In March 2016, the Arizona-based Ethisphere Institute published the list of the ‘World’s Most Ethical Companies’ for the year.
131 companies from 21 countries, representing 45 industries, made the list.
The National Australia Bank, the Rezidor Hotel Group, L’Oréal, Illy Caffè, Marks & Spencer, Cisco, GE, Intel Corp., Levi Strauss & Co., Northern Trust, Kellogg Co., LinkedIn, Pepsi Co., Royal Caribbean Cruises, UPS, Windham Hospitality Worldwide, Microsoft, Ford Motors Co., Colgate-Palmolive Co., Ricoh Co., Delphi Automotive PLC, Marriott International, 3M Co., H & M AB, Accenture, Tata Steel Ltd., Shiseido Co., Ecolab, Starbucks, Capgemini, MasterCard and 100 more were awarded the Most Ethical stamp.
To be considered, companies need to register – at a fee - and abide by the following principles:
“At the heart of the evaluation and selection process for Ethisphere’s World’s Most Ethical Companies is Ethisphere’s proprietary rating system, the corporate Ethics Quotient (EQ). The framework of the EQ is comprised of a series of multiple-choice questions that capture a company’s performance in an objective, consistent and standardized way. The information collected is not intended to cover all aspects of corporate governance, risk, sustainability, social responsibility, compliance or ethics, but rather is a comprehensive sampling of definitive criteria of core competencies.”
The Ethics and Compliance Program represents 35% of the EQ framework, the Corporate Citizenship and Responsibility weights 20%, the Culture of Ethics is another 20%, Governance 15%, and finally Leadership, Innovation and Reputation weights ‘only’10%.
In absence of an official definition of what is an ‘Ethical’ way of running a business, companies rely on third parties such as the Ethisphere Institute… or crown themselves as being ethical.
Go to your local supermarket and you will find hundreds of ethical items, from organic bananas, to sustainable fishing or recycled toilet paper!
Not mentioning your favorite fast food store who donates, discreetly (but still they make sure you know!), to NGOs and other good-will organizations every time you buy from them.
Obviously, if all major international groups work hard to make the Ethisphere’s list, or similar such as FairTrade International, GreenGlobe, Green Business Bureau and so many more, while local and regional companies communicate directly or indirectly on being ‘Ethical’, there must be a reason:
It makes business sense.
Not only does it make business sense, it enhances your brand and gives your company a cutting edge:
It takes advantage of the ‘I want to do good to feel good’ attitude that prevails more and more among your customers.
At a time when medias repeat day after day that the Planet is on the edge of collapsing and that global warming announces the end of our life style as we know it, an ever-greater number of consumers feel guilty to… consume!
They feel they can redeem their guilt by consuming green.
Don’t get us wrong!
From article to article, we promote here sustainable development, Corporate Social Responsibility (CSR), leadership as opposed to management, or highlight the importance of your employees and your corporate culture.
In this article, we are looking at the branding side of things:
How can you use your ethical way of running your business to benefit its image, development and growth?
Every year, more companies are claiming to be ethical, green, environmentally friendly or however they wish to brand themselves:
According to a 2014 Nielsen global survey, the number of companies that claim to be ethical (under whichever denomination they chose to use) grew worldwide by 267% between 2000 and 2014!
It doesn’t mean that companies are actually more ethical, as another 2012 survey from the Virginia-based Ethics Resource Center demonstrates (they actually remark that “The percentage of companies with a weak ethical culture is on the rise”), consumers being more interested in ‘packaging’ than in the ‘real thing’:
“Some fifty-two percent of global respondents in Nielsen’s survey say their purchase decisions are partly dependent on the packaging – they check the labeling first before buying to ensure the brand is committed to positive social and environmental impact.
Sustainable purchase considerations are most influenced by the packaging in Asia-Pacific (63%), Latin America (62%) and Middle East/Africa (62%) and to a lesser extent in Europe (36%) and North America (32%).”
