional electric aircraft capable of accommodating up to 30 passengers. This innovative aircraft relies on battery power, enabling quiet operation and producing zero emissions, thus contributing significantly to environmental sustainability within the aviation sector. Source https:// heartaerospace.com

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Fig. 5.3 Yara and the technology firm KONGSBERG have joined forces to construct the world’s inaugural autonomous and emissions-free container ship, known as the Yara Birkeland. With the deployment of the Yara Birkeland, Yara aims to eliminate 40,000 annual diesel-powered truck journeys. This initiative is poised to yield multiple benefits, including the reduction of NOx (Nitrogen oxide) and CO2 emissions, enhancement of road safety, mitigation of road dust formation, and reduction of traffic noise. The primary role of the zero-emission vessel is to transport mineral fertilizer from Yara’s production facility in Porsgrunn, Norway, to the regional export port in Brevik. From a technical perspective, KONGSBERG assumes responsibility for the comprehensive development and provision of essential technologies on board the Yara Birkeland. This encompasses the integration of sensors necessary for remote and autonomous operations, as well as the implementation of electrical propulsion, battery systems, and control mechanisms. Source Yara Birkeland, photo credits Knut Brevik Andersen, Wilhelmsen Ship Service Copyright © 2004–2023 Yara International ASA

emissions regulations, and many manufacturers are working to reduce emissions from their vehicles. The adoption of alternative fuel vehicles, including electric, hybrid or hydrogen vehicles, can help to reduce emissions from the transport sector. During cold winter days, certain groups like children, pregnant women, and the elderly are particularly susceptible to the adverse effects of local pollution. Particulate matter, a component of local pollution, comprises tiny particles that can infiltrate the lungs, while other types of local pollution linked to the transport of goods and services include harmful substances like SO2 (detrimental to asthmatics), carcinogenic PAH, and CO (detrimental to those with heart problems). Local pollution poses a threat not only to human health but also to animals, plants, and historic buildings and monuments. In her 2020 State of the Union address, von der Leyen proposed the European Green Deal, which aims to cut greenhouse gas emissions by at least 55% by 2030. The proposed measures to achieve this objective include investing in renewable energy and promoting the use of electric vehicles.

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Cruise ships emit greenhouse gases that contribute to climate change by burning fossil fuels like heavy fuel oil, marine diesel, and liquefied natural gas (LNG) to power their engines and generate electricity. These fuels produce carbon dioxide (CO2 ) emissions, a potent greenhouse gas that contributes to global warming. Additionally, cruise ships can also emit other pollutants like sulfur oxides (SOx), nitrogen oxides (NOx), and particulate matter (PM), which can negatively impact human health and the environment. However, it’s important to note that the global shipping industry, including the cruise sector, is subject to a range of environmental regulations designed to mitigate its environmental impact. The International Maritime Organization (IMO) has implemented various measures to reduce greenhouse gas emissions from ships, such as mandatory energy efficiency standards and a global sulfur cap on marine fuel. Many cruise companies have also pledged to reduce their emissions and adopt sustainable practices, such as using cleaner fuels and investing in energy-efficient technologies.

5.2.2 Water The availability of fresh water, a vital and limited resource, is highly susceptible to human activities such as distribution, transportation, and channel management. Fresh water accounts for only 4% of the total water on Earth, and nearly 70% of it is frozen in polar ice caps. Less than 1% of the world’s fresh water is in accessible sources such as lakes, rivers, reservoirs, and underground springs. However, even this limited supply may not always be safe or suitable for human consumption, as it may be contaminated by pollutants or natural toxins. Consequently, many people lack access to safe and reliable sources of fresh water, which can negatively impact public health, agricultural production, and economic development. Most of the freshwater usage is attributed to agricultural irrigation (70%), followed by industrial (20%) and residential (10%) purposes. In contrast, about 96% of the world’s water reserves are saltwater oceans that are likely to expand as polar ice continues to melt. This trend could lead to severe consequences such as rising sea levels that can threaten the livelihoods of millions of people living in vulnerable areas like major cities such as New York, London, Shanghai, and Calcutta. Freshwater dams, from their construction to operation, can have various environmental impacts, including altering water flow, sediment transport, and affecting habitats of fish and wildlife. Moreover, in some cases, the dams can lead to increased evaporation and water loss, particularly in arid areas with high temperatures and low humidity. It’s crucial to recognize that freshwater dams can have social and cultural implications, including displacement and loss of traditional lands and resources for local communities. The decision to build a freshwater dam should be thoughtfully considered, weighing potential environmental, social, and economic impacts. While freshwater dams can provide benefits such as increased water access and electricity generation, it’s necessary to balance these benefits against possible negative impacts and consider alternative solutions where appropriate.

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In contrast, hydropower generation from waterfalls typically does not result in significant freshwater loss. Hydropower plants harness the kinetic energy of falling water to generate electricity, and the water used in these plants is often returned to the original river or stream. However, it’s important to note that some hydropower projects can cause environmental changes, such as alterations to water flow and impacts on fish and wildlife. Additionally, in areas where freshwater resources are limited, utilizing water for hydropower may not be the most efficient use of this resource. Overall, while hydropower is generally viewed as a renewable and lowcarbon energy source, it’s important to evaluate carefully the potential environmental effects of specific projects and consider alternative energy sources where freshwater is scarce. The lack of sufficient regulation for boat traffic has led to several accidents causing harm to nature, biological diversity, and recreational areas. Although water transport is relatively more environmentally friendly than land-based transport when it comes to cost per transported ton, it is not immune to environmental challenges. The shipping industry is responsible for emitting harmful gases such as CO2 , volatile organic compounds, sulfur oxides, and nitrogen oxides, while the discharge of ballast water can spread hazardous animal and plant species as well as diseases to distant sea regions (Fig. 5.3). Air and car transportation also face environmental challenges such as fuel spills, handling and accidents that lead to pollution. The chemicals used to extinguish fuel fires also pose environmental threats. For instance, the traditional firefighting foam used at airports, Aqueous Film-Forming Foam (AFFF), has been found to contain Per- and Polyfluoroalkyl Substances (PFAS), which are a type of persistent chemicals associated with potential health risks. AFFF can enter soil and water systems when used to put out fires, potentially contaminating nearby waterways and posing risks to both human health and the environment, especially when the contaminated water is used for drinking or irrigation. Consequently, many airports have started to phase out the use of AFFF and adopt alternative firefighting technologies that are less harmful to the environment. Additionally, regulatory agencies have implemented guidelines and regulations to restrict the use of PFAS-containing firefighting foam, requiring airports to take measures to mitigate the contamination risks. The transportation and distribution of goods and services can have a negative impact on access to freshwater resources. Harmful emissions and waste can contribute to unsustainable development. Minimizing waste is crucial to conserve freshwater resources. Reducing food waste is one way to achieve this. Studies show that perhaps one-third of all food produced globally is wasted, representing a significant amount of water resources. The amount of water saved by reducing food waste depends on the type of food and the amount of water used in its production. However, reducing food waste by 25% could save up to 297 billion cubic meters of water per year globally. This is equivalent to Spain’s annual water use or more than three times the amount of water that flows through the Colorado River in a year. By reducing food waste, we can promote sustainable water use practices in agriculture and food production and conserve freshwater resources.

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5.2.3 Pollution of Land The adverse consequences of land pollution transcend the realm of production and have repercussions for distribution as well. The establishment of transportation infrastructure, exemplified by the construction of roads and railways, has inflicted substantial harm upon land ecosystems. This damage manifests as the erosion of topsoil, depletion of organic matter, nutrient loss, diminished water retention capacity, and a decline in biodiversity. Notably, the transportation sector not only contributes to air pollution and greenhouse gas emissions but also plays a significant role in land degradation. Conventional fossil fuel-based transportation systems carry the risk of emissions, whereas the transportation of hazardous chemicals can lead to land pollution. Consequently, the electrification of trucks and road transportation emerges as a pivotal solution to mitigate climate emissions and curb the proliferation of toxic substances that imperil the environment (Fig. 5.4). The entire supply chain, from resource extraction to consumption and recycling, can have severe land pollution consequences. Consumers are increasingly aware of the detrimental impact of chemicals on land and are demanding products with fewer chemicals and artificial additives. Dumping valuable metals in unregulated areas in developing countries has resulted in soil pollution and increased health risks. Similarly, western dumping sites in

Fig. 5.4 When considering longer transportation routes, such as intercity travel, the Volvo FH Electric becomes a choice. This truck maintains its well-known qualities appreciated by drivers worldwide while meeting stringent environmental targets by reducing its carbon footprint. To facilitate the transition to electric transportation, the truck can be equipped with comprehensive service and support packages. These packages cover essential elements such as charging infrastructure, route and range planning, battery monitoring, and other aspects, ensuring a smooth and efficient adoption of electric mobility. Source © Volvo Truck Corporation

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West Africa have caused long-term pollution, posing significant threats to public health. At least 2 million areas in the USA, Europe, and former Soviet countries are heavily contaminated with substances such as cyanide, heavy metals, mineral oil, and chlorinated hydrocarbons. The use of the insecticide DDT in agriculture after World War II also resulted in severe land pollution, with long-lasting toxic effects. Although DDT is now banned worldwide, the damage to land areas continues to persist. Exposure to such contaminants can have serious and long-lasting effects on human health, including respiratory and cardiovascular problems, neurological disorders, and cancer. These pollutants also have detrimental effects on the environment, causing damage to ecosystems and wildlife. Therefore, it is essential to take measures to prevent and mitigate contamination, such as implementing effective waste management practices, regulating industrial and agricultural activities, and promoting clean energy sources.

5.2.4 Biodiversity In today’s era of heightened international trade and travel, living organisms are increasingly transported globally through human activities. This dissemination occurs through both deliberate export/import processes and unintentional means, such as invasive species hitching rides with other goods, transportation systems, or different species. These introductions to new regions stem from various practices, including breeding, aquaculture, garden planting, landscaping, the utilization of foreign tree species in forestry, and uncertain waste disposal. Additionally, species can unintentionally spread as passengers hidden within imported food, plants, and other biological products. Biological diversity encompasses the variety of species, genetic variations, and ecological systems and is a critical component of sustainability that should be considered when managing distribution systems (Fig. 5.5). The impact of distribution-related climate emissions can have adverse effects on biodiversity, including the oceans, which play a vital role in regulating the Earth’s climate. However, they are also highly vulnerable to the effects of climate change. The absorption of carbon dioxide emissions into the ocean increases water acidity, which can harm marine life. Ocean acidification can have a range of impacts on biodiversity, such as reducing the ability of marine organisms to form shells and exoskeletons and can have cascading effects on the entire ecosystem. These effects can have consequences for human societies that depend on seafood for food and livelihoods. The construction of transportation infrastructure for fossil fuels can harm wildlife habitats by causing fragmentation and loss, which can limit access to food and mates and hinder species’ adaptation to climate change. Local extinctions can also occur. Moreover, oil spills resulting from the transportation and distribution of fossil fuels can cause severe damage to biodiversity by killing wildlife and damaging habitats. These spills can have long-lasting impacts on ecosystems as oil persists in the environment and disrupts the food chain. Distribution-related emissions causing climate

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Fig. 5.5 Pink salmon, originally native to the Pacific Ocean, were introduced into commercial production in both Canada and Russia during the 1950s. This initiative successfully established self-sustaining populations. Currently, pink salmon are migrating into the Atlantic Ocean, posing a significant threat to the native wild Atlantic salmon population. Source Creative Commons Attribution-Share Alike 4.0

change can alter temperature and precipitation patterns, which can disrupt the timing of seasonal events like flowering and migration, thereby affecting biodiversity. Such disruptions can cause an imbalance between species that depend on each other for resources, leading to a shortage of food for some species, like birds that rely on insects for food, whose migration may no longer align with the emergence of their prey. The negative impacts of distribution-related climate emissions on biodiversity are varied and significant, highlighting the need to reduce these emissions to protect ecosystems and their dependent species. The interconnectivity of biodiversity and the environment emphasizes the importance of a comprehensive approach to addressing climate change challenges. By decreasing our reliance on fossil fuels in supply chains and investing in clean energy options, control import of new threatening species through our global supply chains, we can work towards mitigating climate change’s effects on biodiversity and create a sustainable future for ourselves and the planet (Fig. 5.6).

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Fig. 5.6 This figure indicates that the spread of new species over time is linked to the increasing economic activity, like tourism, industry, and services in Svalbard. Economic activities and supply chain transactions contribute to the threat to biodiversity by introducing potential invasive species into a vulnerable Arctic environment. In this figure, the green dots represent the number of nonreproducing observed species, while the blue dots represent the number of reproducing species during the period 1900–2000. Source Miljøstatus.no

5.3 Social Relationships The social dimension of sustainability encompasses a wide range of interconnected factors that pertain to social progress and human rights. A comprehensive approach to logistics and distribution is required to ensure that raw materials are sourced in a manner that incorporates access to education, healthcare, adequate living conditions, and equitable distribution of benefits. H&M, the Swedish multinational clothing retailer, is committed to investing in the communities in which they operate. They have implemented various initiatives and programs aimed at promoting sustainable development and improving the lives of people in their supply chain. Ensuring fair living wages for workers in their supply chain is one of H&M’s top priorities, and they invest in programs that promote sustainable livelihoods and education to achieve this goal. Furthermore, H&M is investing in sustainable production methods, such as the use of renewable energy, to reduce their environmental footprint and support local communities. They are also striving to increase the proportion of locally sourced materials, which can contribute to local economies and reduce the environmental impact of transportation. H&M is actively engaging with local

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communities through diverse programs, including education and training support, disaster relief, and women’s empowerment initiatives. While the total investment made by H&M in communities is difficult to estimate, the company’s dedication to sustainable development and improving the lives of people in their supply chain is apparent. H&M regularly publishes an annual sustainability report that outlines their progress towards these goals, which may provide more specific information on their community investments. Unilever, a consumer goods company, has implemented a Sustainable Living Plan to enhance the health and well-being of people worldwide while minimizing the environmental impact of their products. They have invested in various programs, such as clean water access, improved sanitation, and sustainable agriculture. Danone, a food, and beverage company, has a One Planet. One Health, framework prioritizing environmental and social sustainability. They support local communities through the Danone Ecosystem Fund, which provides funding and assistance to small-scale farmers and entrepreneurs. Patagonia, an outdoor clothing company, is committed to environmental sustainability and invests in diverse initiatives to support local communities. They donate 1% of their sales to environmental organizations and invest in programs promoting regenerative organic agriculture and fair labor practices. Coca-Cola has a sustainability strategy that emphasizes water stewardship, sustainable packaging, and climate protection. They invest in local communities through initiatives such as the Replenish Africa Initiative, which provides clean water and sanitation to communities across Africa. Companies can play a strategic role in improving social conditions through their supply chains. This includes promoting the development of democratic institutions, trade unions, political participation, anti-discrimination efforts, poverty reduction, and combating corruption and abuse of power. Prioritizing the needs of vulnerable and marginalized groups, such as women, children, indigenous people, the disabled, and the sick, is crucial in creating a sustainable strategy. Social development targets should be included as key performance indicators alongside financial profitability and environmental indicators. Social conditions are integral to effectively managing environmental impact and promoting economic growth.

5.4 Geopolitics and Sustainable Supply Chains China, known as one of the world’s largest autocracies, became a member of the World Trade Organization (WTO) in 2001, marking a significant entry into the global economy. China could challenge the United States as the world’s largest economic superpower by 2030 due to the country’s rapid economic growth. Alongside other autocracies such as Turkey, the United Arab Emirates, and Vietnam, China has increased its economic influence, which can be attributed to their favorable business conditions and investment strategies. This heightened economic influence of autocracies has also resulted in the shift of production capacity and supply chains

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from democracies like the USA and Europe to autocracies. This, in turn, has raised challenges for governance and oversight of aspects such as human rights and environmental responsibility in countries with ineffective legal systems. In general, approximately one-third of all imports in democratic countries originate from supply chains that begin in autocratic countries, meaning that consumers in democracies often purchase products with raw materials from regions characterized by human rights violations and a lack of political rights. This complex global market contributes to problematic control systems in supply chains and through legal systems designed to serve the economic and political interests of incumbent leaders. This creates legal challenges in international business relations. Times have changed, and we have moved away from an era where environmentally damaging production, based on labor conditions reminiscent of slavery, could be outsourced to the third world without supply chains taking responsibility. Today, sustainability is a crucial performance factor that encompasses both social responsibility, environmental responsibility, and economic efficiency throughout the supply chain. This also means that supply chains can no longer conceal dirty, unethical, and unsustainable activity in places where it is difficult to detect or control. This phenomenon is known as “greenwashing” in supply chains and is met today with strict reactions when uncovered. Greenwashing in supply chains refers to the practice where a company gives a misleading impression of its sustainability and environmental responsibility throughout its supply chain. This can occur by providing unclear or selective information about the sources of raw materials, production processes, or suppliers. It may also involve obtaining environmental certifications for certain parts of the business while overlooking problems elsewhere or by emphasizing the positive aspects of the supply chain while ignoring the challenges. Greenwashing in supply chains is problematic because it presents a false picture of sustainable practices and can lead consumers and stakeholders to make incorrect decisions based on misleading information. To combat greenwashing in this context, increased transparency, independent verification, and a thorough evaluation of the entire supply chain are essential measures. The design of control systems, ownership, and incentives are critical decision variables for leading a sustainable strategy in a supply chain. Case: Strategic Approaches for Managing Biodiversity Threats in the Supply Chain Instructions You are a consultant tasked with advising a supply chain company on strategies to address threats to biodiversity. It has become increasingly evident that the spread of invasive species poses a significant risk to ecosystems and biodiversity through supply chains and transportation systems. Invasive species can travel alongside goods, transportation methods, tourism, or even other species. They are introduced to new regions through activities such as aquaculture, horticulture, foreign tree species in forestry, and improper waste disposal.

