For some time now brands have been encouraged to develop a conscience – to show that entrepreneurial capitalism can, and should, care about more than financial returns.
The triple bottom line concept was intended to turn corporate focus towards social and environmental issues as well as profit. Corporate Social Responsibility (CSR) and more recently Environment, Social, Governance (ESG) policies have been created to point investors towards brands that commit to taking these issues seriously. The B Corp movement also accredits businesses that commit to inclusive, equitable, and regenerative business processes, thus making them ‘forces for good’.
Not only investors, but employees and consumers too increasingly expect companies to be accountable in terms of transparency and sustainability.
This raises bigger issues than it would appear at first sight. How are these criteria measured and who measures them? Are the results of measurement comparable across different companies? Where companies own more than one brand, how are these assessed individually?
Perhaps even more crucially these issues touch on how brands define their ‘purpose’ and how they reflect their ‘values’, which are often conceived by those in the C-suite and validated by employees huddled in workshop sessions led by brand consultants. These worthy aspirations are intended to guide corporate culture and behaviour. As a result, employees, including those at the top, may find themselves held to higher standards than many of those in public life. CEOs at McDonald’s, Uber and NBC Universal were all fired for misconduct or harassment in relation to other employees.
Accusations of hypocrisy, virtue-signalling, greenwashing or woke policies can become a minefield for unwary brands. It’s easy to step out of line on issues of gender, race, and inclusivity when feelings on these topics run so high and brand owners haven’t thought through the implications of their policies.
Occasionally ethical conflicts emerge dramatically into the daylight, as in the recent case of Coutts Bank. Internally noting its discomfort with the ‘xenophobic, chauvinistic, and racist views’ of a particular customer, the bank claimed to have rejected the individual solely on commercial grounds. Once the real reason was made known, that customer’s powerful voice forced the resignation of two CEOs. Was the bank applying its own internal standards to one of its customers? Was that fair? Would it have done the same to a more valuable customer?
Brands might argue that they want their customers to buy in to their own ethical standards and thereby establish a two-way loyalty. Some brands even expect their customers to be aligned with their aspirations and so become ‘part of the family’. It’s about ‘impact’ – how the brand makes a difference in the real world.
Tom’s, the US shoe company, is explicit in its commitment to specific goals, giving one third of its profits towards mental health and other good causes. Patagonia, the outdoor clothing brand, sees itself as an environmental activist, even offering complaint letter templates to highlight local sewage effluent infringements.
Many brands find themselves in conflict with the changing world. Brands like Shell, for example, struggle to tell an environmentally positive story while transitioning from an existing business model in the beleaguered fossil fuel sector. Others like Thames Water
claim to be ‘passionate about protecting our most precious resource’ while favouring shareholder returns over customers’ interests and investment in infrastructure.
Increasingly, public pressure and calls for transparency will shine a blinding light on brands that don’t take ethics seriously or don’t practice what they preach when formulating their purpose and values.