Furthermore, Nielsen checked 20 brands in nine countries claiming to be ethical to verify if respondents’ answers matched sales figures.
“These brands either included sustainability claims on packaging or actively promoted their sustainability actions through marketing efforts.
The results from a March 2014 year-over-year analysis show an average annual sales increase of two percent for products with sustainability claims on the packaging and a lift of five percent for products that promoted sustainability actions through marketing programs.
A review of 14 other brands without sustainability claims or marketing shows a sales rise of only one percent.”
Some brands, such as Ben & Jerry’s, don’t make the Ethisphere’s list – did they even apply?
Nevertheless, they are strongly perceived by consumers as being a green ethical brand.
It all comes from their packaging and their direct marketing strategy:
Of course, they advertise and communicate like anyone else – maybe less though -, but they are extremely active on social networks, talking and interacting directly with their consumer-base, showing them how good they are to farm animals, to the Planet through their packaging, distribution methods, etc.
They studied and know exactly who their markets are (a Ben & Jerry’s regular client might only rarely buy from Häagen-Dazs and surely never from Baskin-Robbins and vice-versa), therefore they know ‘where’ to find them and communicate directly with them.
Ben & Jerry’s or Baskin-Robbins clients may don’t know of the Ethisphere’s list – which is more a corporate world thing (the Häagen-Dazs clientele might be more aware of it to some point) -, but on the other hand, these clients are more familiar with the FairTrade logo they can encounter daily in supermarkets worldwide.
Mary Jo Cook, FairTrade USA’ Chief Impact Officer, says that they noticed that “if price and quality are similar, most consumers would likely switch from one brand to another if it is associated with good causes.”
She adds that “third party certification schemes are trusted by consumers, who are suspicious when companies set their own standards. Adding the Fair Trade Certified label to a product results in sales increases of about 10%, and a substantial segment of consumers is willing to pay 5 to 10% more for a product bearing the label.”
Nevertheless, not all consumers react the same way towards green labels.
According to Nielsen, “Millennials (age 21-34) appear more responsive to sustainability actions.
Among global respondents in Nielsen’s survey who are responsive to sustainability actions, half are Millennials; they represent 51 percent of those who will pay extra for sustainable products and 51 percent of those who check the packaging for sustainable labeling.
Regionally, there are wide gaps between younger and older respondents in the Asia-Pacific and Middle East/Africa regions. In these largely developing regions, Millennial respondents in favor of sustainability actions are three times more agreeable, on average, to sustainability actions than Generation X (age 35-49) respondents and 12 times more agreeable, on average, than Baby Boomer (age 50-64) respondents.”
Amy Fenton, Nielsen’s global leader of public development and sustainability, explains that “it’s no longer a question if consumers care about social impact.
Consumers do care and show they do through their actions. Now the focus is on determining how your brand can effectively create shared value by marrying the appropriate social cause and consumer segments.”
That’s the Ben & Jerry’s story!
And to a lesser extent the currently fast rising Michel et Augustin who are using branding and marketing strategies and tools very similar to Ben & Jerry’s.
But it means also that your company is continuously under scrutiny from your clients – and employees:
Your customers will vote with their wallets if they find you culprit of lying – Nike, Nestlé, or Dole among many learned at what time or the other of their corporate history the cost of publishing claims too far off from their actual managerial style or strategic decisions.
CBD Marketing’ Maria Omar concludes by saying that “third party certification schemes definitively lend to brands integrity, but to best navigate consumers’ quality expectations, brands must listen… to what is being discussed to online forums and social media platforms.”
As we repeat again and again in these pages, successful branding is much more than a cute logo and a clean-cut marketing plan.
Successful branding is a very complex job that takes into consideration so many parameters that we need a great number of articles and forum discussions to cover them all – and we are far to be done!
Are you in charge of branding in your company?
How are you managing it and how successful are you?