Brand trust is hard-won and easily lost.And once lost, sales decline, customers leave, employees become disillusioned and growth slows. In the Mad Men era the brand was the product. Digital changed the narrative to a consistent branded experience across physical and digital interactions. Social media platforms heightened company interest. Today the brand is the keystone of a company’s reputation. The media shines its light into the dark corners of global supply chains, treatment of employees, customer complaints, carbon footprints and colonial histories. Bad news does not disappear into tomorrow’s fish and chip papers. The digital footprint lives on long after the event. The days when a brand was an iconic logo and witty strapline have gone. As its guardians, marketing teams are facing a fresh challenge.
Societal Leadership is now a core function of Business.
Edelman, a global communications firm, believes that trust is the ultimate currency in company and stakeholder relationships. Its annual trust and credibility survey, the Edelman Trust Barometer, has been running since 2000.
In 2012 the Barometer characterised trust as “Delivers consistent financial returns”. It predicted that trust needed to move from a “licence to operate” to a “licence to lead”. “Listens to customer needs and feedback” was the future primary attribute. Ten years later it is hard to find a company whose strategy does not include “customer focus”.
The 2022 Barometer headline summarises that “Societal Leadership is now a core function of Business”. This conclusion has been drawn from interviews with over 36,000 respondents in 28 countries.
Companies still have to deliver profits.
Traditionally business leaders have adopted Friedman’stenet that a company’s only responsibility is to its shareholders. Recent criticism of Unilever’s financial performance blamed its sustainability focus. A Daily Telegraph journalist asserted, “Unilever has been drifting for years devoting all its energies to pious value signally but bereft of ideas and imagination and with about as much energy as a cup of Horlicks”.
Unilever’s advertising has more than a whiff of greenwashing but it is too simplistic to blame “pious value signalling”. Analysts base share price predictions on three factors: results, strategy, and management. During Paul Polman’s 10 years as CEO, Unilever’s share price tripled and its positive societal impact increased through the Unilever Sustainable Living Plan. Proof that both are possible with the right leadership.
Creating Shared Value increases economic and societal value.
The creation of societal value alongside economic value is not new. In 2011 Professors Porter and Kramer defined the concept of Shared Value in the Harvard Business Review, as “the policies and operating practices that make a business more competitive, and at the same time advance the economic and social condition of the communities it operates within.” They explained that Creating Shared Value (CSV) differs from Corporate Social Responsibility (CSR).
Purpose guides decision-making.
Some might argue that whilst you can deliver both economic and societal value simultaneously, one grows at the expense of the other. Alex Edmans, a professor at the London Business School with a background in investment banking, calls this pie-splitting, i.e., robbing Peter (investor – profits) to pay Paul (stakeholder – value) and vice-versa. In Grow the Pie, he explains that there is mutual benefit from pie growing where investors and stakeholders are on the same team, with profits as the by-product of value.
The company’s definition of purpose guides decision-making and trade-offs to grow value. Where purpose is defined as “why an enterprise exists – who it serves, its reason for being and the role it plays in the world. Purpose is what wouldn’t happen if you didn’t exist.”
Building for a better society – Skanska
To connect for a better future by enabling inclusive and sustainable digital societies – Vodafone
Making the best products, causing no harm to the environment, and using profits to implement solutions to environmental crises – Patagonia
Shared Value could become law.
Many companies publish a sustainability report alongside their Annual Reports and Accounts, though the emphasis tends to be on climate and carbon rather than societal value. In the next year, new directives will make this mandatory.
The UK Government is introducing a TOMs (Themes, Outcomes and Measures) framework for their procurement process, providing a minimum reporting standard to measure and justify the social value outcomes in their contracts. The weighting is expected to be 10%.
The Better Business Act (BBA) campaign aims to change the UK Companies Act 2006 so that businesses act in the interests of all stakeholders, rather than shareholders alone. Certified B Corporations, or B Corps, are companies verified by B Lab to meet the highest standards of social and environmental performance, transparency, and accountability. This commitment requires a change in the company’s Articles of Association.
In Europe, a new Corporate Sustainability Reporting Directive is about to be launched. A “game-changer” says EY.
Restoring the cycle of brand trust.
Marketing is frequently accused of greenwashing in sustainability campaigns and communications. To restore the cycle of trust, Edelman advises that companies have to provide tangible evidence of progress, focus on long-term thinking, and provide credible information that is trustworthy, consistent, and fact-based. This case study from Nestle demonstrates how brand trust can be restored by creating shared value.
In 2002, Nestle’s brand was under attack. Two top authors withdrew from the Hay Festival, which was sponsored by Nestle, attracting headline news. Germaine Greer and Jim Crace objected to the marketing of powdered baby milk to the developing world. One, the advertising implied that powdered milk was better than breast milk (which is free), and secondly the mothers in the developing world did not have access to clean water and used contaminated sources, putting the baby’s health at risk. Germaine Greer was incandescent with rage when Nestle proposed that the mothers use bottled water. Whilst Nestle’s spokeswoman said that the authors’ concerns were out of date, and the firm’s baby formula marketing policy was in line with the World Health Organisation marketing code, the damage was done.
Fast forward to 2022, and Nestle’s latest Creating Shared Value and sustainability report 2021, with KPIs validated by EY. Its purpose is, “Unlocking the power of food to enhance the quality of life for everyone, today and for generations to come. We are the Good food, Good life company. We believe in the power of food to enhance lives.” Nestle has restored brand trust and grown its share price.
Chief Marketing Officers are a catalyst for change.
Research in 2017, suggested that the practice of CMOs leading societal responsibility efforts was embryonic. Early adopters demonstrated a positive impact on the marketing function’s influence and hence performance. Due to their networks and external perspective, marketers are uniquely positioned to raise the awareness of shared value. As the authors of Sustainable Marketing concluded: “With the change from shareholder capitalism to stakeholder capitalism being acknowledged, marketing has the attention of all stakeholders, so now is the time to communicate and collaborate.” It’s time to be a changemaker.
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Klara Futura is a consultancy helping businesses and business leaders to grow and become resilient: strategy, customer experience, coaching and communications.