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Additionally, invasive species can act as stowaways through the importation of food products, plants, and other biological organisms. It is estimated that as much as half of the species on the invasive species list have been introduced to the environment as unwitting passengers in various vehicles, containers, or during the movement of materials. With rising temperatures, longer growing seasons, and milder winters, invasive species find it easier to establish themselves, thus posing a growing threat to biodiversity. Your task is to develop a strategic plan that the supply chain can adopt to address these challenges and contribute to the preservation of biodiversity. Assignment Part 1: Problem Analysis 1. Provide an overview of the concept of biodiversity and its importance in ecosystems. 2. Explain the significance of biodiversity threats posed by invasive species in supply chains. 3. Analyze the specific factors and mechanisms through which invasive species spread within supply chains and transportation systems. 4. Describe the potential consequences of failing to address these threats to biodiversity. Part 2: Strategic Development 5. Propose a set of strategies that the supply chain can implement to mitigate the risks associated with invasive species. 6. Discuss the role of government regulations and international agreements in addressing biodiversity threats in supply chains. 7. Outline the ethical considerations and corporate social responsibility aspects related to biodiversity conservation in supply chain management. 8. Provide recommendations for monitoring and evaluating the effectiveness of the chosen strategies. Part 3: Implementation Plan 9. Develop a detailed plan for the supply chain to implement the chosen strategies. 10. Identify potential challenges and barriers to the implementation of these strategies and propose solutions. Part 4: Conclusion 11. Summarize the key points of your analysis and strategic recommendations. 12. Highlight the long-term benefits of adopting these strategies for both the supply chain and the preservation of biodiversity. 13. Inform the company if your analysis reveals that global supply chains through suppliers are posing a threat to biodiversity, especially if the company’s logistics systems are susceptible to species listed as the most invasive, resulting in destructive consequences for nature. (including on the top 100 list of invasive species http://www.iucngisd.org/gisd/100_worst.php).

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References Artsdatabanken.no Christiansen, P.B. 2017. DNV GL’s 2016 Annual Report, Mai. Ellen MacArthur Foundation. 2017. A New Textiles Economy: Redesigning Fashion’s Future [Internet]. [Cited date]. Available from: http://www.ellenmacarthurfoundation.org/publications. Miljøstatus.no Nasjonal transportplan 2018–2029 ble lagt frem 5. april 2017 [Internet]. Regjeringen.no. Pierskalla, W.P., and C.D. Roach. 2008. Shrink Rapped: America’s Food Retailers Should Wage a Tougher War on Waste. The Economist, May 15. Stensgard, A.E., and O.J. Hanssen. 2016. Matsvinn i Norge 2010–2015. Sluttrapport fra ForMatprosjektet. The Top 100 List of Invasive Species [Internet]. Available from: http://www.iucngisd.org/gisd/100_ worst.php

Chapter 6

Stakeholder Analysis and Certification Strategy

Abstract In the current business landscape, customer priorities have evolved beyond mere product attributes to include ethical considerations in production and distribution. Acknowledging this shift, companies now recognize the growing importance of ethical assessments alongside financial metrics. Meanwhile, stakeholders, once limited to conventional groups, now encompass a diverse array of entities affected indirectly by marketing strategies. This transition necessitates a comprehensive stakeholder analysis encompassing the entire supply chain, from raw materials to consumption and disposal. With stakeholders exerting varying degrees of influence, businesses must develop proactive strategies to address divergent interests, aligning with environmentally conscious marketing objectives. Sustainability certification systems play a pivotal role in promoting sustainable practices and informing consumer choices. These systems, intricately linked to political and stakeholder interests, are crucial for fostering a more sustainable global landscape, contingent upon the trust and credibility of these certification mechanisms.

6.1 Certifications and Stakeholders Customers are now increasingly concerned not only with the price and quality of products but also with the ethical conditions associated with their production and distribution. Companies have recognized this and incorporated ethics and sustainability into their strategies. For instance, Sir Terry Leahy, the former head of Tesco, one of the world’s largest grocery chains, believes that “ethical assessments will increasingly become equally important as financial” (The economist 2012). Stakeholders are individuals or organizations that are affected in one way or another by the operations related to logistics, supply chains, and marketing strategy. Numerous pressure groups are currently exerting influence on decisions and strategies within the distribution and production stages. In contrast to the past, where the primary influencers were predominantly owners, employees, management, and customers collaborating to develop a shared strategy. Presently, sustainability is intricately linked with a broader array of stakeholder groups, including secondary entities

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Table 6.1 Some examples of global certification systems and their most important founding stakeholder group counterparts Certification system

Associated stakeholder interest group

Forest stewardship council (FSC)

World wildlife fund (WWF)

Marine stewardship council (MSC)

World wildlife fund (WWF)

Rainforest alliance

Rainforest foundation

LEED

U.S. green building council

indirectly impacted by marketing strategies. Consequently, conducting a comprehensive stakeholder analysis becomes imperative, encompassing all interest groups affected, directly or indirectly, by the entirety of the supply chain operation, spanning from raw material acquisition to consumption, recycling, and composting. Stakeholders exhibit varying levels of influence and interests in the company’s operations, with some wielding more substantial sway than others. Certain forms of influence stem from impartial expertise, while others may arise from uninformed, biased activism. However, the company must proactively address these attempts at intentional and potentially disruptive interests. Consequently, the company necessitates a stakeholder strategy that aligns with its environmentally conscious marketing vision. Sustainability certification systems hold a pivotal role in advancing sustainability practices across diverse industries and sectors. These institutional systems often possess intricate interconnections with political and stakeholder interests, as indicated in Table 6.1. Through the recognition and rewarding of sustainable practices, these certification systems incentivize companies to embrace more sustainable approaches and empower consumers with the necessary information to make informed choices. Whether through product-based, building-based, or organizationbased certifications, sustainability certification systems serve as vital tools in fostering a more sustainable and equitable world, contingent upon our trust in these institutions.

6.2 Stakeholder Analysis The strong connection between certain stakeholder groups and certification systems underscores the importance of conducting a rational and thorough stakeholder analysis. Moreover, it is well-established that certifications, when integrated into broader branding or co-branding strategies, lead to an enhanced willingness among consumers to pay. The willingness of consumers to pay for socially responsible products has emerged as a significant research area in recent years. A review of multiple meta-studies investigating consumer willingness to pay for socially responsible products, including sustainable products, certified wood products, renewable energy, and animal welfare, indicates a consensus that certification, renewable energy,

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and animal welfare positively influence consumers’ willingness to pay for these products (Nygaard 2023).

6.2.1 Strong and Weak Interests The stakeholder theory is grounded in the resource dependence theory, which elucidates how businesses can become highly dependent on external resources that are vital for their long-term survival (Pfeffer and Salancik 1978). Stakeholders, to a considerable degree, encompass individuals or groups outside the company’s core commercial operations but can still exert a substantial influence on its effectiveness. Numerous stakeholder organizations prioritize sustainability as their key objective, and they constitute stakeholders who possess significant power and influence over the business (Table 6.2). In terms of managing stakeholder relationships, companies need to employ varied strategies based on the stakeholders’ access to power and resources (Freeman 1984). For stakeholders wielding substantial power and resources, establishing strong relationships is essential to ensure their satisfaction. Conversely, for stakeholders with limited power and resources, keeping them informed and providing minimal follow-up suffices. Environmental stakeholder groups exert considerable power and influence over businesses. These groups include: 1. Environmental NGOs: Environmental non-governmental organizations (NGOs) such as Greenpeace (Fig. 6.1), World Wildlife Fund (WWF), and Friends of the Earth are at the forefront of advocating for environmental protection and sustainable development. Their extensive memberships and grassroots mobilization enable them to exert pressure on businesses by advocating for stricter environmental regulations and holding them accountable for their ecological impact. 2. Consumer Groups: Consumer groups such as Ethical Consumer and Consumers Union actively promote environmentally friendly products and practices. Backed by a large base of environmentally conscious consumers, these groups possess the power to influence businesses’ purchasing decisions through support or boycotts, ultimately driving demand for sustainable products, and encouraging businesses to adopt environmentally responsible practices. 3. Investors: The recognition of environmental, social, and governance (ESG) factors as vital drivers of long-term business performance has elevated the role Table 6.2 Approaches tailored to stakeholders’ interests and resource levels Stakeholders

Strong interests

Weak interests

High power and resources

Build close relationships

Maintain satisfactory relationships

Low power and resources

Keep informed

Follow up with minimal resources

Alternative strategies depending on the intersection of interests and power and resources

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Fig. 6.1 Founded in 1971, Greenpeace is a globally recognized environmental organization that tirelessly defends the Earth’s well-being. Their mission is clear: protect ecosystems, promote sustainability, and combat climate change. Through peaceful activism and innovative campaigns, Greenpeace is a stakeholder group that influences policies, holds corporations accountable, and raises public awareness to drive tangible change. They stand as a symbol of unwavering commitment to a more sustainable world. Source Shutterstock.com

of investors as influential stakeholders in the sustainability landscape. Investors now consider ESG factors in their investment decisions, exerting influence on companies to prioritize sustainability and responsible business practices. 4. Governments: Governments play a crucial role in enacting environmental regulations and policies to safeguard the environment and address climate change. Their regulatory frameworks significantly impact businesses’ operations, necessitating investments in sustainable practices to ensure compliance. Government initiatives and legislation are pivotal in driving sustainability and shaping corporate behavior. 5. Local Communities: Communities directly affected by business operations, including indigenous peoples and those impacted by pollution, are empowered stakeholders. These communities can mobilize and advocate for their rights, demanding that businesses operate in an environmentally responsible manner and mitigate any adverse impacts on their surroundings. Their collective voice has the potential to shape corporate practices and influence sustainability initiatives. The engagement and influence of stakeholder groups such as Environmental NGOs, Consumer Groups, Investors, Governments, and Local Communities are crucial in driving sustainability efforts and shaping corporate behavior. Recognizing their power and leveraging their influence is essential for businesses to align with sustainability goals and address environmental and social challenges effectively.

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Environmental organizations are generally characterized as non-governmental and independent, commonly referred to as NGOs. Many companies have established systematic partnerships with various stakeholder organizations, as they represent a strong international opinion and often possess expertise in the companies’ core areas. For instance, Equinor has collaborated with Bellona in an organized manner. By entering alliances with such organizations, companies can better absorb the risk of potential harm from external interest groups. Large institutional investors, such as the Government Pension Fund Global (The Norwegian oil fund) that is one of the world’s largest funds and can influence companies to prioritize sustainability principles when dealing with interest groups. For instance, since 2017, UNICEF and the Norwegian Government Pension Fund Global—have been engaging with leading garment and footwear brands to encourage stronger business respect for children’s rights (Holter 2017): For UNICEF, the partnership with NBIM (the Government Pension Fund Global—The Norwegian oil fund) is a unique and innovative example of a collaboration with one of the world’s largest investors to promote better business practices for children. We’re thrilled to announce this new initiative today, which we hope will lead to better industry practices for children in the food retail sector. Carla Haddad Madini Director of UNICEF’s Division for Private Fundraising and Partnerships

IKEA places a strong emphasis on stakeholder strategies as a fundamental component of fulfilling its sustainability commitments. The company recognizes the significance of cultivating robust and meaningful relationships with various stakeholder groups that possess the potential to drive and support change. By engaging in dialogue with these stakeholders, IKEA aims to foster an environment of learning, inspiration, and collaboration to collectively identify and implement the most effective solutions. IKEA views dialogue with stakeholders as a crucial strategy in its pursuit of sustainability (more on this: https://about.ikea.com/en/sustainability/stakeholderengagement). Investors, owners, and shareholders constitute a vital stakeholder group, and among them, large investors, particularly pension and investment funds, are instrumental in propelling the “green shift.” These investor groups, through their direct ownership stakes, hold the power to exert pressure on the boards and management teams of multinational corporations, compelling them to adopt sustainable practices and drive long-term changes, even with a relatively small shareholding. Their influence is significant in shaping the trajectory of environmental sustainability within the corporate landscape.

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6.3 The Ethics of Reversed Supply Chains The Rana Plaza tragedy in 2013 was a pivotal moment, resulting in the loss of 1138 lives and leaving around 2500 injured (Fig. 6.2). This incident led to the establishment of two important agreements: “The Accord on Fire and Building Safety” (The Accord) and “The Alliance for Bangladesh Worker Safety” (the Alliance). These agreements define inspection procedures for textile factories and mandate clothing companies to ensure that their subcontractors uphold safety standards. The garment industry’s tragedy in Bangladesh served as a wake-up call for all stakeholders, including investors in the sector. The fashion industry responded differently following the earthquake in 2023 in Turkey and Syria, which claimed the lives of over 50,000 people. This time, fashion companies with thousands of employees working in this area for their supplier companies acted swiftly, transparently, and on a large scale. According to The Business and Human Rights Resource Centre, within hours, companies like Decathlon, Mango, H&M, Kering, Louis Vuitton, and the Italian group OTB, which owns brands such as Diesel and Marni, rerouted their logistical supply chains to provide aid, financial assistance, clothing, and support to the affected areas. Inditex recently made a generous contribution of 3 million euros to the Turkish Red Crescent to aid in humanitarian relief efforts following the earthquake. Additionally, in collaboration with its local producers, Inditex donated 500,000 outdoor clothing items to both the Turkish Red Crescent and AFAD, a specialized earthquake management body under the Ministry of Interior in Turkey. H&M, working closely with numerous Turkish manufacturers, also joined in the relief efforts by donating warm clothing and providing financial aid of 930,000 euros to AFAD. The H&M Foundation contributed 468,000 euros to both the Red Crescent and Save the Children associations. To ensure the safety of their teams, both Amazon and Mango took necessary precautions. Mango reported that only one out of its 1300 Turkish employees required hospitalization. Mango’s “social action” department initiated the distribution of clothing to various areas affected by the earthquakes and contributed 150,000 euros to the Red Crescent. Furthermore, Amazon has been actively encouraging its customers to make donations to support the Red Cross and Red Crescent. They have also provided financial assistance to local NGOs, amounting to approximately 468,000 euros. Utilizing their logistics capabilities, Amazon has facilitated the delivery of essential supplies such as blankets, tents, heaters, food, nappies, baby food, and medicines to the affected regions (Deslandes 2023). When comparing the fashion industry’s response to the Rana Plaza collapse in 2013 in Bangladesh with the 2023 earthquake in Turkey, it is evident that there have been significant changes and improvements over the 10-year period (Fig. 6.2). The Rana Plaza tragedy exposed the harsh realities of unsafe working conditions and unethical practices within the fashion industry. It led to increased awareness and scrutiny of supply chain practices, highlighting the role of stakeholders in driving change. In the aftermath of the Rana Plaza collapse, stakeholders, including NGOs, consumer groups, investors, governments, and local communities (Kasperkevic

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Fig. 6.2 The Rana Plaza tragedy stands as an emblematic representation of avarice, negligence, and indifference within the fashion industry. On the fateful day of April 24, 2013, the Rana Plaza building collapsed, resulting in the tragic loss of 1138 lives and leaving thousands more grievously injured. The global community watched in stunned disbelief as media reports unveiled the full extent of this human catastrophe. It was a moment of reckoning, as numerous prominent brands were linked to suppliers operating within the ill-fated building, with labels from high-end fashion chains tragically discovered amidst the deceased workers. This calamity marked a pivotal turning point that galvanized both stakeholders and the fashion industry itself to address the unethical exploitation and perilous working conditions faced by laborers in the developing world. Notably, this awakening prompted a significant shift towards greater social responsibility within the fashion industry. A poignant example of this transformation emerged in 2023 when the same industry rallied to provide extensive support to the victims of earthquakes in Turkey and Syria. This positive development underscores the growing commitment of fashion chains to corporate social responsibility (CSR) and their willingness to contribute positively to global crises. Source Shutterstock.com

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2016), played crucial roles in pushing for reforms and holding fashion companies accountable. Environmental NGOs and consumer groups advocated for improved worker safety and sustainable practices. Investors, especially socially responsible investment funds, exerted pressure on companies to prioritize ethical and sustainable considerations. Governments enacted regulations to protect workers’ rights and ensure safer working conditions. Local communities affected by the disaster demanded greater transparency and accountability from fashion companies operating in their regions. Fast forward to the 2023 earthquake in Turkey, and we see a more proactive and immediate response from the fashion industry. Companies such as Decathlon, Mango, H&M, Kering, Louis Vuitton, and OTB quickly mobilized their resources and logistics to provide aid, financial support, and clothing to the affected areas. This demonstrates a heightened sense of responsibility and a recognition of the industry’s role in supporting communities during times of crisis. Over the 10-year period, stakeholders have played an instrumental role in driving positive change in the fashion industry. Their advocacy demands for transparency, and insistence on sustainable practices have contributed to the adoption of stricter safety standards, improved working conditions, and greater accountability. The fashion industry has realized the importance of stakeholder engagement in shaping its operations and reputation. However, it is essential to recognize that challenges and gaps still exist. While progress has been made, the industry must continue to address issues such as supply chain transparency, fair wages, and environmental sustainability. Stakeholders must continue to collaborate and push for further improvements, ensuring that ethical and sustainable practices become the norm rather than the exception in the fashion industry. The response from the fashion industry following the Rana Plaza collapse and the 2023 earthquake in Turkey showcases the evolving role of stakeholders in driving positive change. The industry has become more aware of its social and environmental responsibilities, but ongoing efforts are needed to ensure a truly sustainable and ethical fashion ecosystem.

6.4 Sustainable Supply Chains Building sustainable supply chains necessitates comprehensive documentation, control, and monitoring of each stage within the supply chain, encompassing activities from raw material extraction to product sale, consumption, recycling, and composting. As previously mentioned, sustainability entails effectively balancing three critical strategic objectives: profitability, environmental responsibility, and social responsibility. To achieve sustainability, companies must adopt a threedimensional strategic planning approach that considers the intricate interplay between these goals, thereby adding complexity to their operations. Consequently, businesses need to thoroughly analyze their production and distribution processes at each step, ranging from raw material sourcing to distribution, consumption, and recycling. This presents a challenge in terms of identifying and addressing sustainability issues throughout the entire supply chain. In the past, the focus of marketing

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strategy was primarily on managing relationships within the production, delivery, and post-purchase stages of products to ensure customer satisfaction and foster loyalty. However, the emergence of sustainability as a strategic concept has broadened the scope of these channels beyond downstream activities. The perspective now encompasses the entire product lifecycle, from raw material extraction to recycling, considering the environmental and social impact at each stage. This shift recognizes the need to integrate sustainability considerations throughout the entire value chain, moving away from isolated downstream perspectives. The concept of sustainability, encompassing the interconnected dimensions of planet, profit, and people, has expanded to include 17 different dimensions since 2015. This expanded framework adds complexity to the task of monitoring and documenting progress towards sustainability goals throughout the entire process. The globalization of production and markets further contributes to this complexity, information asymmetry between suppliers and buyers in the chain, and the costs of enforcement, control, and transactions. Companies must expand their scope of responsibility for sustainability beyond their immediate business practices for several compelling reasons. A pertinent example is illustrated by the situation involving Telenor’s subsidiary, Grameen Phone, in Bangladesh. This case underscores the complexity of subcontractor relationships and supply chain networks. Even though this subsidiary operated in a different country, Telenor’s management found itself unable to evade responsibility when it came to light that children were laboring under hazardous conditions to construct infrastructure and communication masts for the company. This instance serves as a stark reminder of the intricate challenges inherent in managing subcontractors and supply chains, particularly when faced with substantial legal, geographical, cultural, and linguistic differences. Cases like these can have severe repercussions on a company’s reputation and brand value. However, assessing and evaluating sustainability can be challenging due to the global and cultural dimensions of these issues. Technological limitations also make it difficult to monitor and regulate the distribution system, spanning from raw materials and supplier relationships in poor areas. The lack of accessible information about sustainable distribution hinders relying solely on market transactions. As we discussed earlier, the theory suggests that greater vertical integration, management, ownership, and direct control are recommended to ensure adherence to sustainable criteria. However, implementing this solution may not always be practical or feasible, particularly in international transactions involving cultural, political, and economic barriers. In such cases, establishing trust among organizations, companies, workers, and managers involved in the distribution chain may be the only viable option. Investments in fostering strong relationships can have a positive impact on financial outcomes, particularly in complex scenarios where trust becomes a crucial factor for effectively implementing sustainable strategies without requiring direct investment and increased control.

