In 2021, it’s not enough for a company to look great on paper. Revenue, growth, and market share are only part of the equation. Today brands are also competing in the reputation economy, where a brand’s success hinges upon how the company treats its employees, customers, and community.
ESG investing is growing in popularity, with index funds hitting $250 billion in September of last year. ESG stands for environmental, social, and governance — factors that some investors analyze alongside financial metrics. Analysts say the pandemic accelerated a boom in socially-mindful investing, but this preference for brands with a conscience has been percolating for years.
As a leader, you can’t afford to ignore how consumers view your brand. You must make a concerted effort to contribute to a greener, cleaner, and more equitable world.
Here are three key factors that contribute to your company’s reputation:
1. The Diversity of Your Team and Suppliers
The upsurge in support for the racial justice movement last year brought diversity to the forefront of everyone’s minds. More consumers are aligning their purchase behavior with corporate diversity efforts, and when presented with two brands that have identical offerings, a third of consumers say they would consider companies’ commitment to diversity in their purchase.
Many brands are making a greater effort to be inclusive in their advertising, but unfortunately, it doesn’t always come across the way it was intended. Research shows that two-thirds of African-Americans and more than half of Latinos feel that advertisers still rely on stereotypes. This is why it’s important to do more than cast people of color in advertisements. Individuals from underrepresented groups need a seat at the table.
In recent years, the conversation about diversity in corporate America has centered around the board room. But your company’s inclusivity efforts shouldn’t end with your organization. It’s also important to consider the diversity of your vendors and suppliers.
Tracey Grace, founder and CEO of IBEX IT Business Experts, has made it her professional mission to help companies diversify their supply chains. She acknowledges that it has always been difficult for big companies to extend diversity efforts to their diverse vendors because many of these inclusive suppliers are small businesses with less visibility. That’s why she launched Certifiably Diverse, a supplier diversity vendor management platform to simplify the curation process.
Today, many big brands are beginning to recognize the importance of supplier diversity. Johnson & Johnson’s supplier diversity program prioritizes businesses owned by women, minorities, LGBT individuals, and veterans. It even makes its yearly spending in each supplier category available to the public. AT&T, CVS, and Toyota have also been outspoken about their supplier diversity efforts.
2. Your Track Record on Sustainability
In 2018, luxury fashion brand Burberry came under fire for burning excess merchandise to prevent the items from being sold at a discount. The company claimed the energy generated from the burn was captured, but the damage was already done. Consumers were starting to become aware of the rampant waste in the fashion industry, and burning clothes to protect the cachet of the luxury brand may have permanently marred Burberry’s reputation.
According to one survey, 47 percent of consumers have switched to a different product or service because the company violated their personal values. (Concern for the environment is one of the top reasons consumers have switched.) People increasingly want to do business with eco-conscious companies, and among younger generations, half are willing to spend at least 10 percent more on sustainable products.
This could explain why H&M — one of the biggest polluters in the fashion industry — has invested $100 million in developing the technology to recycle discarded clothing. In alignment with its pledge to be climate-positive by 2040, the company has also launched a line of clothing with “Conscious” hangtags to denote products that use at least 50 percent sustainable materials.
It’s too early to say whether H&M can transform its reputation from a fast-fashion giant to an eco-conscious apparel brand, but its efforts show that sustainability is becoming a hallmark issue for its consumer base.
3. Your Commitment to Social Good
These days, it’s not enough to simply avoid bad behavior. To solidify a great reputation, your brand must be committed to doing good.
Take the COVID-19 crisis, for instance. When the pandemic first took hold, a huge surge of brands rushed to put out relevant ads. Some spots expressed support for healthcare workers, while others unveiled new taglines encouraging people to stay at home.
But the brands that stood out during the pandemic were those that invested more in social action than ads. These were companies such as General Motors and Ford, which retooled factories to produce ventilators and face masks. Other standouts were those brands that made large donations or rolled out their own programs to provide relief.
One company that really shined was Nike. Yes, the brand launched a new pandemic slogan, but it also began offering its NTC Premium streaming workout content for free. Nike also committed to donating $15 million to a variety of organizations, including the Oregon Food Bank, the Oregon Community Recovery Fund, and other organizations around the world.
Then there’s Anheuser-Busch, which has a long history of social good. It contributed to the crisis by transforming stadiums and arenas into blood-drive stations with the American Red Cross. It donated air time to promote the initiative and began manufacturing hand sanitizer. Meanwhile, UK-based Budweiser Brewing Group raised more than €1.5 million as part of its “Save Pub Life” campaign. The campaign urged people to buy gift cards for their favorite pub, which Budweiser matched throughout the crisis.
These companies strengthened their already stellar reputations by serving in a way that aligned with their brand. This is the way you should approach “doing well by doing good.” It isn’t enough to play lip service to diversity, switch to biodegradable packing peanuts, or jump on the bandwagon of a good cause. To compete in the reputation economy, you must be committed to improving the world for all stakeholders — your employees, your customers, and the community.
Image credit: Pixabay; Tumisu