Sustainability: The New Market Differentiator

Janice Seungmin Yoo - Jeju

According to researchers, multinational corporations (MNCs) account for nearly a fifth of the global CO2 emission. They say that the global supply chains of MNCs such as Coca-Cola, Walmart, and BP have detrimental impacts on our environment. Experts stated that for many large companies, emissions from their supply chains were larger than that of many countries. For example, Coca-Cola emitted the equivalent amount of carbon dioxide with China's food sector which feeds 1.3 billion people, foreign affiliates of Walmart emitted more carbon dioxide than Germany’s retail sector, and Samsung’s carbon emission around the world was higher than all electronic manufacturers in India. Likewise, the carbon footprints of MNCs have massive environmental impacts.

One of the experts pointed out that such MNCs have a blind spot in judging the environmental impact of their suppliers’ operations, adding to corporate risks linked to climate change. According to the report by non-profit consultancies - CDP and BSR - only 49 percent of almost 8000 suppliers in Dell, Unilever and Wal-Mart responded when asked about their environmental footprint, which conveys their ignorance on the environment. Experts claimed that it is difficult for MNCs to gain these information about their supply chains since they operate on a large scale.

However, the trend is changing for MNCs. As the Millennials and Gen-Z are more conscious about the environment than the previous generations, consumers these days prefer and seek sustainable products and brands. Recent researches suggest that 77 percent of consumers are more willing to purchase from a company with corporate social responsibility (CSR) pledge. Therefore, leading global companies are using sustainability as a market differentiator. Apple, Dell, Amazon, Google, and other large tech companies have made pledges to reduce their carbon footprint and improve other sustainability initiatives. Last month, Amazon launched a $2 billion Climate Pledge Fund aimed at investing in companies that build products, services, and technology to decarbonize the Earth. Apple also committed to being 100 percent carbon neutral in its entire business including the supply chain and product life cycle by 2030.

As such, when a market is saturated with products, companies choose to appeal their social corporate responsibility to customers and increase their competitiveness by differentiating themselves from other companies. Knowing that Amazon, arguably the largest company in the world, is making such a bold pledge and encouraging other companies to follow the suit puts them in positive a position in consumers’ minds. As consumers are loyal to brands that truly care about the things they care about, environmental issues and efforts towards sustainability are indeed acting as one of the marketing strategies for the MNCs.

Thus, not only MNCs but also other companies should work towards heightening

their sustainability and increasing awareness of the environmental impact of their

supply chains. If such a trend continues in the market, there will be a notable

reduction of carbon emissions as well as overall negative environmental impacts

from companies. Therefore, we, as consumers, should aspire to purchase products

that are environmentally friendly and contribute to the circular economy.