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In an increasingly interconnected and complex world, characterized by the globalization of production, the significance of social dialogue and tripartite discussions involving governments, workers’ organizations, and employers’ representatives has become more pronounced. These dialogues, both within and across national boundaries, are crucial for finding solutions and fostering social cohesion. They also contribute to establishing legal certainty by utilizing international labor standards as effective instruments. International Labor Organization (ILO)

Gaining access to information regarding sustainable distribution poses challenges that can hinder market transactions. To overcome this obstacle, the previously discussed theory suggests pursuing greater vertical integration, management, ownership, and direct control. However, implementing such integrated transactions may not always be practical or viable, particularly in situations where cultural, political, and economic barriers impede collaborative efforts for increased control. In such instances, the establishment of trust among organizations, companies, workers, and managers becomes essential for ensuring the adherence to sustainable strategies. Social dialogue, as defined by the International Labour Organization (ILO), plays a pivotal role in fostering trust within the supply chain and between employees and employers 100. It fosters confidence in regulations and standards, helping to build trust and cooperation among the involved parties. However, in many countries, the existing regulations and legislation concerning social and environmental conditions are inadequate, and enforcement of these rules is often ineffective. Consequently, a lack of trust emerges among the participants within the distribution system, necessitating investments in interpersonal and inter-organizational trust to effectively implement sustainability measures. As countries undergo industrialization and market development, a stronger legal regime will be necessary, and parties will increasingly need to trust that rules, contracts, and standards will be adhered to. This type of trust is called institutionalized trust, which is a form of trust in formal and institutionalized relationships that is not dependent on individuals or organizations. Case: Analyzing Stakeholder Influence in a Local Business Introduction: In this case assignment, you will explore the dynamics of stakeholder management in a local business of your choice. By identifying and assessing various stakeholder groups, you will analyze their impact on the business and determine the level of influence they hold. Your task is to provide recommendations on how to effectively engage with these stakeholder groups based on their influence. Case Scenario: Imagine you are a green marketing consultant conducting a case study on a local business of your choice. You have selected “XYZ Café,” a popular coffee shop in your town, as the subject of your analysis. Assignment Tasks 1. Select a Local Business • Choose a local business in your area. It can be a café, restaurant, retail store, or any other business that you find interesting and can access information about.

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2. Identify Stakeholder Groups • Identify and list the most important stakeholder groups associated with the selected business. Stakeholder groups can include but are not limited to customers, employees, owners, suppliers, local community, regulatory agencies, and competitors. Explain why each group is considered a stakeholder. 3. Assess Impact on the Business • For each stakeholder group identified, analyze how they might impact the business. Consider their needs, interests, and potential actions that could affect the operation of the business. 4. Evaluate Influence Levels • Determine which stakeholder groups have significant influence over XYZ Café and which ones have less power to influence its operations. Explain your rationale for ranking their influence. 5. Recommend Engagement Strategies • Provide recommendations on how XYZ Café should engage with both highly influential and less influential stakeholder groups. Consider strategies for managing relationships, addressing concerns, and leveraging the influence of key stakeholders. 6. Conclusion • Summarize your findings and emphasize the importance of effective stakeholder management for the success and sustainability of local businesses. Submission Guidelines • Prepare a well-structured report following academic writing conventions. • Include relevant citations and references to support your analysis. • Ensure clarity, coherence, and logical flow in your case assignment.

References Deslandes, M. 2023. Business and Human Rights Resource Centre, Fashion Network. Turkey: Fashion Brands Announce Commitments to Workers Affected by Earthquake. Freeman, R.E. 1984. Strategic Management: A Stakeholder Approach. London: Pitman. Holter, M. 2017. World’s Biggest Wealth Fund Turns Attention to Fashion Houses. Bloomberg. Ikea [Internet]. https://about.ikea.com/en/sustainability/stakeholder-engagement Kasperkevic, J. 2016. Rana Plaza Collapse: Workplace Dangers Persist Three Years Later, Researchers and Activists Say Working Conditions Have Hardly Improved for Garment Workers Since the Bangladesh Factory Collapse Killed 1138 People. The Guardian. Nygaard, A. 2023. Is Sustainable Certification’s Ability to Combat Greenwashing Trustworthy? Frontiers in Sustainability 4: 1188069.

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Pfeffer, J., Salancik, G.R. 1978. The External Control of Organizations: A Resource Dependence Perspective. University of Illinois at Urbana-Champaign’s Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship. https://ssrn.com/abstract=149 6213 The Economist. 2012. Going Global, Terry Leahy on the Art of Management.

Chapter 7

Green SWOT Analysis

Abstract In the face of multifaceted global disruptions, including geopolitical instability, the pandemic, economic turmoil, and climate change impacts, businesses and their supply chains must conduct comprehensive analyses to anticipate and prepare for future challenges. This necessitates leveraging tools like the SWOT analysis framework, which systematically evaluates internal strengths, weaknesses, external opportunities, and threats. Through SWOT analyses, organizations can identify their capacities, constraints, growth prospects, and risks, enabling the formulation of proactive green marketing strategies. Embedding sustainability objectives into these strategies aids in enhancing resilience and adaptability in an evolving landscape. Over time, the traditional SWOT analysis has evolved to integrate sustainability considerations, offering a holistic evaluation of a company’s sustainability landscape. By utilizing green SWOT analysis as a guiding framework, businesses can strategically incorporate sustainable practices, leading to improved performance and a positive societal and environmental impact.

7.1 Sustainable SWOT and Uncertainty Amid disruptive events such as the conflict in Ukraine, heightened geopolitical instability, the ongoing pandemic, economic crises, and the effects of climate change, including rising temperatures and extreme weather, it is imperative for both the firm and its supply chain to conduct a thorough analysis of the challenges and opportunities. This analysis aims to ensure preparedness for the forthcoming changes. One valuable tool that can aid in this endeavor is the SWOT analysis. SWOT analysis provides a structured framework for assessing Strengths, Weaknesses, Opportunities, and Threats. It offers a comprehensive view of the internal and external factors that can impact the organization. By conducting SWOT analyses, firms can gain insights into their internal capabilities and limitations while also identifying potential growth areas and external risks. Utilizing the findings from SWOT analyses, organizations can formulate proactive green marketing strategies. These strategies are designed to align with sustainability

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objectives, mitigate weaknesses, leverage strengths, capitalize on opportunities, and address potential threats. In a rapidly changing and uncertain world, such strategic planning is essential for resilience and adaptability. SWOT analyses, also known as situation analyses, have been a traditional tool for evaluating various internal and external factors that affect a company’s ability to achieve strategic goals. SWOT was first introduced at Stanford Research Institute (SRI) in the 1960s for analyzing Fortune 500 companies (Fine 2009). Today, sustainability can become a central objective in SWOT analyses, as they can contribute to evaluating the strengths, weaknesses, opportunities, and threats related to sustainable performance. SWOT analysis provides a general examination of a company’s sustainability landscape, enabling it to identify its strengths and weaknesses, leverage opportunities, and mitigate threats. By integrating sustainability considerations into each aspect of the analysis, companies can develop well-informed and comprehensive sustainable strategies that align with their internal capabilities and external market and technological dynamics. SWOT analysis serves as a valuable tool to assess, plan, and implement sustainable practices, leading to improved business performance and a positive impact on the environment and society. The utilization of the SWOT process can engage internal departments, centers, and groups in the organization, fostering heightened awareness and focus on changes that facilitate sustainable technological advancements and market adaptation. According to the World Resources Institute, integrating SWOT analysis into the creative process enables the discovery of more sustainable solutions and facilitates superior strategic decision-making. Increasingly, companies are involving various stakeholder groups, customers, unions, and suppliers in this inclusive process. It is crucial to recognize that sustainability is a collective objective encompassing the outcomes not only of individual companies but also of a vast global network of interconnected businesses. Consequently, the ability to achieve sustainable outcomes relies on the efficacy of the entire chain involved in a product’s life cycle, from the sourcing of raw materials to recycling post-consumption. Consequently, SWOT analyses should encompass the entirety of companies within this interconnected network to ensure a comprehensive and holistic approach. The SWOT analysis serves as a valuable tool for identifying key factors that influence a company’s ability to achieve its strategic objectives. It can be applied at various levels of analysis, including product, individual, industry, destination, project, organization, and supply chain. However, it is crucial to establish the appropriate level of analysis to ensure the relevance and practicality of the findings. SWOT analyses provide the foundation for developing strategic plans, operational plans, and marketing plans, which are further broken down into monthly and weekly plans within companies. This analysis sets the stage for the entire planning hierarchy and proves particularly valuable when industries and sectors are confronted with disruptive changes like climate change.

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7.1.1 Structure of Sustainable SWOT Analysis By examining the strengths, weaknesses, opportunities, and threats, companies can gain insights into their internal capabilities, external market dynamics, emerging opportunities, and potential risks. This enables them to make informed decisions and formulate effective strategies that leverage their strengths, address weaknesses, capitalize on opportunities, and mitigate threats. Ultimately, the SWOT analysis helps guide the planning process, enabling companies to align their actions with their strategic goals and adapt to changing market conditions. It serves as a valuable framework for navigating uncertainty and ensuring that plans are well-informed and adaptable. Sustainability and the environment are now the main driving forces behind innovation and entrepreneurship, and a SWOT analysis can help identify both entry and exit barriers that limit these possibilities. Entry barriers could be legislation, financial constraints, social networks, or social and cultural distance, while exit barriers may be linked to internal resources that make it difficult for a company to change course. For example, the strong mechanical expertise that car manufacturers possess around internal combustion engines is an exit barrier that makes it challenging and expensive to switch to electric cars. SWOT analyses are case-specific and can help identify special problems in different markets and technologies.

7.2 Ecological Threats The changing climate, including rising ocean temperatures and increased weather variability, will significantly impact the physical infrastructure within interorganizational networks. The rate and magnitude of these changes vary across different industries and geographical regions. In response to ecological uncertainties, inter-organizational networks must address the interconnected dynamics of vulnerability, exposure to heatwaves, wildfire (Fig. 7.1) and flooding, socioeconomic processes, sustainable development, and climate change in general, as emphasized by the UN Intergovernmental Panel on Climate Change (IPCC). The IPCC identifies five key ecological risks that require active responses from inter-organizational networks, as outlined in Table 7.1. These risks include the presence of unique and threatened systems, extreme weather events, the distribution of impacts, global aggregate impacts, and large-scale singular events. The expansion of integrated global inter-organizational networks has introduced ecological uncertainties that individual actors within the system must navigate and respond to. Organizations grapple with the task of effectively navigating ecological uncertainties, which exert significant influence on their organizational structures, supply chains, markets, and technologies. Ecological uncertainty, functioning as an external force, imposes constraints on resource availability and shapes internal power dynamics within organizations. Consequently, organizations strive to absorb and

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Fig. 7.1 Firefighters battle against the relentless fury of a wildfire. The link between climate change and these increasingly devastating infernos underscores the urgency of addressing our warming planet. We must combat the flames and confront the causes. Source Shutterstock.com

mitigate ecological uncertainty within the global network of exchange. As markets become increasingly internationalized, supply chains become more susceptible to the far-reaching impacts of climate change. The global sourcing and production practices prevalent in many industries amplify the repercussions of climate-related events. For example, the flooding that occurred in Thailand disrupted the supply chains of major companies like Toyota, Honda, Samsung, and Lenovo, leading to adverse downstream effects in their supply chains (Fig. 7.2). Hurricane Harvey in 2017 and subsequent flooding in Texas, USA, inflicted extensive damage on infrastructure, causing disruptions in supply chains across various industries. The energy sector experienced production shutdowns and logistical challenges, resulting in disruptions in fuel supplies. The automotive and chemical sectors also encountered obstacles due to facility damage and transportation disruptions. Similarly, the floods that took place in China in 2020, including the regions affected by the Yangtze River basin, significantly impacted agricultural production, logistics, and transportation networks. Climate change may lead to more extreme weather conditions. In recent months of 2023, severe drought has intensified due to El Niño, resulting in water shortages in Central America and impacting the operation of the locks along the Panama Canal. This challenging situation is expected to persist well into 2024. Consequently, the Panama Canal, a vital sea route for global trade, has become increasingly difficult to navigate. This has forced U.S. grain carriers bound for Asia to take longer routes through the Suez Canal or around southern Africa. The current challenges faced by boat transportation through the Panama Canal are the latest example of how critical components of global supply chains can abruptly come to a standstill, posing a threat to global supply chains and trade. Under normal circumstances, the Panama Canal

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Table 7.1 Ecological threat scenario with implications for business economics 1. Unique and threatened system

Some unique and threatened systems, including ecosystems and cultures, are already at risk from climate change (high confidence). The number of such systems at risk of severe consequences is higher with additional warning of around 1 °C. Many species and systems with limited adaptive capacity are subject to very high risks with additional warming of 2 °C, particularly Arctic-sea-ice and coral-reef systems

2. Extreme weather events

Climate-change-related risks from extreme events, such as heat waves, extreme precipitation, and coastal flooding, are already moderate (high confidence) and high with 1 °C additional warming (medium confidence). Risks associated with some types of extreme events (e.g., extreme heat) increase further at higher temperatures (high confidence)

3. Distribution of impacts

Risks are unevenly distributed and are generally greater for disadvantaged people and communities in countries at all levels of development. Risks are already moderate because of regionally differentiated climate-change impacts on crop production in particular (medium to high confidence). Based on projected decreases in regional crop yields and water availability, risks of unevenly distributed impacts are high for additional warming above 2 °C (medium confidence)

4. Global aggregate impacts

Risks of global aggregate impacts are moderate for additional warming between 1 and 2 °C, reflecting impacts to both Earth’s biodiversity and the overall global economy (medium confidence). Extensive biodiversity loss with associated loss of ecosystem goods and services results in high risks around 3 °C additional warming (high confidence). Aggregate economic damages accelerate with increasing temperature (limited evidence, high agreement), but few quantitative estimates have been completed for additional; warming around 3 °C or above

5. Large-scale singular With increasing warming, some physical systems or ecosystems may be at risk of abrupt and irreversible changes. Risks associated with events such tipping points become moderate between 0 and 1 °C additional warming, due to early warning signs that both warm-water coral reef and Arctic ecosystems are already experiencing irreversible regime shifts (medium confidence). Risks increase disproportionately as temperature increases between 1 and 2 °C additional warming and become high above 3 °C, due to the potential for a large and irreversible sea level rise from ice sheet loss. For sustained warming greater than some threshold, 35 near-complete loss of the Greenland ice sheet would occur over a millennium or more, contributing up to 7 m of global mean sea level rise Intergovernmental Panel on Climate Change (2014)—part 2 quote. Risk dimensions of ecological uncertainty

handles approximately 3% of global maritime trade volumes and facilitates the movement of 46% of containers from Northeast Asia to the East Coast of the United States (LaRocco 2023). These disruptions reverberated across diverse industries, causing delays in production, distribution, and delivery of goods. These examples highlight how extreme weather events, such as floods resulting from increasing temperatures,

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Fig. 7.2 A panoramic scene of flooding at a Honda car manufacturing facility in Ayutthaya province, Thailand. Climate change intensifies weather patterns, leading to more extreme and frequent rainfall, resulting in significant damage to both production facilities and infrastructure. In the context of a global supply chain, flooding poses a substantial threat. Source Shutterstock.com

can disrupt supply chains by damaging infrastructure, causing transportation disruptions, and creating shortages of critical components and raw materials. These disruptions can have far-reaching global consequences on businesses and industries, leading to delays in production, increased costs, and supply shortages. Strategic decision-making processes necessitate careful consideration of the evolving external conditions stemming from climate change and resource depletion. The absence of a sustainable product lifecycle structure contributes to the loss of ecosystems and depletion of resources. Ecological uncertainty has the potential to inflict irreversible damage on biodiversity and trigger long-term climate effects attributed to CO2 emissions. These uncertainties disrupt the dynamics of business relationships and contractual agreements throughout supply chains. Consequently, ecological uncertainty poses significant informational challenges that decision-makers must address when conducting a SWOT analysis. The analysis described above can systematically review a company’s environmental challenges in its operations by evaluating the long-term effects of climate and resource changes. It can connect environmental problems such as climate change and resource scarcity to risk conditions, opportunities, strengths, and weaknesses. This analysis can help identify new opportunities and areas for further development and growth in sustainability and the environment. However, threats and weaknesses have been the focus, while strengths and opportunities have received less attention. Additionally, SWOT can serve as an educational tool for communicating and discussing new strategic choices, presenting sustainability challenges and opportunities in a

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clear and structured way. Mobilizing SWOT as a group process within the organization can generate new ideas, possibilities, and solutions, better anchoring strategic processes among employees before strategic changes are made (Table 7.2). In general, it is advisable to use quantitative measures when conducting a SWOT analysis to evaluate the various dimensions accurately. Furthermore, gathering data over time can provide additional value to such analyses. It is also beneficial to obtain comparative data among companies within the industry or sector, regional data, and national data on business environments (Achrol et al. 1983). Utilizing “objective” data can contribute to a more valid analysis. Nonetheless, there exists a potential for misuse of SWOT analysis within internal power struggles for resource allocation. In such scenarios, conflicting internal interests may selectively cherry-pick data that aligns with their preferred outcomes. To Table 7.2 Idea map of a typical sustainability SWOT analysis (situation analysis) Strengths

