Corporate responsibility is now a minimum requirement for any respectable business. But how much does it really matter to people?
Most big companies have embraced some form of corporate citizenship, acknowledging they have social and environmental responsibilities beyond just financial duties to shareholders.
Corporate Social Responsibility (CSR) has evolved into the broader, more strategic concepts of sustainability and brand purpose. Although these are distinct concepts, they are linked in the sense that businesses are looking to connect to people’s values, and give clarity about what they aim for above providing good products and services. Consumer expectations are also evolving: socially responsible behaviour now includes not just environmental and social issues, but taxation too.
This signals a transition from being ad hoc and project-based to becoming fully aligned with business strategy. Young companies such as Tesla, Toms and Patagonia built sustainability into their DNA from scratch, with targets and behaviours rooted in a sustainability purpose. Among established brands, Unilever is often lauded for its success in integrating sustainability into its core business model. The launch of the United Nations Sustainable Development Goals (SDGs) in 2015 also helped to provide organisations with a new framework for ‘doing good’.
We all say we want brands that make a positive difference …
This study shows that globally, 67% of people agree that it has become more important that the brands they choose make a positive contribution to society, beyond just providing a good service or product. This is the majority view in virtually all countries we surveyed.
In some ways more importantly, a similar proportion across the world (68%) think that companies who make a positive difference will be the most successful brands of the future. This rises to 80% or more in key emerging economies like Indonesia (86%), India (83%) and China (80%), where environmental issues and labour relations have a higher profile than in many western countries.
… and there is of course a risk if companies behave irresponsibly
Social media is amplifying reputation problems: if unethical behaviour, accidents or malpractice come to light, even in a far-off jungle or a remote factory, it is shared instantly with millions of potential customers, leaving companies increasingly vulnerable and under attack – something United Airlines is well aware of, after video footage of a passenger being forcibly removed from an airplane in Chicago went viral around the world.
However, does sustainability and purpose really matter to us?
But while the public say they choose ‘good’, sustainable brands with a social purpose over those that lack it, there is plenty of evidence that indicates that our actual behaviour doesn’t always follow through. ‘Virtue signalling’ in surveys and on social media does not always link to buying behaviour!
Globally, 61% say they try to buy products from brands that act responsibly, even if that means spending more, but this is not the view taken by the majority in several countries, including Canada, Britain, Russia and Japan. Millennials (64%) say they are more ethically driven than Baby Boomers (54%), but not overwhelmingly. Bearing in mind that there is a likelihood that some people will give a socially desirable answer here, the figures are much lower when it comes to what people do in practice. Another insight into people’s thinking can be drawn from their response to the statement, ‘I don’t care if a brand is ethically or socially responsible, I just want them to make good products’. Opinion is evenly split here, with 45% agreeing and 47% disagreeing (and no differences between generations).
Such opinions may go some way to explaining examples in the marketplace. After Volkswagen experienced difficulties around emissions in 2015, the company went on to publish record sales figures a year later. Also, for all the debate about sustainability and brand purpose, globally price still tops people’s stated reasons for purchasing decisions (68%), with reputation coming in third place (44%).
So, we say responsible behaviour is increasingly important to us, and while there is a clear reputational risk in dodgy supply chains or environmental damage, the question is: are people likely to change their behaviour?
All other things (such as price and quality) being equal, people will choose the brand that ‘does good’ over the others available to them. This reputational benefit may well be on the margins, but can still result in millions of additional revenue. The challenge that we all face is to make sustainability and ‘better’ business an even more central part of customer decision-making.
Sustainability in particular should be seen as not only doing the right thing, but as an opportunity for business.Despite mixed evidence on the impact it has on customers, it is sensible to improve on and invest further in sustainability. Why? First of all, it’s in companies’ own interest. Building a sustainable business by definition increases the likelihood of long-term success. This can manifest itself in many ways: from the way you manage your buildings (e.g. the famous ‘lights out’ motto), handling your natural resources in a responsible way, or developing relations with local communities. Companies should not underestimate the reputational benefit of doing the right thing.
If we want to make the world a better place, (big) business, with all the resources it can bring, is uniquely placed to play a role in this. Think about the scale, abilities to innovate, capabilities in implementing effective new business models, and sheer resources of the big companies. As many as 79% of the public believes it is possible for brands to make money and support good causes at the same time.
This doesn’t mean sustainability investments – like any other investment – shouldn’t be critically reviewed. They should be responsible and prudent in their own right, giving shareholders a return on investment. As with any other process, this should be carefully monitored and inform decision-making – the literature hasn’t shown any conclusive impact on the bottom line.
Finally, if business doesn’t do the right thing, all over the world consumers say government should regulate business more. While there is general public support for free trade across the world – as our 2017 study on the limits of populism19 shows – there is plenty of appetite for more regulation of big business, with 60% globally saying they want more action by government.