People think it is more important that large companies take responsibility in tough times, but don’t think companies are acting in everyone’s long-term interest, according to an Ipsos MORI study that landed on my desk today. This is out of sync with corporate comms executive and NGO-experts. What does this mean for corporate sustainability?
In the autumn I was interviewed by Ipsos MORI for their annual survey of UK NGO and CR Experts. I say ‘interviewed’, my memory is being asked a lot of questions over the phone while staring at a screen with flash cards with things like “A=Strongly agree”. My colleagues would hear me give one letter answers with looong pauses (“C…E….A….”) and look at me strange. Anyway, earlier today I got the general headlines. Ipsos MORI say I should feel free to use them widely so here goes.
The most interesting thing is the contrast between NGO-Experts and Corporate Communications executives on the one hand – who think large companies are at least trying on sustainability – and consumers – who think companies should take responsibility seriously but don’t.
First the NGO-Experts cohort. Almost 80% agree or strongly agree that companies will continue to invest in corporate responsibility despite the tougher economic times. When the recession started lots of commentators said CSR was a luxury that would fade. So why are companies continuing to invest? Some 72% of NGO-Experts say this is because large companies see the need for engaging in sustainable business. But 65% believe that companies are not focussing on the material issues, and only 30% believe large companies are incorporating sustainability into their business strategy.
I take this to mean, the NGO-Experts are experiencing senior company executives realising that sustainability will somehow be important to future success, but then are struggling to turn that realisation into coordinated action that really links to how the company makes profit.
The second cohort is senior corporate communicators (presumably Ipsos MORI’s main clients). An amazing 90% believe their company is incorporating sustainability into its business strategy – and developing new products and services.
So, both groups agree that large business is trying. But the insiders think it is embedded, while the expert outsiders don’t agree.
One of two things is happening here. Perhaps the insiders have better information and their high agreement is a leading indicator of integration. We can expect a new wave of sustainable products and services. Or, the two groups mean different things. The corporate comms people see greater activity, especially in reporting – maybe they see their workload going up – and take that to mean sustainability is integrated. The NGO-Experts have higher standards of ‘integrated’ (a wholesale change of strategy, not just changing existing products and services). Plus they have the day-to-day frustrations of trying to create change. Hence a lower perception.
But the real juice comes from consumers. They are a funny bunch. Most of the British public (65%) think it is more important for companies to take responsibility in difficult economic times.
In the words (and pictures) of Ipsos MORI “There is clear support for corporate sustainability in the British people…”
“…But few think it is currently happening to any great extent.”
Finally, and in a way most amazing: profits are bad for customers.
What I find really interesting in this chart is that people’s attitudes to profit seems to run counter to the politics. People voted for Thatcher, for increasing the role of markets, for generating outcomes through markets – and therefore for companies making profits as a sign of doing something that customers want. But as market forces were unleashed people said that making profits did not make things better for customers.
In a way it’s not surprising. For one thing it is easy to see company profits as a zero-sum game: if they did well, someone else must have done badly. While that isn’t true, it is true that inequality has risen in the UK. In 2011 OECD found that the top 10% of high-earners have incomes that are 12 times that of the bottom 10% in Britain, up from eight times in 1985. Perhaps people see the increase profits as a symbol of that rise.
Also, we are all told that executives should maximise shareholder value. Most people (including business people) take that to mean putting the interests of shareholders first, even if there is evidence that companies who put customers first end up generating better returns for shareholders (see Obliquity and Fixing the Game).
Turning to customer behaviour, 29% say that responsibility is very important to purchases. That sounds a lot, until you know that this is a return to the levels of the late 90s. In the the mid-2000s the figure was more like 35-40%. Anyway, people say what they think they are expected to say in surveys and then do something else in the shop (the well-known value-action gap).
Nevertheless in the last year 17% of people have done at least 5 advanced sustainability behaviours (like choosing not to travel by air/car, buying green energy). That number of dedicated consumers is higher than I’ve seen before (usually 10-12%). Some 3% of people use solar, wind or other renewable source to power their own home – a figure which surely will only grow.
What makes the consumers a funny bunch is that they are saying companies should act for the long-term but don’t – while they themselves don’t either. There’s an implicit criticism of companies, which consumers could just as well make of themselves.
What does all mean for corporate sustainability?
My first reaction on seeing the consumer numbers was ‘oh no’. The recession has hit purchasing behaviour. There is a path to weary cynicism from consumers having high expectations but seeing little delivery. What a slog it is going to be!
But my second reaction was, well here’s an opportunity for a smart company with a solid track record on sustainability (which many believe they have, apparently). You should be able to differentiate yourself by showing how you are meeting people’s high expectations.
The remaining conundrum is about profit. In my experience people in companies get themselves into an awful tangle about whether an initiative that makes money can be sustainable. If it does, then isn’t just a commercial activity you would have done anyway? If it doesn’t then the initiative is a drain on the business, let’s stick it in corporate giving.
In some ways the wider populace seem to feel the same way. If profit=bad, then any sustainability activity that makes money will be tainted.
Now, for sometime Forum’s advice to companies about products and services has been: don’t sell it on the sustainability, that locks it into a niche. Instead match the qualities customers are looking for (price, quality etc) and make some tangible aspect of sustainability the tie-breaker. This opens up a mass market. It also sidesteps the “but, aren’t you making a profit?” objection.
The other option that occurs is to be prepared to make a symbolic sacrifice of profit for long-term gain. The classic example is product recalls. Companies that announce quickly and then recall everything tend to recover (or better). Companies that delay and then are miserly in their recall tend to do less well. They’ve said “my profit is more important than your safety”, and customers lose loyalty.
My other thought was about the 17% of consumers who do 5 or more advanced sustainability behaviours every year. I wonder if that reaches out of the Guardian/Waitrose ghetto (to stereotype). If so, then the chance of some specific behaviours – especially on energy efficiency or on collaborative consumption – going through a tipping point is getting larger all the time.
Finally, there is a risk of self-referential complacency for corporate executives and NGO-Experts. Although experts see effort and insiders see progress, customers do not. Add in the on-going tough economic times, with people presumably feeling that their lives are not getting better as had been promised. They will look for someone to blame, and that will be large companies. Whatever companies are currently doing on comms and products or services isn’t getting cut-through. Smarter effort needed, it seems.