Green Branding in Japan Is Underpinned by a Strong Environmental Ethos

The Conservation Mindset of the Japanese People
As discussed in our July article The Changing Energy Landscape of Post-Fukushima Japan, the Great East Japan Earthquake radically altered the country's energy equation. Most importantly, renewable energy resources -- which had formerly been seen more as a social good rather than a solution to energy shortfalls -- became central to the discussion of how to ensure a safe, sustainable, and affordable power supply.

Fortunately, in meeting its energy challenges, Japan builds on a strong tradition of environmental consciousness that should ease the path to boosting supplies from alternative sources. An April 2009 Gallup survey ranked Japan first among 127 nations in awareness of global warming, with an almost astonishing 99% of Japanese people saying they knew "something" or a "great deal" about it. In an Ipsos MORI survey conducted one month before the Earthquake, when asked, "What are the three most important environmental issues facing your country today?," some 48% of Japanese respondents said global warming -- placing Japan third among 24 countries in its concern about greenhouse gas emissions. As stated in the April 2008 edition of TIME magazine¹, "A conservation mindset is ingrained into Japanese people from birth, and is apparent in little ways throughout society."

Japanese Companies Work to Burnish Their Green Credentials
This mindset is apparent in Japan's leadership in Corporate Social Responsibility (CSR) reporting, a major component of which is environmental reporting. According to a study released by KPMG in November 2011 of CSR reporting² by the world's 250 largest companies, Japan led all nations with 100% of its big firms complying; statistics prepared by CorporateRegister.com indicate that Japan ranks third, behind only the US and UK, in total companies preparing CSR reports. And while multinationals of many countries emphasize their environmental efforts on their websites, the ubiquity of a main menu link on Japanese company sites to the firm's environmental report is still noteworthy.

Japanese companies are, no doubt, attracted to CSR reporting in part because they often have strong environmental records to communicate. A case in point: Since the inauguration of the ISO 14000 series of environmental standards in the mid-1990s, Japanese companies have been among its leading adopters and long accounted for 20% or more of all its certifications.

Perceptions of Companies' Green Policies Drive Consumer Choices
Is a high green rating also good for a company's business? Albeit a few years old, one study of consumer behavior, Nikkei BP's environmental brand ranking, would indicate so. Its 2003 survey found that the correlation between a company's Sustainability Rating and consumer's response as Likely to Use or Buy (from the company) is a very high 0.90. Name association also showed a high correlation (0.89) with intention to buy; but among the 260 best known brand/companies of the 560, this value drops to 0.71. These stats would indicate that, because well-known companies are already familiar to consumers, name recognition alone is not a distinguishing factor. On the other hand, for these 260 companies the correlation between sustainability rating and intention to use is still quite high at 0.86, suggesting that for larger and more well-known companies a green image can serve to differentiate it from the competition and attract potential customers.

Creating Business Opportunity from Japan's Green Consciousness
So how can businesses -- particularly overseas companies looking closely at Japan -- exploit the green mindset of her companies and consumers for revenue growth and market expansion?

We believe there are opportunities in the following areas:

1. Eco-friendly consumer products: Because Japanese consumers are highly aware of the environmental impact of products, overseas brands that focus on sustainability -- and can communicate its green values effectively -- will enjoy a receptive market for its products. A few examples of North American companies that are imbued with a green consciousness are Seventh Generation, Whole Foods, and Method.


2. Capital spending for green projects: Leading Japanese companies are intent on projecting a strong corporate image of sustainability awareness. They are constantly seeking ways to maintain and improve that reputation, and they are eager to invest in eco-friendly projects that will command attention by the news media. For example, we see blue chip companies planning to install renewable energy sources (solar, wind, fuel cells, etc.) in their factories, office buildings, and retail outlets. If the equipment is provided by a less traditional supplier (for example, a prominent venture-backed overseas company), there is a greater likelihood of media interest and coverage.


3. Burnishing green credentials: Brand and strategy consultants, as well as ad agencies, can support Japanese corporations by advising them on some of the best practices for green branding overseas, as well as help them with English-based corporate communications that cater to a worldwide audience. For example, Interbrand, a global brand consultancy, focuses on green branding and releases its Best Global Green Brands survey.