Weaknesses

• High quality sustainable technology, innovations, and entrepreneurship

• Outdated and unsustainable technology and knowledge

• Strong position in the market for green products

• Static and inflexible organization

• Established in markets without green • Sustainable network of companies throughout the product lifecycle in the products supply chain from raw materials to recycling • Strong liquidity, solvency, and profitability

• Part of a network of companies in the supply chain that do not transition towards sustainability

• Strong brands and high customer satisfaction • Poor reputation in sustainability • Strong relationships with stakeholders

• Limited knowledge of green marketing and technology

• Strong brands, customer loyalty and customer satisfaction

• Low customer satisfaction and weak brands • Weak liquidity, solvency, and profitability

Opportunities

Threats

• Low entry barriers for sustainable products

• High exit barriers to phase out unsustainable practices

• High dynamism and sustainable technological innovation capacity in the sector

• Static technology based on unsustainable solutions

• Low external pressure from relationship • Regulations and subsidies that stimulate sustainable products and sustainable business stakeholders and other parts of the network towards a sustainable economy • New global market opportunities for sustainable products

• Price subsidization of not sustainable technological solutions

• Growing green market segments with high willingness to pay for sustainable products

• Increased geopolitical risk caused by dependency of critical resources like scarce green minerals, competence, infrastructure

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mitigate these internal conflicts of interest, external consultants are often enlisted to contribute to a more impartial analysis. SWOT analysis, in this context, serves as a dynamic framework for evaluating the company’s long-term evolution within its network. It facilitates the integration of external factors’ impacts into the company’s strategic, planning, and operational decision-making. Employing a SWOT analysis in assessing the company’s operations enables the adoption of a long-term perspective, placing the business within a comprehensive lifecycle framework. 1. Green Strengths A SWOT analysis helps identify the company’s internal strengths that can be leveraged to facilitate the green transition. These strengths can include existing sustainable practices, eco-friendly technologies, skilled workforce, strong corporate values, or established partnerships with green suppliers. By recognizing and building upon these strengths, the company can align them with its green goals and initiatives. 2. Green Weaknesses SWOT analysis also identifies internal weaknesses that may hinder the green transition. These weaknesses could include outdated technologies, insufficient knowledge about sustainable practices, lack of employee engagement, or inadequate financial resources. By understanding these weaknesses, the company can develop strategies to overcome them and allocate resources to address any gaps. 3. Green Opportunities A SWOT analysis helps identify external opportunities that can be capitalized on during the green transition. These opportunities could include market demand for eco-friendly products and services, government incentives or subsidies for sustainable initiatives, emerging green technologies, or changing consumer preferences towards sustainable options. By recognizing these opportunities, the company can strategically position itself to take advantage of them and drive the green transition. 4. Green Threats Analysis also helps identify external threats that may pose challenges to the green transition. These threats could include evolving environmental regulations, increasing competition from environmentally conscious competitors, reputational risks associated with unsustainable practices, or potential supply chain disruptions due to climate change. By understanding these threats, the company can develop contingency plans, adapt its strategies, and mitigate risks associated with the green transition.

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7.3 Geopolitical Threats The green transition confronts a substantial challenge characterized by geopolitical uncertainties surrounding the supply of critical minerals. This challenge is particularly evident in the economic dynamics between the United States and China. An illustrative example is the United States’ heavy reliance on China for 80% of its imported Rare Earth Elements (REE), which are indispensable for electrification, digitalization, and sustainable initiatives. The geopolitical landscape between China and the United States is marked by considerable uncertainty, owing to potential trade conflicts and various rivalries spanning military, scientific, technological, and regional spheres. The strategic partnership between China and Russia has further complicated this potential conflict, exemplified by recent events such as the Ukraine invasion (Nygaard 2023). Additionally, there are latent international conflicts arising from territorial or political disputes involving China and nations like Taiwan, India, Japan, and Vietnam. This escalating uncertainty in the China-US relationship has the potential to escalate geopolitical instability, particularly concerning critical minerals such as REEs. Notably, as of 2020, China maintained control over approximately 60% of global REE production and processing. The ongoing trade war and long-term strategic conflicts between China and the United States contribute to the geopolitical uncertainty surrounding the supply of minerals necessary for the global growth of green technologies, particularly in the electric vehicle (EV) industry. In Asia, China holds a dominant position as a producer of minerals essential for the green technology revolution, surpassing other resourcerich players such as the United States and Canada. China’s production of minerals like aluminum, steel, lithium, silicon, and titanium, which are crucial for expanding the green sectors in the economy, including EVs, places it among the top five global producers. In a study conducted by the International Institute for Sustainable Development (IISD), it was revealed that Guinea, a nation categorized as highly fragile and potentially unstable, possesses 28% of the world’s bauxite and alumina reserves. Additionally, the Democratic Republic of Congo, which Transparency International designates as both fragile and corrupt, boasts an astonishing 56% of the global cobalt reserves. Notably, other minerals such as chromium and graphite are predominantly found in countries with known corruption issues. The IISD’s 2017 report underscored that significant reserves of minerals essential for the electric vehicle (EV) manufacturing industry are concentrated in countries perceived as corrupt or highly corrupt. Out of the 23 minerals crucial for EV production, many originate from nations plagued by instability or corruption. This situation raises concerns about potential geopolitical conflicts between mineral-producing and consuming countries. Furthermore, competing companies may face varying levels of access to critical mineral extraction, adding further complexity to the landscape.

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For a visual representation of the susceptibility of the global market for essential minerals, vital for sustainable growth, to geopolitical instability and its implications for strategic vulnerabilities, please refer to Table 7.3. Stakeholder groups play a crucial role in shedding light on and constraining the unsustainable practices associated with mineral supply chains in the electric vehicle (EV) industry. A study conducted by Oh et al. (2020) found that mining activities near lakes or ecologically vulnerable areas had a negative impact on the stock value of firms, but only in countries with a robust legal structure and institutional trust. Conversely, mining in more fragile states had the opposite effect on stock value. This study suggests that fragile and corrupt countries (as listed in Table 7.3) could serve as “pollution heavens”. Therefore, the location of mining operations is significant, potentially due to the influence of stakeholder interest groups that contribute to strategic uncertainty. In the realm of green growth, stakeholder groups are wellorganized and enjoy broad public support. In the United States, there has been increasing concern about the outsourcing of supply chains for essential elements to other countries. However, the constraints on national interests extend beyond critical minerals alone. Sustainable development is vulnerable to a combination of geopolitical constraints and the concentration of critical resources (as shown in Table 7.2). The geopolitical rivalry between China and the United States has an impact on business strategies and organizational models. The escalating rivalry between these economic superpowers may result in heightened strategic uncertainty in the EV industry, particularly if green minerals like REEs become entangled in a trade war. Sourcing “green” minerals from countries with politically unstable and corrupt economic regimes further compounds the uncertainty within the EV industry. Consequently, this uncertainty affects mineral sourcing for EV manufacturing companies and contributes to strategic uncertainty overall. Table 7.3 Percentage of green global and critical minerals crucial to El-car technology located in fragile and corrupt states (Nygaard 2023) Minerals

Percentage of global resources located in fragile or very fragile states

Percentage of global resources located in corrupt or very corrupt states

Bauxite and alumina

44

68

Cobalt

70

70

Copper

41

41

Graphite

73

100

Iron

42

60

Lead

49

49

Lithium

21

34

Manganese

66

86

Nickel

42

59

Rare earths

58

94

Silicon

–

–

Titanium

57

62

7.5 Internal Sustainability Strengths and Weaknesses

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7.4 Using SWOT to Design Strategy Based on the insights gained from the SWOT analysis, management can develop a comprehensive green strategy. The analysis helps prioritize initiatives, allocate resources effectively, and set realistic goals aligned with the green transition. It also provides a framework to monitor progress, adjust, and continuously improve the company’s sustainability performance. Overall, SWOT analysis serves as a valuable tool for assessing the internal and external factors influencing the green transition in a company. It helps identify strengths to leverage, weaknesses to address, opportunities to seize, and threats to mitigate, ultimately enabling the company to navigate the green transition successfully. The World Resources Institute suggests the following approach to conducting a meaningful SWOT analysis: I. Initiate the analysis by examining the macro-level environmental, social, and economic factors that influence the industry. Identify long-term threats and opportunities stemming from these factors. Subsequently, evaluate the company’s internal strengths and weaknesses considering these external forces. II. Perform a comprehensive analysis of emerging risks and evolving trends relevant to the company’s operations. This includes investigating market dynamics, societal changes, and stakeholder expectations that can impact the company’s performance and sustainability. III. Understand how the development of capabilities across the entire network of companies involved in the product’s life cycle and value chain can contribute to competitive advantage. Assess the expertise and knowledge of different entities within the value chain to identify potential vulnerabilities and threats that may hinder the company’s progress. By following this approach, companies can conduct a constructive SWOT analysis that considers the broader context, assesses risks and opportunities, and recognizes the importance of collaboration and knowledge-sharing within the value chain.

7.5 Internal Sustainability Strengths and Weaknesses During the initial phase, perform an examination of the company’s internal resources to evaluate its strengths and weaknesses. These analyses may encompass: 1. Assessment of Human Resources: Evaluate the competencies, experiences, and skill sets of the company’s workforce. Consider the effectiveness of research and development programs in enhancing knowledge and expertise within the organization. 2. Evaluation of Physical Resources: Analyze the company’s physical assets, such as its geographical location, technological infrastructure, production equipment, buildings, and other tangible resources that contribute to its operations.

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3. Analysis of Organizational Operations: Assess the efficiency and effectiveness of the company’s operational processes and systems. This includes evaluating the company’s ability to streamline workflows, optimize resource allocation, and enhance overall productivity. By conducting a thorough analysis of its internal resources, the company can glean valuable insights into its strengths, which can be leveraged to establish a competitive edge. Concurrently, it can pinpoint areas of weakness that require attention and improvement. In cases where weaknesses are identified, organizational restructuring may be necessary to enhance environmental efficiency and promote socially responsible production practices. Moreover, it is essential to evaluate various types of organizations capable of offering innovative solutions to address the challenges identified through SWOT analyses. Previous studies in economic organization theory have highlighted the limitations of bureaucratic knowledge development within research and development (R&D) processes. As a result, it becomes crucial to consider nurturing organic growth in new areas, rather than solely relying on mergers and acquisitions of innovative companies. This approach fosters a culture of innovation and exploration, enabling the company to adapt and thrive in the face of dynamic market conditions. An alternative worth considering involves boosting motivation to take on technological and economic risks in the quest for innovative and sustainable technologies through “quasi” integrated entities, such as partially independent subsidiaries or alliances (Williamson 1985). Establishing alliances with the aim of fortifying R&D efforts in sustainable technology can be a feasible choice. Nonetheless, it’s crucial to recognize that orchestrating such partnerships can be intricate and potentially lead to expensive conflicts. However, conflicts within R&D settings can serve as constructive forces when adeptly managed by leadership. It is of paramount importance for management to cultivate an environment that inspires individuals while also adeptly addressing conflicts to avert their potential harm, costliness, and adverse impact on the organization’s overall progress and success.

7.6 External Sustainability Opportunities and Threats To conduct a comprehensive analysis of external factors, it is crucial to gather empirical data on various variables in the external environment that can influence the organization or company’s situation. These variables may include: • Environmental and social shifts driving the transition to sustainable industries and the pace of these transformations. • The influence of digitalization, automation, and robotization on company operations, including their potential for emissions reduction, energy management, and improved transportation efficiency. • Financial trends, investment patterns, consumption behaviors, and income distribution signaling a shift toward sustainability in the sector.

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• The physical operational landscape, encompassing infrastructure, transportation systems, and disruptive technological advancements that can impact sustainability. • National and international regulations, including those imposed by the EU, altering the prerequisites for sustainable development. • The intricate relationship between national and/or international economic, political, and environmental risks. • Social and cultural dynamics either supporting or challenging sustainable changes. • Demographic, cultural, and societal shifts shaping market development. By considering and analyzing these external factors, organizations can gain a comprehensive understanding of the opportunities and challenges present in the external environment, enabling them to make informed decisions and develop strategies that promote the green transition. By conducting an analysis of these external variables, organizations can gain valuable insights into the opportunities and threats that exist in the external environment. This information allows them to make wellinformed decisions regarding sustainability initiatives. The external analysis within the SWOT framework is closely intertwined with the company’s business operations as it involves identifying both micro and macro factors that drive the market. This process is complex and requires analytical insight and market knowledge. It is crucial to evaluate the company’s technology considering external market trends and technological advancements to identify potential opportunities. Identifying these opportunities necessitates a combination of creative entrepreneurship and effective organizational systems within the company. The SWOT analysis involves assessing both opportunities and threats concurrently, ensuring that strategic decisions are grounded in a balanced evaluation of risks. This approach helps to prevent biased evaluations or underestimation of risks, which can lead to confirmation bias. In well-established companies, cultivating qualities like enthusiasm, creativity, and entrepreneurship—attributes often associated with small entrepreneurial firms— can pose a challenge during SWOT analysis. This challenge frequently arises from the compartmentalization and isolation of research and development (R&D) activities from market and customer aspects within established corporate structures. Consequently, effectively disseminating information about external opportunities and threats across the organization, igniting enthusiasm for business transformation, and mobilizing resources for strategy implementation become daunting tasks (Kohli and Jaworski 1990). Nonetheless, it remains imperative for organizations to acknowledge and confront these obstacles to fully harness the potential of SWOT analysis and capitalize on its revealed opportunities. This may entail breaking down organizational silos and fostering a culture of collaboration and knowledge-sharing across departments. Additionally, establishing channels for open communication, promoting cross-functional teams, and incentivizing innovative thinking can help surmount these barriers, fostering an environment conducive to enthusiasm, creativity, and entrepreneurial spirit within the company. By bridging the divide between R&D and market insights,

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organizations can seamlessly integrate external perspectives into their decisionmaking processes, instigate meaningful change, and seize the opportunities unveiled through SWOT analysis. To identify external opportunities and threats, it is important to: • Assess the progress of sustainable technology and the development of sustainable markets on a global scale. • Identify overarching and influential trends that are reshaping market needs and demands. • Examine dynamics at the global, regional, and local levels. • Investigate substantial shifts within the markets, including various segments and niches. • Gain insights into urbanization, population shifts, and demographic changes. • Analyze trends in income growth, income distribution, and overall economic expansion. • Investigate shifts in business models and the adoption of automation, information technology, and related factors. The company’s operations can be vulnerable to threats arising from the environment. Climate change, for instance, can result in shifts in ecological systems, occurrences of extreme weather events, regional and population-based risks, threats to biodiversity, and the potential for significant and irreversible failures in biological systems (Fig. 7.3). These factors of threat pose risks to both industries and individual companies. In the past, environmental threats were often overlooked. However, in today’s business landscape, these threats can have significant consequences for companies, employees, and consumers. Companies that are part of a global network connected through a value chain can encounter challenges if any of the companies in the chain are exposed to environmental threats, as described in the table above. The impact of environmental changes will vary depending on the industry, sector, market, and technology involved. Incorporating climate change considerations into SWOT analyses can help organizations proactively address these factors, identify strategic opportunities, mitigate risks, and develop sustainability-focused strategies (IISD 2006). It’s essential for businesses to consider the long-term impacts of climate change on their operations, markets, and stakeholders to remain resilient and responsive to the evolving business landscape. Strengths 1. Innovation Opportunities: Organizations can view a commitment to sustainability and environmental responsibility as a strength. Developing and adopting eco-friendly technologies and practices can enhance brand reputation and market positioning. 2. Resource Efficiency: Companies that focus on resource efficiency and sustainable practices can reduce operational costs, which can be a significant strength in terms of competitiveness.

7.6 External Sustainability Opportunities and Threats

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Fig. 7.3 Recent data from the European Union-funded Copernicus Climate Change Service (C3S), operated by ECMWF, reveals that the Earth has experienced its warmest three-month period on record and the figure shows that August 2023 was the warmest August on record globally, and warmer than all other months except July 2023. Notably, global sea surface temperatures have reached unprecedented levels for the third consecutive month, while Antarctic Sea ice extent remains exceptionally low for this time of year. This record-breaking extreme temperature has led to heightened sea surface temperatures and the potential for more severe weather events, posing significant risks to supply chains, marketing channels, consumers, and society. The pertinent question arises: are businesses adequately prepared (SWOT analysis), and can their marketing strategies effectively counteract these challenges through the adoption of green entrepreneurship and green marketing? Source Globally averaged surface air temperature anomalies relative to 1991–2020 for each August from 1940 to 2023. Data: ERA5. Credit C3S/ECMWF

Weaknesses 1. Resource Vulnerability: Overreliance on scarce or environmentally sensitive resources can be a weakness. Climate change can disrupt supply chains, leading to resource scarcity and higher costs. 2. Regulatory Compliance: Companies that have not proactively addressed environmental regulations may face weaknesses when regulations become more stringent, potentially leading to fines and reputational damage. Opportunities 1. New Markets: Climate change can create opportunities in emerging markets related to renewable energy, sustainable agriculture, and climate adaptation technologies. 2. Innovation and Product Development: Organizations can seize opportunities by investing in climate-resilient products and services, such as renewable energy solutions or climate-related risk assessment services.

