This post, Partnership with Purpose, explores the implications for Sponsorship and partnership practice in a landscape in which social and environmental action, and business contribution to the Sustainable Development Goals are increasingly important.
A bit of historic context
We’re so used to the concept of shareholder primacy that it’s strange to remember that the idea of businesses being driven by a purpose beyond profit isn’t new. From the first corporations, 4,000 years ago, there was often a societal expectation that they existed to fulfil a public purpose. It was only in the 1950s that this culture started to change with the new economic thinking of Milton Friedman’s Capitalism and Freedom (1962), which established the principle, unchallenged for over half a century, of the shareholder at the top of the food chain – just as the locus of business ownership was shifting away from the family to the shareholder.
The purpose of purpose
However good ESG or purpose may be for the world, the rationale is that it’s good for business.
Carol Cone, founder of the world’s most ‘purposeful’ brand agency, Cone LLC (and now at Edelman Business + Social) framed the value of purpose as enabling: ‘meaningful engagement with all an organization’s stakeholders, from employees to consumers to communities’. According to Jim Stengel, it drives growth, in his book GROW. According to Michael Porter, compellingly articulated, it inspires innovation. And to put it more bluntly, in the description of Sense Worldwide ‘It transforms (B2B) sales conversations from price-based ‘beat up the vendor’ sessions to high-level strategy partner discussions (…and…) turns senior managers into industry thought leaders.’
From a communications standpoint, irrespective of societal or environmental value, both ESG and purpose entail actions which are intended to influence an audience. For us, this simple point creates a fundamental connection between sponsorship and CSR – but in this post we’d like to consider different dimensions of the relationship between sponsorship and corporate commitment to social and environmental impact.
Terminology
First of all, let’s standardise our terminology.
The relationship between business, society and the environment never ceases to evolve – and with it, the structure, nature and expression of that relationship. Philanthropy, Corporate Responsibility, CSR, ESG, Purpose are just some of the terms used in the last 50 years given to formalise that relationship – each with its own flavour and cultural norms.
All of these terms are subtly different, so here’s a quick graphic up front to summarise the different nuances as we understand them.
A key question for business
How do we tell people about the good we do?
It’s an incredibly sensitive question because it cuts directly to the real heart of corporate personality and culture and poses existential questions for any business or any person. How do I achieve recognition? Do I deserve recognition? Will people think I’m bragging? How do I earn – and do I deserve – respect? Very real questions which emanate, in or out of consciousness, from the heart of every employee.
We approached this subject in 2015 with a large enquiry into corporate practice, interviewing 50 global directors of sustainability to understand how they approached the subject of communicating their sustainability achievements. The relationship between sustainability and marketing, in other words.
It’s a while now, but the findings are still relevant :
- There’s growing consumer appetite to understand the detail of brand sustainability.
- Marketing teams were increasingly keen to communicate sustainability stories : the ability of marketing teams to deliver impactful communication was appreciated – although there was nervousness about dumbing down.
- It’s a journey. No business will ever be totally sustainable, so don’t let the notion of perfection prevent you from communicating. But do make sure there are no huge or indefensible inconsistencies in your behaviour.
- Tone is important. Make sure you’re honest, humble and don’t overclaim.
- It’s better to communicate than to stay quiet. Silence creates suspicion and every communication is an opportunity to engage people and potentially customers.
The move to mainstream
Importantly, the huge changes in society and this landscape over the last 20 years have had two major effects on the relationship between sponsorship (and rightsholders) and ESG.
In the past, NGOs were a default partner, because they had the necessary specialisms – to advise IKEA on sustainable timber sourcing in the case of WWF or to advise Puma on ethical supply chain practice in the case of the International Labor Organisation. But now the question of ‘impact’ confronts us in our daily lives : there is no excuse for us not to understand the significance of diversity, for example, or recycling or carbon impact reduction. These are no longer the subject of specialist corporate action and communication but legitimate platforms for consumer communication.
Johnnie Walker’s longstanding anti-drink-driving campaign, Join the Pact, which launched in 2008 and famously used its partnerships with Lewis Hamilton and F1 to encourage responsible drinking, is one of the early examples of brands using ESG to engage mass consumer audiences .
That increasing audience relevance makes it possible for rightsholders, if not to own, at least to contribute to those conversations; it also enables them to engage with their core audiences on those issues.
The role for partnerships with purpose
The role for partnerships with purpose therefore as a mechanism to deliver and amplify ESG activity is as large as the audience it engages. F1 has now helped Diageo reach 5 million signatories to its pledge never to drink and drive.
So on the one hand, brands can look at the rightsholders’ audience metrics and consider how they might leverage their sponsorship to engage these with their ESG activity, as is the case with Xylem, for example and Manchester City.
The approach here broadly reflects the pattern of traditional sponsorship management : where there is no intrinsic connection between sponsor and audience and the sponsorship campaign uses insight and activation to drive audience engagement.
But the other path for rightsholders is to pro-actively manage their own ESG in order to increase their relevance to fans and corporates.
