UK: Brands And Best Behaviour

Last Updated: 17 March 2014
Article by Jayson Robinson

It is a complicated time for brand managers. In the last few years, a number of brands have come under intense scrutiny for reasons ranging from tax avoidance to safe manufacturing environments. Consumers (and politicians) want brands to be good corporate citizens and it has elevated the topic right to the top of the agenda for many businesses. Good news for society, right?

But there is a problem here: companies – or publicly listed companies at least – are about profit, and being a good corporate citizen usually costs money. Maximising shareholder wealth is the CEO's fiduciary duty, let alone their personal incentive in order to retain their job. In the case of tax avoidance for example, it could be seen as financially reckless by shareholders to pay more than is legally necessary.

Of course, good corporate social responsibility does not have to cost money. Some drinks manufacturers for example use thinner glass bottles: cheaper for the company and uses less resources – win-win all-round – a no-brainer. Unfortunately, not every situation is like this. The reason now most labour intensive manufacturing happens in developing economies is for low labour costs. Companies could pay their factory workers more or improve working conditions, but that means less profit for them or more expensive products for you; neither of which are desirable outcomes for business.

In the first instance, are there any benefits to being a good corporate citizen? Well, some social responsibility consultants suggest that building a socially responsible brand builds a "reservoir of goodwill" to protect the brand against future negative PR. Or they claim that consumers will pay a premium for a product where the brand is socially responsible. But I find this distasteful. Whether you believe the numbers, or whether they stack up in the business case, is irrelevant. Surely being a good corporate citizen is about doing it because "it is the right thing to do", not because there is a dollars or pounds figure backing it – that's called investment. Without getting too philosophical, a brand that frequently announces its corporate responsibility initiatives, especially when defending itself from bad PR, clashes with the entire notion of charity and altruism, that is, giving for giving's sake and not to receive financial, emotional or any other benefit. This concept has been argued since Socrates.

But let's ignore the philosophy behind being a good corporate citizen for now and look at the numbers, or rather the method behind the numbers. There is an avalanche of data out there 'proving' consumers will pay a premium for a socially responsible brand, or will factor it into their buying decision. But it is too often pre-purchase survey-based data. Even the best designed, most objective surveys – and there are plenty of bad ones out there – can still yield unreliable results. "Do you care about corporate social responsibility?" Of course I do, what sort of monster do you think I am? People will always want to present themselves in the most positive light, and this is even truer in intimate focus groups. Even post-purchase surveys can be misleading as it costs nothing to say, "Sure, social responsibility played a part in my decision".

Of course, it is difficult to get reliable data on this topic – you can't really measure a non-event. In my view the best approach (though likely damaging conversions) would be an 'at-purchase' offer to identify the difference between how consumers say they will behave and how they actually behave. For example, at checkout the consumer receives a pop-up with an alternative (for argument's sake, identical) product to the one in their basket that is 10% more expensive but the brand has a higher corporate responsibility score (we'll assume they know what this means). The number of people taking the offer, and at what premium, would be the truest reflection of how far consumers are willing to go in the contract between businesses and consumers. And it is a contract: consumers cannot have their cake and eat it – have the cheapest products and the clear conscience of outstanding corporate social responsibility.

So what do brand managers do with this predicament? One option is to fuse social responsibility with the brand – make the brand about social responsibility, or a certain aspect of it, and use it as the brand differentiator. A number of brands have done this successfully and as a result, profits and social responsibility are in unison – the ideal position. However, if the central values to the brand are seen to be violated, the fallout from accused hypocrisy can be seismic. The other, perhaps more difficult move, is to put the corporate social responsibility agenda right at the heart of the company mission statement and openly shun investment from those that do not buy into it – an approach taken by the Unilever CEO in 2012. This way, the conflict is dissolved. For brands where this is not an option, they could keep all their charity under the radar: just be a responsible business, do not announce it. When PR disasters do happen, apologise, fix it if necessary and move on. Trust consumers to know you are an ethical business.

For consumers the question is a lot simpler. Are you willing to pay the premium for a clear conscience?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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