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Threats 1. Supply Chain Disruption: Increasingly frequent and severe weather events can disrupt supply chains, causing production delays and impacting product availability. 2. Market Volatility: Climate change can lead to market volatility as consumers and investors become more environmentally conscious, affecting demand for certain products or industries. 3. Reputation Damage: Failure to address climate-related issues can lead to reputational damage. Public perception can greatly influence consumer choices and investor decisions. A comprehensive green SWOT analysis should assess the threats that a company may face throughout its entire value chain. Often, companies may be unaware of their environmental vulnerabilities due to the complexity and opacity of global networks. However, evaluating the company’s vulnerability to environmental threats can also present a business opportunity, considering the complexity and dynamics that can impact a company’s operations in various ways. External uncertainties related to resources can significantly influence internal power dynamics within a company and throughout its value chain. Therefore, a SWOT analysis should examine the environmental threat landscape across the global network of companies linked through a value chain. Risk factors resulting from the threats outlined in the table above can be actively utilized to assess vulnerability across different stages of a product’s life cycle, from raw material production to distribution and recycling. This can be achieved by measuring various aspects of the network, among other factors: • Greenhouse gas emissions • Local pollution of soil, air, and water • Encroachment on arable land or protected areas of high environmental importance (e.g., rainforests and wetlands) • Depletion and disposal of finite natural resources • Utilization of freshwater resources in regions facing severe water scarcity • Pollution of the oceans • Handling and disposal of hazardous chemicals. To convert risks and threats into strengths, it is essential to conduct a comprehensive analysis of the entire network in which an organization or business functions. The SWOT analysis can lead to strategic decisions such as reevaluating partners, alliances, manufacturers, and distributors. To achieve sustainable outcomes, a fresh organizational approach may be required across the entire value chain, spanning from production to recycling. This could involve exploring alternative alliances, ownership and control structures, and market transactions. As mentioned earlier, innovation may also be imperative in addressing the issues identified in the SWOT analysis.

7.7 Sustainability Goals and Strategy

129

7.7 Sustainability Goals and Strategy In preceding chapters of this book, we have illustrated the substantial impact that disruptive technologies and emerging market trends can have on established companies, organizations, networks, industries, and economic sectors. As a result, the SWOT analysis plays a vital role in the strategic decision-making process, enabling businesses to proactively adapt to changes arising from sustainability considerations, green technological advancements, or evolving sustainable consumer demands. Through the implementation of a SWOT analysis, companies can reevaluate their strategic objectives and priorities. Integrating SWOT analysis into the marketing strategy is a valuable approach that enables companies to gain meaningful insights and make informed decisions. By considering the internal strengths and weaknesses as well as the external opportunities and threats, businesses can develop a comprehensive marketing strategy that aligns with their overall objectives and maximizes their chances of success. The internal analysis in SWOT helps identify the strengths of a company, such as unique selling propositions, strong brand equity, or extensive distribution networks. These strengths can be leveraged to create a competitive advantage and effectively communicate value to the target market. Simultaneously, the analysis also highlights weaknesses that need to be addressed, such as limited resources or outdated technology. By acknowledging these weaknesses, the marketing strategy can focus on areas of improvement and enhance competitiveness (Porter and Van der Linde 1995). The external analysis in SWOT uncovers market opportunities, emerging trends, or changing customer needs. Identifying and capitalizing on these opportunities is essential for the marketing strategy to drive growth. Additionally, the analysis helps identify potential threats, such as intense competition or regulatory changes. By understanding these threats, the marketing strategy can mitigate risks, differentiate offerings, and build resilience. SWOT analysis facilitates the alignment of marketing objectives with broader organizational goals. It ensures that the marketing strategy is coherent and supports the overall business strategy. Moreover, the analysis provides insights into the market environment, customer preferences, and competitive landscape, guiding market segmentation and targeting decisions. By identifying the target market segments, the marketing strategy can tailor its tactics to effectively reach and engage the desired customers. Competitive positioning is another crucial aspect of integrating SWOT analysis into the marketing strategy. By assessing the strengths and weaknesses of competitors, the marketing strategy can develop a unique value proposition, differentiate offerings, and position the company effectively in the market. The outcomes of SWOT analysis also influence marketing mix decisions, including product development, pricing strategies, distribution channels, and promotional activities. By aligning these elements with internal capabilities, market opportunities, and customer demands, the marketing strategy becomes more effective and customer centric. Integrating SWOT analysis into the marketing strategy allows

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companies to gain a comprehensive understanding of their internal and external environments. It empowers decision-makers to leverage strengths, address weaknesses, exploit opportunities, and mitigate threats. By utilizing SWOT analysis, companies can develop a well-informed and strategic marketing approach that drives business success and enables them to thrive in dynamic market conditions. Effective strategic plans should encompass the following criteria: • Clear prioritization among different sustainability goals and dimensions. • Quantifiable goals using objective and measurable variables. • Realistic SWOT analysis of long-term sustainability issues in the company’s environment. Strategic goals should be deeply rooted in the company’s vision, which should embody its values, ethics, obligations, and integrity, with a strong emphasis on sustainability. A sustainable vision serves as a guiding force, defining the purpose and aspirations of the company. It should be built upon pillars such as social responsibility, ethical guidelines, sustainability practices, human rights, respect, and transparency. A sustainable strategy should be anchored in this vision, aligning every aspect of the company’s operations with its overarching goals. To be effective, the vision must be clear, easily communicated, and relatable to both internal and external stakeholders. It should serve as a source of inspiration, driving strategic actions and decision-making. While a SWOT analysis provides a logical connection between the company and its external environment, the vision provides the essential direction and momentum for strategic planning. It ensures that the company’s strategies and initiatives are in line with its long-term vision and contribute to its overall mission. By integrating the vision into strategic planning, companies can foster a cohesive and purpose-driven approach. The vision acts as a compass, guiding the formulation of objectives, strategies, and tactics. It helps prioritize initiatives and allocate resources effectively. Additionally, the vision serves as a unifying force, rallying employees, customers, and partners around a shared purpose and generating enthusiasm for the company’s sustainable goals. A strong and sustainable vision not only shapes the company’s strategic planning but also influences its culture and decisionmaking processes. It sets a higher standard for responsible business practices and encourages innovation and continuous improvement. The vision serves as a constant reminder of the company’s commitment to sustainability, driving it to find creative solutions and embrace emerging opportunities in a rapidly changing world. A sustainable vision is the foundation upon which a company’s strategic goals are built. It provides a sense of purpose and direction, ensuring that the company’s actions and strategies align with its core values and long-term aspirations. By integrating the vision into strategic planning, companies can foster a holistic and purpose-driven approach, driving sustainable growth and making a positive impact on society and the environment. As mentioned previously, the planning process within companies can sometimes become inward-focused, reinforcing existing power structures, and limiting adaptability to new technologies, markets, and evolving environments. Bureaucratic structures, often characterized by hierarchical management,

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131

may struggle to effectively respond to disruptive shifts and fail to incorporate sustainable technologies into strategic planning. Consequently, decisions may be made prematurely, delayed, or implemented using inappropriate approaches. To address these challenges, it is important to view the plan as more than just a static end goal. Instead, it should be seen as a dynamic tool that facilitates a sustainable transition. Embracing this perspective encourages organizations to adopt a forwardthinking approach that embraces innovation and adapts to changing circumstances. By recognizing the need for flexibility and responsiveness, companies can overcome the limitations imposed by rigid structures and hierarchies. Incorporating sustainability into the planning process becomes essential in this context. Recognizing disruptive shifts, such as the introduction of sustainable technologies, enables companies to align their strategies with emerging trends and environmental considerations. By actively integrating sustainability into strategic planning, companies can better position themselves to navigate uncertainties and seize opportunities associated with sustainable practices. To achieve a sustainable transition, organizations should foster a culture of openness and learning. This involves challenging traditional assumptions, questioning existing processes, and encouraging collaboration across different levels and departments. By fostering an environment that values agility, adaptability, and continuous improvement, companies can ensure that strategic planning remains relevant, responsive, and capable of driving meaningful change. Ultimately, the goal is to leverage the planning process as a catalyst for transformative action. By embracing the dynamic nature of planning and its potential to drive sustainable transitions, organizations can overcome bureaucratic constraints and seize opportunities for innovation and positive change. The SWOT analysis plays a vital role in shaping a sustainable strategy and marketing plan, providing a data-driven foundation for decision-making. The marketing plan serves as a comprehensive roadmap that outlines how resources will be allocated to achieve the sustainability objectives established in the strategy. It offers a practical and realistic approach for leveraging the company’s available resources effectively. Within the marketing plan, specific initiatives are identified, along with the designated timeframes for their implementation. This creates a tangible and actionable blueprint that spans across weeks, months, and years. By delineating the steps and actions required, the marketing plan empowers the company to address various areas, including product design, advertising, pricing, and channel selection. However, it is essential to recognize that the marketing plan should not merely be a formal document. It must serve as a dynamic tool for executing initiatives and driving results. To ensure effectiveness, the resources allocated to customer-focused initiatives need to be cascaded down from a strategic level to individual operational units within the organization. This enables each unit to align their actions with the overarching marketing plan and work towards the shared sustainability goals. By operationalizing the green marketing mix strategy into a plan, the company can integrate sustainability considerations into day-to-day operations and decision-making. It allows for a more targeted and coordinated approach to customer engagement, ensuring that efforts are aligned with the company’s overall strategic direction. The SWOT analysis informs

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Fig. 7.4 The green SWOT analysis establish the basis for green marketing mix strategy decisions that produce sustainable performance

the development of a marketing plan that translates strategic objectives into actionable steps (Fig. 7.4). Through effective execution and resource allocation, the marketing plan becomes a powerful tool for driving sustainable initiatives, leading to positive outcomes for the company and its stakeholders. Additionally, it is crucial to complement the strategy and marketing plan with a well-defined budget and resource allocation for various activities. This includes clearly assigning responsibilities and authority to personnel involved in executing the plan. Proper management of outsourcing with a sustainability focus is a complex task. Evaluating sustainability outcomes can be challenging, leading to increased costs associated with control and evaluation for companies. It is important to note that sustainability encompasses multiple dimensions, and relying solely on economic measures may overlook environmental and social impacts. Traditional economic logic, primarily driven by cost considerations, can contribute to this issue. When choosing a channel organization, economic factors often play a significant role, as organizations compare costs across different forms of organization. Transaction cost assessments are helpful in determining the most appropriate organizational structure. However, sustainability considerations are often given less importance in these evaluations. On the other hand, outsourcing activities and shifting environmental costs while engaging in “greenwashing” practices can lead to the transfer of dangerous and unethical activities to other companies (Ndubisi and Nygaard 2018). This allows some companies to portray themselves as “sustainable” while effectively outsourcing activities that have detrimental environmental effects and ethical concerns (Metzer et al. 2012). By doing so, these companies evade the reputational consequences associated with such activities. To adopt a truly sustainable approach, organizations must carefully consider the ethical implications and environmental impacts associated with outsourcing decisions. Relying solely on economic factors without taking sustainability into account can result in unintended negative consequences. It is imperative for companies to uphold ethical standards, foster transparency, and assume responsibility for the overall sustainability of their operations and supply chains. The decision to outsource textile production to low-cost developing countries is often driven by the comparative cost of conducting business across different countries and companies. For instance, Zara has opted to manufacture textiles near European markets to facilitate the swift introduction of new collections, which may have been

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challenging if production was in Bangladesh. Regrettably, in cases like the Rana Plaza disaster, companies that own luxury brands were not extensively held accountable for the tragic incident. This situation can create a profit incentive for companies to outsource unethical practices to third-world countries. In a supply chain that primarily focuses on two-way relationships, there is a risk of delegating irresponsible and unethical activities to businesses that are challenging or costly to monitor. Therefore, it is crucial to elevate the analysis of the entire product life cycle, from raw materials to recycling, to a strategic level for all companies involved. Relocating environmentally hazardous operations to countries where monitoring is difficult or expensive is not a sustainable approach (Ndubisi et al. 2020). This issue can arise from an exclusive emphasis on bilateral relationships within a distribution system, rather than adopting a comprehensive strategy that encompasses the entire network of companies involved in all stages of production, distribution, and recycling. For example, highly unethical and irresponsible recycling practices are observed in West Africa, where children gather metals from burning heaps of discarded PCs imported from Europe and the USA (Akbar 2015). The Niger Delta serves as another illustration of oil spills and pollution resulting from oil exploration and production at the far end of the production and distribution system (Mustoe 2016). Numerous uncertainties, including financial, technical, market, political, and social factors, affect the ability of actors to regulate one another in a global production system, significantly impacting the organization of the circular network from production to recycling. Case: Leveraging SWOT Analysis and Marketing Strategy in the Era of Climate Change Introduction: Climate change is a pressing global challenge that is transforming the business landscape. Organizations need to adapt and develop strategies that not only address environmental concerns but also align with changing consumer preferences and regulatory landscapes. In this case assignment, you will explore how organizations can utilize SWOT analyses and marketing strategies to navigate the complexities of climate change. Case Scenario: You are a consultant for a medium-sized consumer goods company, “EcoTech Products Inc.,” that produces and markets a range of household and personal care items. EcoTech Products Inc. is committed to sustainability but is facing challenges related to climate change and its impact on the business. Your task is to help the company leverage SWOT analysis and marketing strategies to address these challenges effectively. Instructions Step 1: SWOT Analysis (25 Points) 1. Strengths (5 points): Identify and analyze at least two strengths related to EcoTech Products Inc.’s commitment to sustainability and environmental responsibility. How can these strengths be leveraged to gain a competitive advantage in the market?

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2. Weaknesses (5 points): Identify and analyze at least two weaknesses in the company’s current sustainability practices. Consider how these weaknesses might hinder the company’s ability to adapt to climate change and changing consumer expectations. 3. Opportunities (5 points): Explore at least two opportunities that climate change presents to EcoTech Products Inc. in terms of new markets or innovative product development. How can the company capitalize on these opportunities? 4. Threats (5 points): Assess at least two threats that climate change poses to the company, such as supply chain disruptions or market volatility. How might these threats impact the company’s operations and market positioning? 5. Overall SWOT (5 points): Summarize the key findings from your SWOT analysis and provide recommendations on how the company can strategically leverage its strengths, address weaknesses, seize opportunities, and mitigate threats related to climate change. Step 2: Marketing Strategy (20 Points) 1. Green Marketing Strategy (10 points): Develop a green marketing strategy for EcoTech Products Inc. based on the strengths and opportunities identified in your SWOT analysis. How can the company effectively communicate its commitment to sustainability to consumers while addressing climate change challenges? 2. Consumer Engagement (5 points): Explain how the company can engage consumers in its sustainability initiatives. Consider social media, educational campaigns, and other marketing tactics. 3. Regulatory Compliance (5 points): Discuss how the company can ensure compliance with evolving environmental regulations and use it as an opportunity for marketing and branding. Step 3: Presentation (10 Points) Create a concise presentation summarizing your SWOT analysis and marketing strategy. Use visuals and bullet points to convey your key findings and recommendations effectively. Conclusion (5 Points) Summarize the key takeaways from your analysis and emphasize the importance of integrating climate change considerations into business strategy and marketing efforts. Submission Guidelines 1. Submit a well-organized and structured report with clear headings. 2. Your report should be ~ 1500–2000 words in length. 3. Include visuals, charts, or graphs where applicable to enhance the clarity of your analysis. 4. Use credible sources to support your arguments and provide proper citations.

References

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Grading Rubric • • • •

SWOT Analysis: 25 points Marketing Strategy: 20 points Presentation: 10 points Conclusion: 5 points.

References Achrol, R., T. Reve, and L. Stern. 1983. The Environment of Marketing Channel Dyads: A Framework for Comparative Analysis. Journal of Marketing 47: 55–67. Akbar, J. 2015. Where Your Computer Goes to Die: Shocking Pictures of the Toxic ‘Electronic Graveyards’ in Africa Where the West Dumps its Old PCs, Laptops, Microwaves, Fridges and Phones. Daily Mail. Fine, G.F. 2009. The SWOT Analysis: Using Your Strength to Overcome Weaknesses, Using Opportunities to Overcome Threats, 1st ed. Scotts Valley: Createspace. International Institute for Sustainable Development. 2006. Creech, H. (2006, December 7). Measuring while you manage: Planning, monitoring and evaluating knowledge networks.(IISD) [Internet]. https://www.iisd.org/ IPCC. 2014. Intergovernmental Panel on Climate Change, 2014-del 2. Kohli, A.K., and B.J. Jaworski. 1990. Market orientation: The construct, research propositions, and managerial implications. Journal of Marketing 54 (2): 1–8. LaRocco, L.A. 2023. Panama Canal drought hits new crisis level with nearly half of vessel traffic targeted for cuts, CNBC. https://www.cnbc.com/2023/11/03/panama-canal-drought-hits-newcrisis-level-amid-severe-el-nino.html. Metzer, E., S. Putt Del Pino, S. Prowitt, J. Goodward, and A. Perera. 2012. sSWOT: A Sustainability SWOT. World Resources Institute. Mustoe, H. 2016. Shell Being Sued in Two Claims Over Oil Spills in Nigeria. BBC. Ndubisi, N.O., and A. Nygaard. 2018. The Ethics of Outsourcing: When Companies Fail at Responsibility. Journal of Business Strategy 39 (5): 7–13. Ndubisi, N.O., A. Nygaard, and N.G. Chunwe. 2020. Managing Sustainability Tensions in Global Supply Chains: Specific Investments in Closed-Loop Technology Vs “Blood Metals.” Production Planning and Control 31 (11–12): 1005–1013. Nygaard, A. 2023. The Geopolitical Risk and Strategic Uncertainty of Green Growth After the Ukraine Invasion: How the Circular Economy can Decrease the Market Power of and Resource Dependency on Critical Minerals. Circular Economy and Sustainability 3 (2): 1099–1126. Oh, C.H., D. Shapiro, S.S. Ho, and J. Shin. 2020. Location Matters: Valuing Firm-Specific Nonmarket Risk in the Global Mining Industry. Strategic Management Journal 41 (7): 1210–1244. Porter, M., and C. Van der Linde. 1995. Toward a New Conception of the EnvironmentCompetitiveness Relationship. The Journal of Economic Perspectives 9 (4): 97–118. Williamson, O.E. 1985. The Economic Institutions of Capitalism. New York: The Free Press.

Chapter 8

Green Segmentation, Targeting, and Strategic Positioning

Abstract Market segmentation is a pivotal strategy in fostering the green transition within businesses. This approach allows companies to strategically target specific consumer segments, tailor messaging, optimize resource allocation, and identify latent market prospects. By leveraging market segmentation, companies can direct their efforts toward consumer groups most inclined to embrace sustainability, thereby enhancing the acceptance and integration of eco-friendly products and services. Despite the significant potential for improved performance and competitive advantage through segmentation, the present study reveals a limited implementation of sustainability initiatives among businesses. Therefore, it is imperative for companies to personalize communication strategies, aligning them with distinct consumer motivations and concerns. Continuous adaptation of communication tactics to evolving consumer preferences is crucial in navigating potential counteractive responses and fostering a sustainable market environment. Vigilant monitoring of consumer behavior within green segments is necessary to ensure the efficacy of communication strategies and encourage a positive shift toward environmentally responsible practices.