The opportunity
ESG offers a huge upside if the resources exist to take advantage. Impact-led campaigns can be used to reach new audiences, to build engagement and communicate additional dimensions of your organisational brand. Just as sponsorship, it offers rightsholders and brand partners a new platform to engage with media, with existing and new audiences. Beyond the two strands above, which are rich in themselves, the Sustainable Development Goals offer numerous platforms to align with.
La Liga’s Real Betis is successfully using its branded commitment to sustainability- Forever Green – to reinvent its brand and renew its relationships. The Mercedes AMG Petronas, McLaren and Ferrari teams are all developing a clear focus on sustainability. Ultimately sustainability will simply become another hygiene factor, but at present it offers strong and credible rightsholder positioning. It signals very clearly: we are a responsible partner for business.
ESG is a huge opportunity as it allows rightsholders and sponsors to demonstrate values which have broad social relevance which would not normally be associated with their brands, especially in sport, where the importance of performance is so dominant that it tends to drown out more nuanced attributes.
The work to define this focus is akin to brand work: it needs to incorporate the brand, business and audience objectives and clearly based on the organisation’s assessment of Its own ESG strengths and weaknesses.
Rightsholder as advisor
One dimension of partnership where the NGO sector has a clear lead over the sponsorship rightsholder is in the domain of advice. Many NGOs successfully leverage their expertise in sustainability, human and labour rights, animal welfare etc to become advisors to major brands – helping them to manage their ESG challenges and ambitions pro-actively. Organisations such as WWF clearly separate out advisor services from partnerships and, even more clearly, licensing.
Traditional sponsorship rightsholders have never fully leveraged their understanding of their fans in this way. McLaren Technologies are perhaps the best example of a rightsholder leveraging its IP to become a trusted advisor to business. Any fan insight shared with brands has been considered a cost of sale of sponsorship. We’ve always been big fans of the internal agency model and it feels like a missed opportunity. Given their access to data, the size of the data sets they own and their experience across multiple sponsors and multiple campaigns – they should be in a better position than agencies even to advise brands on fan communications.
As ESG grows in importance, the ability of rightsholders to offer advisory support to brands also has opportunity to grow. One contemporary area, especially for sports rightsholders, is the domain of health, with its intrinsic links to physical and mental health and the resilience required to deliver peak performance. Many sports rightsholders hold unique IP in this area which they can leverage across all aspects of delivery and amplification.
The risk
Obviously, any change to the business environment affects sponsorship practice sooner or later but – given the brand component of ESG, businesses which genuinely commit to social or environmental impact targets will quickly apply that lens to their sponsorship. And even for cynical businesses which carefully manage the scope of their ESG reporting, sponsorship is a very visible expression of business values which can easily become a lightning rod for criticism.
In this respect, BP is a salutary tale. Its sponsorships – RSC, British Museum, London 2012 and more – have been relentlessly targeted for years by activists, forcing both BP and the rightsholders which initially maintained their support – into a slow and undignified retreat.
Few companies are likely to attract the same level of scrutiny or despite as BP, which has become the totem for every fossil fuel giant, but the point is that the smell of greenwash is a powerful pheromone for both activists and media – and stories of large company hypocrisy find a ready audience as the best kind of sin free gossip: nobody gets hurt.
Just as corporates have been forced to take responsibility for supply chain management to ensure suppliers meet centralised standards of production integrity, the ESG performance of suppliers and rightsholders will inevitably become an extension of the sponsors’ own. Blatant mismanagement of people or the environment, toxic cultures, disregard of DEI and increasingly simple lack of humanity will all become major risk factors for corporate partners.
We’ve already seen multiple signs of this – from the shaming of US Gymnastics, and reports into sponsorship greenwashing b the New Weather Institute, to the remarkable step of the Danish Football Association promising to exchange sponsor logos for critical comment for the 2022 FIFA World Cup in 2022 in Qatar
Implications
Considering ESG from a risk perspective, sponsors are advised to review the ESG practice of the rightsholders they engage with, to ensure these do not represent reputational risk. Although the typical termination safeguards have traditionally provided enough insulation for sponsors, there are signs that more conscious consumers are growing less tolerant of the defence of rightsholder autonomy and legitimately expect sponsors to know what is going on below the bonnet of their partneships.
Rightsholders need to ensure their ESG practice is robust and of a quality comparable to the corporate world in order to meet the due diligence criteria of corporate partners – and ideally embrace the communications opportunity that ESG represents.
As we’ve commented before, rightsholders’ own ESG policies, over time, will inevitably provide a clearer focus for their activity and force them to become more selective about the kind of impact initiatives they can support, as their own brand will become linked to this focal point. So this in turn will limit their ability to generate CSR initiatives on behalf of their sponsors.
A clear ESG commitment by rightsholders, with the many benefits it offers, is also a two edged sword, as a clear focus on sustainability, for example, logically also limits the field of potential sponsors – and I hate to say it but INEOS, at least in the public eye, does not support sustainability positioning for Mercedes AMG Petronas. Real Betis’ visible commitment to sustainability does not sit comfortably with many FMCG brands,
Sponsorship and in particular athletes have a major role to play in connecting consumers to brand ESG and impact programmes. The longer term pressure is for both parties – rightsholders and sponsors – to get serious about ESG.
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