Loyalty programmes are nothing new: customers are rewarded for engaging with and purchasing the products and services of a particular brand in a way that makes them a recurring customer. This marketing tactic has boosted sales for numerous companies and fostered a sense of community between brands and their customers, so it comes as no surprise that eco-conscious organisations have got to thinking how to translate this same function to drive positive change around carbon footprints.
This is where social tokens take their place. Earning social tokens is based on the same ideology, it is simply structured to help drive sustainability for the brand itself, as well as the community on a global scale. We consider how social tokens are driving ESG goals for brands, and why these ESG goals are so important for businesses to succeed.
Defining ESG Goals
ESG stands for “Environmental, Social and Governance” practices that are considered the non-financial pillars of conducting business for any company. ESG goals measure the company’s sustainability and ethical impact.
- Environmental
Environmental goals encompass those elements or operations that directly influence a company’s carbon emissions. There can be considerations such as whether they make use of renewable energy sources, what their waste management system looks like, how efficiently they make use of resources like water or what their contributions to pollution are.
- Social
Social goals are directly related to the “human” factor: the company’s employees, the surrounding community, and their customer base. This pillar reviews the company’s stance on employee equality and diversity, health and safety measures, human rights, and training and development (amongst others).
- Governance
Governance goals relate to the way the company is governed internally. Its corporate behaviour is defined by measurables such as compensation, board appointments, accounting methods, ethics, and fraud.
Why would businesses want to have ESG Goals?
Incorporating ESG goals as part of the business strategy is a necessity for long-term success. Not only are consumers practising more environmentally friendly purchase decisions, but investors are taking note, too. A study by US Business Roundtable found that investments into sustainability-focussed companies is up 68% compared to 2014 and has increased tenfold in the ten years prior to 2014. Studies have also found that value creation, through business performance, is also considerably higher with companies who favour sustainability practices.
Here are the benefits:
1. Top-line growth.
ESG propositions can assist brands in penetrating new markets by attracting customers that otherwise would not have been interested in their products. Research shows that consumers are choosing to purchase products that have sustainability in mind and, in some cases, are willing to pay up to 5% more for a product if the company prioritises ESG goals.
2. Cost reduction.
Prioritising sustainability by focussing on environmental goals within the ESG framework makes production more efficient and can make the company’s operations more cost-effective. In fact, a study by McKinsey revealed that companies who had ESG propositions saw operating profits improve by 60%.
3. Reduced regulatory and legal interventions.
ESG goals minimise the risk of adverse government intervention and companies, across the spectrum of industries, can benefit from tax savings when implementing sustainability initiatives. Governing authorities are also more likely to award companies with access, approval, and licenses if their operations are positively perceived by customers and stakeholders and are considered to positively impact carbon emissions.
4. Improved employee productivity.
The world over, people are shifting their mindset to sustainability and environmentally friendly practices, so it should come as no surprise that working professionals consider their employer’s impact, as well. ESG goals help companies attract and keep quality employees. They also see increased levels of motivation and productivity amongst employees as their roles are more purpose-centric and fulfilling.
5. Investment optimisation.
While more sustainable investment options (such as energy-efficient equipment) for business operations require substantial capital, businesses who had the foresight to invest in these opportunities early on, or who are making the switch now, will see the most benefit from their decisions and avoid stranded investments (such as write-offs on power-hungry equipment). We’re touched on cost reduction previously and a company’s plant and equipment ties into that directly. Environmental efforts that focus on decarbonisation and waste reduction (as examples) further offset costs through tax incentives and favourable financing terms.
When it comes to Environmental, Social and Governance goals for sustainability, the important thing to remember is this: younger generations are more conscious of sustainability issues and their purchasing decisions are directly influenced by these measures. In a recent study PWC concluded that 66% of millennials research companies prior to purchasing from them and Simon-Kucher & Partners unearthed that 85% of all shoppers are more concerned by the impact their purchases have on the environment than they were five years ago. Businesses need to adapt and keep this shift in mind to ensure they maintain their market share, or risk losing it altogether.
So, now that we understand the value of ESG goals, what are social tokens and how are they accelerating this sustainability change?
Defining Social Tokens
In layman’s terms, social tokens are a type of cryptocurrency that are issued by businesses to holders to fulfil a sense of community, but more importantly, to monetise brand experiences. For example, BiSolvent social tokens are issued to users who purchase products from sustainability-oriented suppliers through the platform. These social tokens can then be used to claim special offers from the pool of suppliers on the BiSolvent platform during their next purchase. In the instance of merchants, social tokens are issued to credit their ESG propositions, based on their ongoing efforts towards sustainability.
How Social Tokens Drive ESG Goals
Social token systems offer two advantages to companies. First, as we’ve mentioned previously, they establish an inclusive community as users earn tokens that can exclusively be used on the platform in question, thus improving engagement and loyalty. Second, and the focus of this article, is their ability to support the brand’s environmental impact by encouraging sustainability-centric behaviours throughout the supply chain, as well as with users.
- Environmental
Starboard CEO, Svein Rasmussen once said, “climate positive actually means to go carbon negative” and social tokens that reward sustainability initiatives are directly impacting those environmental goals that translate to lowered carbon emissions. Companies are incentivised to prioritise sustainable supply chain management.
- Social
A digital compensation platform offers automated services that can improve pay accuracy, enforce good practice when it comes to compliance, and reduce legal risk. These tools also provide insight into performance results and projected earnings for key stakeholders to monitor. In these ways, social tokens help maintain the businesses’ social goals by improving investors’ confidence and brand loyalty.
- Governance
Good governance translates to long-term business success, and automated rewards systems achieve just that by allowing for flexibility and thus being able to adapt to change quickly.
Social tokens provide transparency and consistency to users and merchants and support ESG goals through rewarding sustainability initiatives and stimulating positive behaviours associated with lowered carbon emissions. As younger generations become household decision-makers the shift to environmentally-friendly and net-zero carbon emissions will become a necessity for marketplace success; we’re already seeing the impact on companies globally. Social tokens do not only promote brand loyalty but can further drive companies’ ESG propositions to ensure they are efficiently implemented and managed.
BiSolvent incorporates social tokens as an in-house loyalty programme that rewards you for being sustainability-focussed. Chat to us to find out more.