8.1 Segmentation and Sustainable Performance Market segmentation is vital for the green transition as it allows companies to target specific customer segments, customize messaging and communication, optimize resources, identify market opportunities, and influence consumer behavior. By dividing the market into distinct segments, companies can focus their efforts on the segments most likely to embrace sustainable alternatives, tailor their messages to resonate with specific audiences, allocate resources efficiently, uncover untapped market niches, and design effective strategies to encourage sustainable behaviors. Ultimately, market segmentation facilitates the adoption and acceptance of environmentally friendly products and services, accelerating the green transition.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Nygaard, Green Marketing and Entrepreneurship, https://doi.org/10.1007/978-3-031-50333-7_8

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Market segmentation plays a crucial role in the green transition by addressing the evolving preferences of customers and the growing demand for environmentally friendly products. Research shows that approximately one-third of customers have a strong inclination towards green products. To understand market trends and cater to different customer groups effectively, segmentation allows for targeted customization of the marketing mix for each segment. Market segmentation allows companies to identify and target specific customer groups that are likely to embrace sustainable alternatives (Book 2009). This is crucial because consumer segments have diverse preferences, needs, and attitudes towards sustainability. Through market segmentation, companies can gain insights into these differences and customize their offerings, accordingly, increasing the chances of acceptance and adoption. However, despite the potential for improved performance and competitive advantage through segmentation, a study conducted by Oxford Economics in 2023 reveals that only about 20% of companies have taken actions to achieve their sustainability goals by rewarding and incentivizing sustainable performance. Tailoring communication strategies is essential for driving the green transition. Market segmentation allows companies to customize messaging for different segments, aligning with their unique motivations, values, and concerns. This approach makes sustainability messages more compelling and persuasive. It is crucial to continuously adapt communication strategies to evolving preferences and potential counteractive responses in emerging green segments. According to the Natural Marketing Institute’s Consumer Trends Report (2022), monitoring potential counteractive actions among green consumer segments is crucial. The report highlights that 40% (a 21% increase since 2015) of consumers in general and 58% of the Millennial segment in the United States have stopped purchasing products from companies or brands that do not prioritize environmental responsibility. Effective communication in the green transition requires customized messaging and adaptation to changing preferences. Market segmentation facilitates understanding consumers’ motivations, enabling companies to create compelling sustainability messages. To address potential counteractive responses, it is essential to monitor consumer behavior and adjust communication strategies accordingly. This fosters a positive impact on the adoption of environmentally responsible practices.

8.2 The Segmentation, Targeting and Positioning Model Market segmentation is essential for the green transition as it allows companies to identify and target specific customer segments, customize their messaging and communication, and effectively address the diverse preferences and needs of different consumer groups (Fig. 8.1) (Simkin 2016). By doing so, companies can increase the adoption of sustainable alternatives and accelerate the shift towards a greener economy. The green transition often requires significant investments in research, development, and production of sustainable solutions. Market segmentation enables

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Fig. 8.1 The essence of the STP model’s role in shaping the marketing mix. Segmentation identifies the green consumers, targeting sharpens the focus, and positioning creates the connection. Together, they harmonize with the marketing mix to achieve marketing excellence. Source Shutterstock.com

companies to allocate their resources more efficiently by focusing on segments with the highest potential for demand and profitability. Instead of adopting a onesize-fits-all approach, companies can prioritize segments that align closely with their capabilities and sustainability goals, ensuring optimal utilization of resources (Fig. 8.1). Market segmentation helps identify untapped market opportunities within the green transition. By analyzing market segments, companies can uncover niche markets or underserved segments that have a high affinity for sustainable products or services. This knowledge enables companies to develop targeted offerings to address the specific needs of these segments, gaining a competitive advantage in the green market. Market segmentation plays a critical role in influencing consumer behavior towards sustainable choices. By understanding the barriers and drivers of behavior change within each segment, companies can design effective marketing strategies, incentives, and educational campaigns. By tailoring their messaging and approaches, companies can help shift consumer preferences and encourage sustainable behaviors, accelerating the green transition. Market segmentation enables companies to understand their target customers better, tailor their offerings, allocate resources efficiently, and influence consumer behavior effectively. By leveraging market segmentation, businesses can drive the green transition by offering compelling and sustainable solutions that resonate with specific customer segments (Fig. 8.1).

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8.3 The Health and Sustainability Segment The Lifestyles of Health and Sustainability (LOHAS) analysis model developed by the Natural Marketing Institute is an invaluable tool for green segmentation, enabling the mapping and promotion of sustainable products in marketing. The LOHAS segment, identified through this model, comprises individuals who demonstrate a strong inclination towards sustainable living and environmentally friendly “green” products, while also placing value on high-quality and upscale consumption. This segment is typically characterized by higher levels of education, with a significant portion holding a bachelor’s degree from a university. The LOHAS segment is closely monitored by the Natural Marketing Institute, a leading green marketing research institute, measured, and analyzed in markets in Europe, Japan, and the United States, representing approximately 30% of the consumer market in the United States. Furthermore, a recent report by Ipsos revealed similar findings, indicating that 31% of Europeans are already making sustainable choices when it comes to their purchasing habits (Ipsos 2022). This demonstrates a growing awareness and demand for sustainable options among consumers in the European market. The LOHAS analysis model provides valuable insights for green segmentation, identifying a consumer segment with a strong preference for sustainable living and environmentally friendly products. Additionally, the Ipsos report highlights the increasing adoption of sustainable choices among European consumers, further emphasizing the importance of catering to this growing demand in the market. According to the Social Media Trends Report for 2023 released by Talkwalker in partnership with Khoros, consumer sentiment indicates a desire for businesses and brands to prioritize people and the planet over profit. The report states that 82% of consumers want companies to act in a socially and environmentally responsible manner. The LOHAS analysis model developed by the Natural Marketing Institute aids in green segmentation, specifically targeting individuals with a strong inclination towards sustainable living and environmentally friendly products. Additionally, consumer sentiment reflected in the Social Media Trends Report underscores the importance of businesses prioritizing social and environmental responsibility.

8.4 Segmentation Measurement Models These segmentation analysis model developed by the Natural Marketing Institute and other green segmentation methods to study health—and sustainability consumer groups, rely on assessing the responses to Likert scale from strongly agree (1) to strongly disagree (5) multi-item survey questions, for example: • • • •

I prioritize environmental concerns. I value social responsibility in business. I avoid brands and companies with undesirable practices. I am committed to protecting the environment currently.

8.5 The Green Segmentation Strategy

• • • •

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I am interested in learning more about ways to safeguard the environment. I intend to become more engaged in protecting the environment moving forward. I am among the early adopters of environmentally friendly products. I prioritize the environment and sustainability but only if it has a direct impact on me.

The importance of sustainability in purchase decisions is consistently growing, and businesses must adapt to these shifting attitudes in the markets they operate in. As previously mentioned, these changes can occur rapidly, making it crucial to establish tools for tracking minor shifts in the market. By doing so, companies can prevent significant, potentially devastating changes to their operations, employees, and management. Recognizing the imperative nature of sustainability, company management must integrate it as a fundamental part of their strategies and planning. Opting out or deprioritizing sustainability is no longer a viable option. It is crucial to understand how ecological and sustainable attitudes spread through personal networks and wordof-mouth, extending beyond the LOHAS segment to broader markets. Analyzing and identifying new green target groups for effective communication has become more important than ever. This communication should be a two-way street, facilitating disruptive product development tailored to these new market segments. The LOHAS segment and other emerging green consumer target groups are not only demanding organic and sustainable products but also seeking brands that are transparent about their entire supply chain, from raw materials to consumption to circular economy. This presents a new paradigm for brand management that must be comprehended when establishing green brands. Merely guaranteeing standardized quality is no longer sufficient; brands must demonstrate social and environmental responsibility throughout their supply chains. In addition to product quality, consumers, particularly green segments, now consider brands’ sustainability signals. Companies face the challenge of repositioning their brands to align with stakeholders, certification systems, and society. This necessitates stronger consistency and connection between brands and these external factors, instilling confidence in the company and fostering loyalty to its products. Consequently, this is likely to reduce price sensitivity in many markets. Trust and brand loyalty will heavily rely on how well companies navigate this new paradigm.

8.5 The Green Segmentation Strategy Using the health and sustainability (for instance Lifestyles of Health and Sustainability) segmentation strategy can be a valuable approach to analyze markets and apply the STP (Segmentation, Targeting, Positioning) model for sustainable products. Segmentation focuses on consumers who prioritize health and sustainability in their lifestyles, making it well-suited for identifying and targeting sustainability-conscious consumers.

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Green segmentation allows you to identify and categorize consumers based on their values, attitudes, and behaviors related to health and sustainability. By segmenting the market, you can pinpoint the groups most interested in your sustainable products. Once you’ve identified green segments, you can target your marketing efforts more precisely. Develop tailored messages and campaigns that resonate with the values and preferences of each segment. Position your sustainable products in a way that aligns with the specific needs and values of the green segments. Highlight the sustainability features, benefits, and social and environmental impacts of your products.

8.6 Marketing Strategy and Mix (4Ps) Customize the marketing mix (Product, Price, Place, Promotion) for each LOHAS segment. For example, design eco-friendly packaging, offer competitive pricing for sustainable options, ensure availability in eco-conscious retailers, and promote through channels that reach your target segments. By effectively targeting and appealing to LOHAS segments, you can increase sales of sustainable products. LOHAS consumers are often willing to pay a premium for products that align with their values, making them an attractive market. Over time, consistently delivering sustainable products and messages to LOHAS segments can help build a strong brand reputation for sustainability and responsibility. It’s important to conduct thorough market research to identify and understand the specific characteristics and preferences of green segments in your market. Additionally, continuously monitor consumer trends and feedback to adapt your strategies and offerings to evolving sustainability preferences. Incorporating green segmentation and the STP model into your marketing strategy can help you effectively reach and serve sustainability-focused consumers, contributing to both increased sales and the promotion of sustainable products. To successfully market green products, companies need customer data and knowledge about the market. Data can help identify market segments and make strategic decisions to allocate resources and adapt to the market. Segmentation analysis can be used to validate future market growth for products in a portfolio. Segmenting the market involves identifying, targeting, and adapting to common needs within the segment. Selecting which segments to target will provide companies with better information on how to position themselves effectively to reach different buyer groups (Fig. 8.2). Based on comparative data from Consumer Scoreboards surveys in various European countries, we know that 20–30% of consumers consider the environment and sustainability important factors when choosing a product, and more than half of consumers check whether a product has an environmental label. However, over two-thirds of non-food products in Europe are marketed as environmentally friendly, indicated by

8.7 Age Group Segmentation

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Fig. 8.2 Segmentation-targeting-positioning (STP) model for identifying and selecting sustainable segments, positioning company resources, and thereby increasing the sales of sustainable products

a logo, written information, or other signals such as colors (EU Commission 2023). Therefore, promoting environmental friendliness is a common way of positioning products in the market. It is evident that consumers today have a growing inclination towards environmentally friendly and sustainable products. According to the Consumer Conditions Survey conducted by the EU Commission in 2023, 56% of respondents reported that environmental considerations influenced their purchasing decisions for at least one or two products/services in the past two weeks. This influence was distributed among those who considered the environment for all or most of their purchases (20%), some of their purchases (27%), or just one or two purchases (9%). On the other hand, 43% of consumers stated that environmental factors did not affect their choices at all, as shown in Fig. 8.3. These percentages demonstrate no significant difference compared to the findings of the same survey conducted in 2020. Additionally, data from the 2021 Market Monitoring survey, represented in Fig. 8.4, highlight the varying importance that consumers place on environmental factors when making consumer decisions for different products and services. For instance, 81% of respondents deemed it important for purchases of new cars, while the importance decreased to 62% for categories such as vehicle rentals, internet provision, loans, credit cards, and airline services. These data from the EU emphasize the complexity of consumer preferences and the crucial need to identify, communicate, and design appropriate marketing strategies that align with different consumer segments.

8.7 Age Group Segmentation From a marketing perspective, one of the challenges faced by companies producing sustainable products is a lack of knowledge about their consumer base. This knowledge gap makes it difficult to effectively target specific market segments that may

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Fig. 8.3 Whether environmental impact of goods or services purchased in last 2 weeks influence choice (%) in the EU countries (EU Commission 2023)

Fig. 8.4 Overall, how important was the environmental impact when choosing products or services (very/fairly important %) (EU Commission 2023)

have potential demand for green products. Therefore, it is crucial to employ principles and methods of market segmentation to reach potential buyers. Various methodological perspectives can be utilized for segmentation, including geographic, behavioral, demographic, and psychometric criteria. Demographic segmentation, such as agerelated segmentation, is a classic approach that can serve as a solid foundation for positioning and communication strategies (see Table 8.1). For example, Millennials have distinct characteristics and exhibit different social media usage patterns, which need to be considered when communicating with them. Generation Z (born 1997–2012) is known for being highly environmentally conscious. They prioritize sustainability and are more likely to actively seek out and support brands that align with their values. They are open to trying new sustainable products and are digital natives, relying heavily on online sources and social media for information and recommendations. Millennials (born 1981–1996) also place a

8.8 Psychometric Segmentation Models Table 8.1 Age segments and their corresponding birth groups

Age segment

145

Birth group

Generation Z

1997–2012

Millennials

1981–1996

Generation X

1965–1980

Baby boomers

1946–1964

Silent generation

1928–1945

strong emphasis on sustainability and are willing to pay a premium for eco-friendly products. They value transparency and expect brands to demonstrate a commitment to social and environmental responsibility. Millennials are active online shoppers and rely on reviews and recommendations from their peers when making purchasing decisions. While sustainability is important to Generation X (born 1965–1980), they may not prioritize it to the same extent as younger generations. They are more likely to consider factors such as convenience, quality, and price when making purchasing decisions. However, they still show interest in sustainable products and appreciate brands that offer environmentally friendly options. The baby Boomers (born 1946– 1964) may not be as focused on sustainability as younger generations, but they are becoming more aware and conscious of environmental issues. They value reliability, trustworthiness, and durability in products. Baby Boomers tend to be more brand loyal and may need additional education and information to fully understand the benefits of sustainable products. The silent Generation (born 1928–1945) may have less exposure to sustainability trends, but some individuals within this segment still show interest in eco-friendly and healthy options. They prioritize product quality, reliability, and customer service. However, the adoption of sustainable products may be relatively lower compared to younger generations. If we for instance apply the age segmentation on the % of US consumers that will consider buying an electric vehicle next time (Fig. 8.5), we see that younger generations (millennials and generation X) have a greater likelihood to buy an electric car than other generation segments.

8.8 Psychometric Segmentation Models Psychometric models can also be employed to uncover the significance of sustainability and environmental concerns within different consumer groups. By segmenting the market, companies can effectively target potential buyers who are likely to be interested in green products, while avoiding the waste of resources on those who may not have such interest. Neglecting the fundamental characteristics of potential buyer groups can lead companies to miss out on significant growth opportunities in green markets. Therefore, utilizing market segmentation techniques becomes imperative to identify and tap into the potential of specific consumer segments who are receptive to green products.

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Fig. 8.5 Millennials, born between 1981 and 1996, are more open to considering the purchase of an electric vehicle, particularly in comparison with Baby Boomer and older adults (Pew Research Center 2023)

Segmentation analyses can also be used as a descriptive tool to analyze the market along the dimensions as willingness to act sustainable and the ability to act sustainable (Table 8.2). This information can help policy makers to design marketing strategies that are more instrumental to increase sustainable performance. For instance, segments that are not acting sustainable might lack knowledge, infrastructure, information, or other support to change their behavior.

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Table 8.2 In this matrix, we have divided segments into categories based on their willingness and ability to act sustainable High ability to act sustainable

Low ability to act sustainable

High willingness to act sustainable

Segments A

Segments B

Low willingness to act sustainable

Segment C

Segment D

To identify these segments in the market several statistical techniques such can be used. Cluster analysis is a widely used technique that groups similar data points or individuals into clusters based on specified variables or characteristics. It helps identify homogeneous groups within a larger dataset and is often used for behavioral or psychographic segmentation. Factor analysis is used to identify underlying factors or latent variables that explain the variation in a dataset. It helps reduce a large set of variables into a smaller number of factors, making it easier to understand and interpret consumer behavior patterns. Discriminant analysis is used to determine the variables that best discriminate between different segments. It helps identify the key factors that differentiate one segment from another and can be used to predict segment membership based on these discriminant variables. Conjoint analysis is a technique used to measure consumer preferences for different attributes of a product or service. It helps determine the relative importance of various product features and can be used to identify different segments based on their preference patterns. Multidimensional Scaling (MDS) is a technique used to visualize and understand the relationships between objects or individuals in a multidimensional space. It helps identify similarities and differences between products, brands, or consumer segments and can assist in positioning and targeting strategies. Latent class analysis is a statistical modeling technique used to identify unobservable or latent classes within a population. It helps uncover distinct segments based on patterns of responses to multiple variables or indicators. The Natural Marketing Institute (NMI) is a specialized research firm operating in the United States, focusing on environmental segmentation analysis. NMI’s methodology involves conducting consumer interviews across different countries to construct a comprehensive segmentation model. This model has delineated five distinct consumer segments (NMI): 1. LOHAS (Lifestyles of Health and Sustainability): LOHAS comprises environmentally conscious and socially responsible consumers who prioritize sustainability in their decision-making. They equally value their personal health and the well-being of the environment. LOHAS consumers exhibit enthusiasm for sharing their knowledge and perspectives on sustainability. Typically, this segment consists of well-educated and affluent individuals. Given their growing numbers and profitability, LOHAS represents an attractive target for green entrepreneurship and innovation.

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2. NATURALITIES: This segment is primarily motivated by health considerations, with a secondary interest in ecological matters. They place a strong emphasis on leading a healthy lifestyle, consuming organic food, and opting for eco-friendly products. However, their concern for broader environmental issues is relatively lower. 3. CONVENTIONALS: The CONVENTIONALS segment prioritizes practicality over environmental concerns when making purchasing decisions. While they are not uninformed about sustainability matters, they tend to be somewhat disengaged and may engage in basic recycling and energy efficiency practices. 4. DRIFTERS: DRIFTERS are driven by fashion and trends, including those related to sustainability, rather than inherent environmental concerns. They easily shift their preferences in response to new topics and trends and lack strong commitment to any single issue. 5. UNCONCERNED: This segment displays no interest or commitment to environmental issues and thus does not factor them into their purchasing decisions.

8.9 Organic Products The market for organic products is experiencing growth, indicating a rising support for the LOHAS segment. This increase in environmentally conscious consumer groups has led to significant growth in the sale of organic agricultural products. This surge in demand for “green” products creates a substantial potential for brands with valid and communicable content. In the USA, the LOHAS segment represents about a quarter of the market, and this segment is innovative consumers who set trends for others to follow. The diffusion of these consumption patterns occurs through the networks these consumers live and work in. LOHAS is characterized by a strong degree of individualism linked to future optimism, but this is a mixed group that includes both health and environmental groups. What they have in common is a belief in knowledge and documentation. The expanding market for organic products suggests a rising presence of the LOHAS segment and other environmentally conscious consumer groups, while the unconcerned segments appear to be dwindling (Fig. 8.6). This has led to a significant increase in sales of organic agricultural products, showing a strong growth in the demand for “green” products. This creates a large potential for products and brands with valid and communicable content. In the USA, the LOHAS segment is considered an innovative consumer group that creates trends followed by others. This group is characterized by a strong degree of individualism linked to future optimism, and clear and correct information is crucial for market communication towards this segment. Marketing with undocumented and fake claims will have adverse effects, as these consumers have the knowledge and capacity to cross-check all claims about health and environmental conditions. They are also active on social media, and “Word of Mouth” effects will have both positive and negative consequences. This will create a different dynamic throughout the buying process in this segment, from problem

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Fig. 8.6 The LOHAS segment is typically in the introduction/growth phase in markets where new sustainable products are introduced. Consequently, it is vital for market players to identify this segment, engage in effective communication with it, and establish a strategic position relative to it

recognition to evaluation of alternatives and the purchase decision, and companies should organize health and sustainability information to be used through all these steps. Greenwashing of this information could have dramatic, negative consequences in the market because social media exposes the entire purchase process. The growth of organic products (Fig. 8.7) may indicate the emergence of a new segment that strongly prefers health and environmentally friendly products. To effectively market these products, companies need to have a thorough understanding of the target segment’s demographics, media consumption, attitudes, price sensitivity, use of marketing channels, and purchasing behavior. Without this understanding, it is impossible to develop an effective marketing plan and position the product through the marketing mix. Given the emergence of “green” segments in the market, it would be a strategic mistake to position sustainable products towards the “unconcerned” segment. Instead, the positioning towards a segment should be integrated and consistent across all aspects of the marketing mix. A clear and well-thought-out approach to “green” consumers must be based on a marketing mix that is a consistent result of a sustainable strategy. For example, a “green” product wrapped in plastic would signal that the promotion of being a sustainable product is inconsistent with the product in the marketing mix. Oatly’s success is closely related to the growing green segments in the market. The increasing consumer demand for sustainable and plant-based products has created a favorable environment for Oatly to thrive. Oatly positions its marketing strategy strategically to target and appeal to these green segments. Oatly positions itself as a sustainable and environmentally friendly brand. They highlight the positive environmental impact of choosing oat-based products over traditional dairy options. By emphasizing sustainability in their marketing messages, Oatly aligns with the values and preferences of the green segments, who prioritize eco-conscious choices (Fig. 8.8).

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Fig. 8.7 Growth of organic food in the US during the period 2001–2021. (Economic Research Service, U.S. Department of Agriculture 2022)

It is important to note that “green” consumers have diverse priorities, and their emphasis on health and environmental concerns may not always overlap. For example, health-conscious consumers may prioritize their personal well-being over climate issues. The Natural Marketing Institute (NMI) analyzes consumer preferences regarding the environment and sustainability using indicators such as personal care, hygiene, and health products. Studies conducted in the USA have shown that over 70% of consumers consider these factors to be very or quite important (NMI 2017). This highlights the significance of understanding market segmentation and macro trends for entrepreneurs entering the market, as well as for established players who need to position themselves against larger market forces. Modern technology offers opportunities for companies to receive real-time feedback on the effectiveness of their marketing mix. Loyalty cards and apps, for example, allow for personalized pricing, promotions, and local offers tailored to individual customers. Additionally, these tools provide valuable insights on market developments and consumer preferences. Dunnhumby, an analysis company, plays a crucial role in enhancing the efficiency of goods flow to customers and logistics systems through category management. By leveraging its access to vast amounts of consumer data, including shopping behavior,

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Fig. 8.8 Oatly’s strategic marketing caters to a new segment, a generation of eco-conscious consumers. Discover how they champion sustainability, making oat-based products the top choice for those who prioritize eco-friendly options. Source Schøning Nygaard Photography

preferences, and purchasing patterns, Dunnhumby can identify consumer trends and segments that exhibit a stronger inclination towards sustainable consumption. This valuable information helps businesses gain insights into the demand for sustainable products, identify target audiences, and customize their offerings accordingly. The application of Dunnhumby’s data analysis also extends to reducing transport and storage costs while minimizing waste and CO2 emissions. Through analyzing the environmental costs associated with each product, companies can optimize distribution systems and make them more sustainable. Real-time information on changing consumer preferences allows for adjustments in capacity utilization and energy usage within logistics systems, fostering greater efficiency and sustainability. However, achieving this level of responsiveness necessitates a culture of adaptability and immediate response to market changes, both within the organization and in distribution systems. Traditionally, information gathering, and decision-making processes occurred in distinct phases (Kohli and Jaworski 1990). However, the current market landscape demands continuous and immediate adaptation. To meet this demand, organizations must embrace contemporary data-driven approaches, including blockchain

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technology, big data analytics, and Artificial Intelligence (AI) systems (Blattberg et al. 1994). These technologies facilitate direct communication channels with individual customers, enabling personalized interactions and more effective sustainability initiatives. CASE: Analyzing Oatly’s Marketing Strategy Through the STP Model Objective: The primary objective of this semester paper assignment is to analyze Oatly’s marketing strategy using the Segmentation, Targeting, and Positioning (STP) model. By examining Oatly’s approach to sustainability, transparency, authenticity, and engaging communication, students will gain insights into how a company effectively aligns its marketing strategies with the values and preferences of environmentally conscious consumers. 1. Introduction (10%) • Provide an introduction to Oatly as a company, its background, and its position in the sustainable food and beverage industry. • Clearly state the purpose and scope of the semester paper. 2. Segmentation Analysis (30%) • Describe Oatly’s segmentation strategy, emphasizing the identification of target market segments. • Discuss how Oatly tailors its marketing efforts to address the specific preferences and values of the “green segments” within the market. • Evaluate the effectiveness of Oatly’s segmentation strategy in connecting with environmentally conscious consumers. 3. Targeting Strategy (30%) • Analyze how Oatly appeals to the green segments within the market. • Explore how Oatly creates emotional connections with consumers through its marketing communications. • Examine Oatly’s engagement on social media platforms and its efforts to foster a community of like-minded individuals among the green segments. 4. Positioning (20%) • Investigate Oatly’s strategic positioning in the sustainable food and beverage industry. • Assess how Oatly builds trust and authenticity in its brand, and the role transparency plays in this positioning. • Explore Oatly’s collaborations with influencers, organizations, and brands that share its values and target similar green segments.

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5. Conclusion (10%) • Summarize the key findings of your analysis. • Provide insights into the lessons that can be learned from Oatly’s marketing strategy and its alignment with sustainability. • Conclude the semester paper with a reflection on the significance of Oatly’s success in the context of sustainable business practices.

References Blattberg, R.C., R. Glazer, and J.D. Little, eds. 1994. The Marketing Information Revolution. Boston, MA: Harvard Business School Press. Book, M. 2009. The Comeback of the Electric Car? Boston: Boston Consulting Group. Consumer Market Study on Environmental Claims for Non-Food Products. Appendix 1, Selection Criteria and Stakeholder Consultation. July 2014. Dunnhumby. Sustainable Growth and Smarter Operations with Our Customer Data Science. https:// www.dunnhumby.com/ EU Commission. 2023. Consumer Conditions Scoreboard. Ipsos. 2022. The Sustainability Imperative, Building Sustainable Societies and Organisations Requires Giving Attention Today to Those Practices that Will Ensure Viability Long-Term. Sustainability Environmental, Social and Governance (ESG). Khoros. 2023. Social Media Trends: How to Disrupt a Disruptive Consumer. Kohli, A.K., and B.J. Jaworski. 1990. Market Orientation: The Construct, Research Propositions, and Managerial Implications. Journal of Marketing 54 (2): 1–18. LOHAS Whole Living Consumer Database Report. 2022. Natural Marketing Institute. Natural Marketing Institute’s Consumer Trends Report. 2022. Oxford Economics. 2023. Economics and Sustainability and Thought Leadership Teams: Cresting the Wave: Businesses Must Navigate a Course Towards Sustainability. Simkin, L. 2016. Segmentation. In The Marketing Book, eds. M.J. Baker, S. Hart, 6th edn, 271–294. Oxon: Routledge. Spencer, A. et al. 2023. How Americans view electric vehicles. Pew Research Center, https://www. pewresearch.org/short-reads/2023/07/13/how-americans-view-electric-vehicles/ The LOHAS Consumer Trends Report [Internet]. http://www.lohas.se/lohas-worldwide/

Chapter 9

Authenticity, Blockchain Technology and Green Marketing

Abstract This chapter delves into the pervasive issue of information asymmetry within global supply chains and its ramifications on consumers’ perception of sustainability in product choices. Exemplified by high-profile industry scandals, the chapter underscores the need for greater transparency and authenticity in green marketing strategy. It emphasizes the criticality of scrutinizing the entire supply chain for ethical and sustainable standards, cautioning against the pitfalls of superficial approaches that risk fostering deceptive greenwashing strategies. As consumer awareness and connectivity rise, businesses must prioritize comprehensive, verifiable, and credible information dissemination, steering away from practices that exploit information asymmetry. With the empowerment of socially conscious consumers and the amplification of social media platforms, the study advocates for a paradigm shift in sustainable branding that champions holistic supply chain analysis, transparency, and accountability.

9.1 Green Products and Authenticity In our previous discussion, we explored how consumers can be influenced to buy unsustainable products due to a lack of information about their sustainability and the true intentions behind green brands and products. Various incidents such as the horsemeat scandal in the food industry, the VW emission scandal in the car industry, and the Rana Plaza disaster in the fashion industry, served as examples of industries and companies that were not as sustainable as they appeared in the market. These examples shed light on an issue of information asymmetry, wherein customers remain unaware of unethical and unsustainable practices occurring throughout the entire supply chain of a product, including production, raw material sourcing, distribution, sales, and recycling. The complexity and globalization of supply chains have exacerbated this problem. With goods now traversing cultural, linguistic, legal, political, and technological boundaries before reaching the customer, the distances involved contribute to greater information asymmetry and provide more opportunities for deceptive behavior through various channels.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Nygaard, Green Marketing and Entrepreneurship, https://doi.org/10.1007/978-3-031-50333-7_9

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Individuals responsible for different stages of production and distribution may be inclined to engage in opportunistic behavior when not under scrutiny by those making the final purchasing decisions. Consequently, customers are left at the mercy of the information presented in the market, which is often challenging to verify or control. Therefore, the success of green marketing hinges on transparency, authenticity, and the reliability of the information available to customers when they make their product choices. To build a genuine green brand, it is crucial to consider the entire supply chain as a strategic focal point for analysis. Merely relying on a conventional approach of communicating sustainability through information derived solely from businessto-consumer relationships will inevitably lead brand owners into a strategic trap of greenwashing. With the increasing number of environmentally conscious consumers, there is a greater capacity than ever before to uncover non-sustainable practices within the global supply chain. These consumers often possess the resources and platforms, such as social media, to expose false claims of sustainability. Blockchain technology has several properties that together contribute to its unique functionality in green marketing. Decentralization is a fundamental feature, where blockchains are distributed across a network of computers without any single entity having full control. This not only reduces the risk of individual errors but also provides protection against data attacks. Security is strengthened through the use of cryptography, ensuring that the data in each block is immutable. Linked by cryptographic hash functions, each block is connected to the previous one, making it complex to manipulate past data. Transparency is another critical aspect of blockchains because all participants in the network have access to the entire blockchain, and transactions can be visible to everyone. This increases trust among stakeholders and makes it more challenging to attempt manipulation of the system. Furthermore, blockchains enable the use of smart contracts, which are automated agreements with built-in conditions that automate and streamline transactions. This technology has various applications across different industries, including finance, healthcare, and supply chains. Blockchain technology can contribute to green marketing in various ways: Transparent transactions: Blockchains provide a transparent and immutable overview of all transactions made. This can help buyers verify the product’s history, including the production and supply chain. Transparency can aid stakeholders and authorities in ensuring that products, production, and distribution are sustainable. Authenticity tracking: For products such as diamonds, luxury goods, or food items, blockchain technology can be used to track the authenticity of products. Buyers can be confident that they are purchasing genuine, authentic, and sustainable goods. Supply chain tracking: By using blockchain technology in supply chains, buyers can follow the path of products from production to consumer. This provides insight into the product’s origin, production methods, and transportation options, helping identify fake greenwashed products invading supply chains.

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Product information: Blockchains can contain all relevant information about a product, including usage instructions, maintenance, certifications, warranties, and other details that enhance buyers’ ability to assess the product’s sustainability. Genuine reviews and testimonials: Blockchain technology can be used to ensure the authenticity of reviews and testimonials, helping reduce fake reviews and providing buyers with more reliable information about whether the product is green or not. Smart contracts: The use of smart contracts linked to blockchains can automate parts of the purchase processes and transactions throughout the supply chains from production to the consumer. For example, smart contracts can be linked to checks on whether a product is sustainable and potentially “flag” products or production that is not sustainable or suspected of non-sustainable practices. For instance, GPS data can be linked to union membership through smart contracts, enabling verification that tuna fishers are not slaves fishing endangered species. Trademarks have previously helped customers navigate the market, particularly in markets characterized by a high degree of uncertainty regarding quality. Brands and certifications play a crucial role in functional markets by signaling and guaranteeing a standard quality. However, this assumes trust in a legal system that protects owners of patents, trademarks, and certification systems against counterfeiting and theft. In a globalized economy, this is not always the case. Moreover, information asymmetry in markets has made it both difficult and expensive for customers to control the quality, authenticity, and traceability of a product. Therefore, blockchain technologies have been developed to contribute to the control of actual quality throughout the supply chain and whether a product is genuinely green or greenwashed.

9.2 Building Green Brands Hence, an effective green marketing strategy must prioritize authenticity, traceability, transparency, and reliability of information. By embracing these principles, brands can establish credibility and earn the trust of environmentally conscious consumers (Fig. 9.1). The company Patagonia has successfully built trust in its green marketing strategy through authenticity, traceability, transparency, and the validity of information. First, Patagonia has established itself as an authentic brand by aligning its actions with its environmental values. The company’s commitment to sustainability is deeply ingrained in its core mission and culture. Patagonia’s founder, Yvon Chouinard, has been a vocal advocate for environmental causes, and this commitment is reflected in the brand’s messaging and actions. By consistently demonstrating their genuine dedication to sustainability, Patagonia has earned the trust of consumers who value authenticity in green marketing. In addition, Patagonia places a strong emphasis on supply chain transparency and traceability. The company strives to know where its products come from, how they are made, and the environmental and social impact associated with their production. Patagonia provides detailed information about the materials used in their products and their sourcing practices. By

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sharing this information openly, they enable consumers to make informed choices and build trust in the brand’s commitment to sustainability. Patagonia is transparent about its environmental initiatives, goals, and progress. The company regularly publishes environmental and social responsibility reports, which provide an overview of their efforts and achievements. Patagonia openly communicates challenges and setbacks, demonstrating a commitment to continuous improvement. This transparency allows consumers to see the company’s progress and hold them accountable, fostering trust and credibility in their green marketing strategy. The company ensures the validity of the information it communicates to consumers and relies on credible sources and data to support its claims and initiatives. Patagonia’s marketing materials often include verifiable facts and figures about environmental impact, such as carbon footprint reduction or water conservation efforts. By providing accurate and reliable information, Patagonia builds trust and credibility among consumers who value the validity of environmental claims. Patagonia has built trust in its green marketing strategy through authenticity, traceability, transparency, and the validity of information. By staying true to its core values, openly sharing information about its supply chain and sustainability efforts, and providing reliable data to support its claims, Patagonia has established itself as a trusted and credible brand in the realm of sustainable consumption.

Fig. 9.1 Leveraging information technology to cultivate environmentally responsible brands, where the authenticity, traceability, and accuracy of information hold paramount importance, is a fundamental strategy. Organic food, as a prime example of a green product, garners strong consumer appreciation and places high value on comprehensive documentation. Source Shutterstock.com

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9.3 Globalization, Information Asymmetry, and “Lemons” The longer and more complex supply chains resulting from globalization have created opportunities for opportunistic behavior that can lead to environmental damage and ignorance of social responsibility. In addition, this market situation can favor the production of unethical and unsustainable products that are cheaper and outcompete sustainable alternatives. This results in “lemons” markets where poor, unsustainable products prevail over the best sustainable products due to market mechanisms (Akerlof 1970). However, with the emergence of blockchain technology, it is now possible to identify inefficient operations, unethical decisions, and unsustainable practices along the supply chain. Quality assurance trademarks in the market are entirely reliant on technology that can verify the actual quality of products throughout the supply chain. Specifically, the instances of fraud in cheese, olive oil, meat, and seafood production in 2016 brought to the forefront the critical issue of food safety in the United States (Olmsted 2016). It is well-documented that over 38 million consumers fall ill each year in the US due to unidentified causes linked to their dietary choices. Some food products do not match their stated labels, underscoring the magnitude of the counterfeit food issue (Olmsted 2016). There is a significant need for new technology that can enable more cost-effective food safety control. Over the last 20 years, we have observed two conflicting trends. On the one hand, there has been a positive development in green market segments such as the health-and sustainability segment, which seeks to adopt ethical and sustainable consumption. On the other hand, the globalization of supply chains has led to greater information asymmetry and challenges in verifying the sustainability of products. This has resulted in a “structural gap” where we previously were able to trace the local production of products, but this has become increasingly difficult in a globalized market (Phillips 2010).

9.4 Technology Safeguarding Green Brands Customers have lost their previously critical role as informers and observers in local and national businesses when supply chains were domestic, much shorter, and easier to monitor for journalists, politicians, unions, and other stakeholders (Nygaard 2022). As a result, the market has entrusted brands, certifications, and supply chain operations to represent their interests in ethical and sustainable consumption. However, as we have seen, this is not always the case, and numerous cases of “greenwashing” and eco-opportunism have emerged due to customers’ limited ability to observe such conditions. The production of palm oil exemplifies the “lemons” problem resulting from asymmetric information in the market. Sustainable palm oil manufacturers can easily be displaced by those producing environmentally harmful palm oil. To address this issue, certification and control schemes have been introduced to implement sustainable practices, but only around small volume of the palm oil market

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was certified as sustainable in 2016 (WWF 2016). Standardized product production in such markets is challenging to control, certify, and document. Blockchain technology can contribute to cost-effective transparency and documentability throughout the entire supply chain from producers to the market. By doing so, blockchain technology can provide sustainable products with a competitive advantage vis-à-vis the non-sustainable products. Provenance, an IT company, is one of several companies developing systems to ensure sustainability throughout the supply chain. Provenance’s blockchain technology empowers entrepreneurs of sustainable products by offering transparency, traceability, and trust of verification of data. By leveraging this technology, entrepreneurs can differentiate their brands, engage consumers, build credibility, and foster collaborations, ultimately increasing their chances of success in the market and contributing to the growth of the sustainable economy. Provenance utilizes blockchain technology to create a transparent and immutable record of every step in the supply chain. This allows green entrepreneurs to provide verifiable information to consumers about the origin, production process, and environmental impact of their products (Provenance 2024). By showcasing their sustainable practices and certifications, entrepreneurs can build trust and differentiate themselves in the market through green brands. Provenance’s blockchain platform can be used to verify the authenticity of sustainable products. This is particularly important in industries where counterfeiting or misleading claims are prevalent. Entrepreneurs can leverage blockchain to prove the integrity and genuineness of their products, instilling confidence in consumers and protecting their brand reputation. Provenance enables entrepreneurs to engage with consumers on a deeper level by sharing the story behind their sustainable products. Using blockchain, entrepreneurs can showcase the journey of their products, from sourcing raw materials to manufacturing, packaging, and distribution. This storytelling approach helps connect consumers to the values and mission of the brand, fostering loyalty and advocacy. With Provenance’s blockchain technology, companies can demonstrate their commitment to transparency and accountability. By providing immutable records of their supply chain practices, companies can prove their compliance with sustainability standards and certifications. This enhances their credibility and strengthens their position as trusted players in the market. Provenance’s platform is an example that illustrates how blockchain facilitates collaboration between entrepreneurs, suppliers, and other stakeholders in the sustainable ecosystem. By connecting different actors within the supply chain, entrepreneurs can forge partnerships, share best practices, and collectively work towards advancing sustainability goals. This collaboration can open new market opportunities and drive industry-wide change. Provenance has created technology that show all the processes involved in the supply chain to all relevant parties in a supply chain. This technology utilizes blockchain, which is a secure database that encompasses all the activities or nodes involved in the supply chain, from the fisherman all the way to the end consumer (Nakamoto 2008). Each transaction is recorded at every node in the system and stored in blocks, which are unalterable documents that cannot be manipulated or modified (Iansiti and Lakhani 2017).

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Consequently, the ability to trace, transparently record, and document information plays a pivotal role in curbing eco-opportunism, deterring greenwashing, and discouraging unethical conduct (Hodal 2016). Employing “smart” conditional contracts, enhanced by sensors, digitalization, and other registration technologies, can facilitate autonomous decision-making through “If–Then” algorithms, akin to the operation of a vending machine, without requiring human intervention. A tangible example of this is demonstrated by Provenance, which leverages “Peer to Peer” blockchain technology to meticulously track the journey of tuna, originating from Maluku, Indonesia, and following its path through the entire supply chain until it reaches consumers in London’s supermarkets.

9.5 Deforestation The current plan to expand palm oil and mining activities production into new areas in Africa and South America raises concerns about its impact on biodiversity, climate, and social conflicts (Fig. 9.2). However, consumers face the problem of insufficient information to differentiate between sustainable and non-sustainable palm oil when making purchasing decisions in the supermarket (ethicalconsumer.org). To address this, the use of blockchain technology can be a crucial tool in promoting responsible and sustainable choices by empowering consumers. With the help of mobile technology, plantation workers can label palm fruit with information such as location, plantation ID, worker ID, date, and time, which is then registered in real-time on the blockchain. This data can optimize plantation operations and provide useful information for certification systems, warehouse and logistics management systems, and authorities. Additionally, sensors can monitor the storage conditions of palm fruit to prevent spoilage and ensure consumer safety. Furthermore, the integration of GPS data within the blockchain framework offers the capability to seamlessly track the entire journey of a product, starting from its point of harvest and concluding at the point of consumption by the end-user. To enhance consumer transparency, the product can be enriched with the inclusion of RFID, NFC, or QR codes, empowering consumers to trace the origin of palm oil right from its inception to their personal consumption (Hyperledger.org). The adoption of blockchain technology not only enables consumers to pinpoint the palm oil’s source but also ensures its sustainability. Non-Governmental Organizations (NGOs) and various stakeholder groups can leverage this information to maintain a high level of transparency. However, it is important to acknowledge the potential risk of collusion among different stakeholders aiming to manipulate or conceal information. Nevertheless, the presence of numerous independent stakeholders can serve as a counterbalance against such instances of eco-opportunism. Blockchain technology functions as a shared information system, guaranteeing the authenticity and chronological accuracy of data, all while bypassing the need for interpersonal trust or third-party intermediaries.

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Fig. 9.2 Rainforest degradation resulting from mining activities in Guyana, South America, underscores the urgency of implementing technology-driven traceability measures to ensure that products do not contribute to such environmental and climate harm. This approach serves as a pivotal strategy for preserving green brands and advancing sustainability. Source Shutterstock.com

Recent research findings support the notion that the combined utilization of certification systems and access to information provided through blockchain technology can empower consumers and enhance the competitiveness of genuinely sustainable products (Nygaard and Silkoset 2023). Certifications supporting environmentally responsible brands are widely acknowledged as crucial tools in addressing climate change, upholding human rights, and advancing sustainable practices. Blockchain technology offers an immutable and transparent ledger capable of meticulously tracking and documenting every facet of a product’s journey, from its origin through sourcing, manufacturing, distribution, and beyond. This empowers green brands to furnish indisputable evidence of their sustainability claims and certifications. Consumers can independently verify the legitimacy of these green certifications and place their trust in the brand’s environmental assertions, substantiated by transparent and auditable data. Blockchain’s application ensures the integrity of green supply chains. Every transaction and movement of goods, recorded on the blockchain, permits brands to trace the origins of raw materials, assess the environmental impact of production processes, and validate adherence to sustainable protocols. This transparency effectively eradicates instances of greenwashing, instilling confidence in the authenticity of green brands and their supply chains.

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With blockchain technology, consumers gain direct access to comprehensive information regarding the environmental footprint of products. This includes particulars about sourcing, manufacturing methods, and carbon emissions. They can authenticate green certifications and evaluate the sustainability claims propagated by brands. Heightened transparency and readily available information cultivate trust among consumers in green brands and certifications, prompting more informed and conscientious purchasing decisions. Blockchain technology also serves as a bulwark against fraudulent misuse of green certifications, ensuring their veracity and integrity (Nygaard 2023). By securely storing certification records on the blockchain, brands can thwart unauthorized alterations or illicit usage of certifications. This safeguards the credibility and standing of green certifications, assuring that only authentic brands committed to genuine sustainable practices can make legitimate claims. Furthermore, blockchain facilitates collaboration among green brands, certification bodies, and regulators to establish industry-wide standards and best practices (Nygaard and Silkoset 2023). Through shared blockchain platforms, stakeholders can collectively define and enforce common sustainability criteria, simplifying the process for consumers to identify and place trust in green brands and certifications. Case: Safeguarding the Authenticity of Sustainability Through Technology Assignment Objective: This case assignment aims to explore the diverse range of authenticity-safeguarding technologies employed across various industries, such as luxury fashion, medicine, children’s food, olive oil, palm oil, and organic food. Students will delve into the unique challenges each industry faces regarding authenticity and critically examine the technology-based solutions employed. The assignment will foster discussions, critical thinking, and reflections on the role of technology in maintaining authenticity in different sectors. Assignment Components 1. Industry Selection (10%) • Select one of the following industries: luxury fashion, medicine, children’s food, olive oil, palm oil, or organic food. • Provide a brief rationale for your industry selection, highlighting its relevance to authenticity concerns. 2. Authenticity Technology Overview (20%) • Research and present an overview of the authenticity-safeguarding technologies used in your chosen industry. • Discuss how brands, certifications, QR codes, RFID, NFC technology, and blockchain technology are employed to ensure authenticity. 3. Industry-Specific Challenges (20%) • Identify the specific authenticity challenges faced by your chosen industry. • Formulate critical questions about these challenges, such as:

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• How does the industry verify the authenticity of its products? • What are the consequences of authenticity breaches in this industry? • How do consumer expectations impact authenticity concerns? 4. Discussion Themes (30%) • Organize a discussion among your peers, focusing on the following themes: • The impact of authenticity technology on consumer trust and brand reputation in your chosen industry. • Ethical considerations surrounding authenticity in your industry, including issues of counterfeiting, and mislabeling. • The potential for technology-driven transparency to address authenticity concerns in the supply chain. • The role of regulation and industry standards in promoting authenticity. 5. Reflection Topics (20%) • Reflect on the broader implications of authenticity technology across different industries: • How can authenticity technology contribute to sustainability goals in your chosen industry? • Compare and contrast the adoption of authenticity technology in different sectors. What factors influence its uptake? • Consider the ethical, sustainability and social implications of technology in ensuring authenticity. • Reflect on the potential future developments in authenticity-safeguarding technology and their impact on industries. Those who contemplate the beauty of the earth find reserves of strength that will endure as long as life lasts. Rachel Carson Silent Spring (1962)

References Akerlof, G.A. 1970. The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics 84 (3): 488–500. Ethical Consumer. Palm Oil Report. http://www.ethicalconsumer.org/ethicalreports/palmoilreport/ introduction.aspx Empower customers with fact-checked sustainability data. 2024. https://www.provenance.org/ Hodal, K. 2016. Slavery and Trafficking Continue in Thai Fishing Industry, Claim Activists. The Guardian. Hyperledger. 2017. Build It on Blockchain: A Sustainable Palm Oil Industry. Iansiti, M., and K.R. Lakhani. 2017. The Truth About Blockchain. Harvard Business Review 95 (1): 118–127.

References

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Nakamoto, S. 2008. Bitcoin: A Peer-to-Peer Electronic Cash System. Bitcoin.org. Nygaard, A. 2022. From Linear to Circular Economy: A Transaction Cost Approach to the Ecological Transformation of the Firm. Circular Economy and Sustainability 2 (3): 1127–1142. Nygaard, A. 2023. Is Sustainable Certification’s Ability to Combat Greenwashing Trustworthy? Frontiers in Sustainability 4: 1188069. Nygaard, A., and R. Silkoset. 2023. Sustainable Development and Greenwashing: How Blockchain Technology Information Can Empower Green Consumers. Business Strategy and the Environment 32 (6): 3801–3813. Olmsted, L. 2016. Fake Food Scandals: A Bad Year for Food Lovers. Forbes. Patagonia. 2023. For Our 50th Year, We’re Looking Forward, Not Back, to Life on Earth. Together, We Can Prioritize Purpose Over Profit and Protect This Wondrous Planet, Our Only Home. Phillips, R.A. 2010. Ethics and Network Organizations. Business Ethics Quarterly 20 (3): 533–543. Provenance. 2024. Amplify Sustainability. Cut Greenwash. WWF Palm Oil Score Card. 2016. http://awsassets.panda.org/downloads/wwf_palm_oil_scorec ard_2016_1.pdf

Index

A Age segments, 145 Airbnb, 27, 29 Apple, 51, 85 Arndt, Johan, 65 Audi e-tron, 48, 49

B Baby Boomers, 145, 146 Bangladesh, 12, 71, 106, 109, 133 Bergans, 85 Better Cotton Initiative, 46 Biodiversity, 4, 20, 52, 92–95, 97, 98, 118, 126, 161 Biological diversity, 4, 78, 91, 93 Blockchain technology, 152, 159–163 Body Shop, 43, 44, 69 Brand extensions, 69, 76, 77 Brundtland-report, 3, 7, 11

C Car industry, 21, 77, 155 Carson, Rachel, 5–7, 164 Chevrolet Corvair, 9, 10, 16 China, 7, 30, 96, 116, 121, 122 Christensen, Clayton, 17, 51–53 Circular business model, 15, 18, 19, 21 Circular economy, 2–4, 20–22, 25, 27, 42, 48, 51, 56–58, 85, 141 Climate gasses, 38 Club of Rome, 10

Cluster analyses, 147 Co-branding, 66, 76, 102 Coca Cola, 69, 96 Competitive intensity, 22 Confirmation Bias, 125 Conjoint analyse, 42, 43, 147 Conspicuous consumption, 8, 70 Consumer scoreboards, 142 Conventionals, 1, 17, 86, 92, 101, 148, 156 Corporate social responsibility, 15, 19, 98, 107 Creative destruction, 17 Cruiseship, 23, 24, 90

D DDT, 5, 6 Demarketing, 36, 37, 41, 72 Demographic segmentation, 144 Digital green nudging, 74 Digitalisation, 121, 124, 161 Disruptive change, 24, 27, 51, 52, 114 Disruptive innovations, 50, 51, 85 Dunnhumby, 150, 151

E Eco-cobranding, 66, 67 Ecological food, 65 Ecological threats, 115, 117 Ellen MacArthur Foundation, 3, 27, 84, 86 Environmental certifications, 78, 88, 97 Externalities, 9, 10, 39

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Nygaard, Green Marketing and Entrepreneurship, https://doi.org/10.1007/978-3-031-50333-7

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168 External shocks, 17

F Fake products, 3, 148 Fast fashion, 45, 85 Fast Moving Consumer Goods, 83, 84 First mover advantage, 21 Food and Agriculture Organization (FAO), 83, 84 Freshwater, 41, 70, 90, 91 Freshwater resources, 91, 128

G Galbraith, John.Kenneth, 6, 7 Generation X, 145 Generation Z, 144, 145 Globalisation, 45, 66, 70, 78, 85, 109, 110, 155, 159 GPS-data, 161 Grameen phone, 109 Green brands, 3, 40, 53, 54, 66, 70, 76, 78, 141, 155–157, 159, 160, 162, 163 Green certification, 162, 163 Green nudging, 41, 72, 74 Greenpeace, 2, 103, 104 Green price strategy, 35 Green product strategy, 35, 43 Green promotion, 65, 67, 68 Greenwashing, 3, 4, 23, 45, 54, 63–66, 70, 79, 97, 132, 149, 156, 159, 161, 162 Groupthink, 18, 22

H H&M, 13, 43–45, 69, 85, 95, 96, 106, 108 Heart Aerospace, 89 Hierarchical governance, 130 Honda, 116, 118 Horse-meat-scandal, 155 Hybridship, 24

I IKEA, 105 Infinitum, 85 Information asymmetric problem, 159 Intergovernmental Panel on Climate Change (IPCC), 87, 115, 117 International Labour Organization (ILO), The, 12, 110

Index J Jaworski, Bernard J., 125, 151

K Kohli, Ajay K., 125, 151 Kongsberg, 88

L Lemons-market, 78, 79, 159 Levitt, Theodore, 17 Lifestyle of Health and Sustainability (LOHAS), 11, 140–142, 147–149 Linear model, 4, 5, 7, 9, 17 Linear strategy, 18

M Mango, 71, 106, 108 Marketing mix, 2, 6, 19, 35–37, 41, 48, 52, 83, 129, 131, 132, 138, 139, 142, 149, 150 McDonalds, 60, 87, 88 McKinsey & Company, 65 Medicine market, 78 Mercedes EQ, 76, 77 Millennials, 64, 65, 138, 144–146 Mintzberg, Henry, 16, 19 Musk, Elon, 21, 22, 46, 47

N Nader, Ralph, 9, 10, 16 Naturalities, 148 Natural Marketing Institute, 11, 64, 138, 140, 147, 150 Nike, 70 Nitrogen oxides, 88, 90, 91 Non-government organisations, 7, 103–106, 108, 161 Nudging, 40, 71–76, 79, 80

O Oatly’s, 149, 151, 152 Oil fund, 105 Overtourism, 23, 40 Oxford economics, 138

P Palm oil, 44, 159, 161, 163 Patagonia, 26, 69, 96, 157, 158

Index Pink Salmon, 94 Plastic whale, 55, 56 Porter, Michael.E., 22, 129 Preferences, 30, 31, 42, 43, 49, 64, 77, 83, 84, 87, 120, 129, 133, 137–140, 142, 143, 147–152 Product life cycle, 2, 18, 20, 43, 49, 50, 58, 70, 71, 79, 85, 109, 118, 119, 133 Product life cycle perspective, 20 Provenance, 64, 160, 161

R Rana Plaza, 12, 71, 106–108, 133, 155 Rare earth elements, 121 Reversed distribution, 48, 83, 84 Reversed logistics, 2, 57

S Saab, 89 Schiphol Airport, 73 Schumpeter, Joseph, 17 Segmentation analyses, 2, 35, 36, 140, 142, 146, 147, 152 Silent generation, 145 Silent spring, 5, 6, 164 Slavery, 97 Social dumping, 30 Social media, 53, 54, 63–67, 69, 79, 134, 140, 144, 148, 149, 152, 155, 156 Social responsibility, 12, 13, 22, 30, 71, 97, 107, 108, 130, 140, 158, 159 Speculation, 84 Stakeholder analyses, 66, 101, 102 Svalbard, 95 SWOT analyses, 113–115, 118–120, 123–135

169 T Taxonomy, 4, 19, 20 Telia, 85 Tesla, 21, 22, 46, 69 Thaler, Richard.H., 71, 72 Tobacco industry, 8 Toogoodtogo, 25 Togoodtogo-app, 84 Tragedy of the Commons, 38–41 Transaction data, 64 Turkey, 13, 65, 71, 96, 106–108

U Uber, 27, 29, 30 Unconcerned, 148, 149 UNICEF, 12, 105 Unilever, 69, 96 Urban goldmines, 24 Urban mining, 47–49

V Veblen, Torstein, 8 Vision, 19, 102, 130 Volvo FH Electric, 92

W Walmart, 44, 71 West Africa, 133 Williamson, Oliver, 124 Word of mouth, 53, 54, 148 World Resources Institute, 114, 123

Y Yara Birkeland, 88