Socially-conscious companies: building stronger reputations

Corporate Reputations have always been strange entities by nature. Public perceptions of what an enterprise stands for cannot be directly manufactured by the companies themselves. They must be earned and the elements that drive them – industry-specific perceptions, profitability, governance, credibility and ethics, just to name a few – have become exponentially more complex in the past decades.

The evolution of the consumer market, laws, investor interests, technology and business models has been so inextricably linked and staggeringly fast that Communication professionals who work with reputation have faced an increasingly complex challenge to come to grips with it.

A relatively recent and fascinating development in that saga is the rise of the socially-conscious company.

A clear example of that trend is that, in the past few months, luxury brands have been announcing that they will no longer burn unsaleable goods - a common practice to preserve pricing ranges in that industry -, with Burberry being the latest one. The company also stated they will no longer use real animal fur in their products. 

In 2008, the Economist Intelligence Unit conducted a survey that already hinted at these developments, which also go by the name of Corporate Citizenship:

Source: Economist Intelligence Unit Survey

While Corporate and Social Responsibility (CSR) is nothing new, we are seeing increasing numbers of companies who are taking it to a whole new level, one in which what used to be seen as risks to be mitigated, is being turned into opportunities to strengthen the positive perceptions from the general public, their communities and several important stakeholders.

Companies who are socially-conscious - and who communicate that commitment effectively to all their main stakeholders – are seeing increasing advantages over those who are not, something underpinned by technology evolution and the growing power of individuals in driving consumer trends. The ability of ordinary citizens to influence their fellow consumers – either for praising companies’ products, services and practices or for lambasting them – has never been greater than it is today.

Another example of that trend: sportswear manufacturer Adidas has been grabbing headlines by selling over one million tennis shoes made from plastic reclaimed from the oceans. A very smart move by the company and one that has clear benefits to multiple communities across the world.

While we are undergoing the Fourth Industrial Revolution, all aspects of production, manufacturing and all types of business activities have to include a social element, probably greater than ever before. Just recently, Joe Kaeser, CEO of Siemens AG, wrote a very interesting article for the World Economic Forum (WEF) about the exciting transformations happening now but also the great responsibilities for companies to ensure as many people as possible benefit from these deep changes in how corporations work. Kaeser argues that “the business of business should be to create value for society”.

Source: Joe Kaeser, World Economic Forum article

Last year, I had the privilege of attending several very interesting lectures while on a business trip to Europe. One of them was delivered by the VP of a large European Financial Services firm and he stated that his company had committed to help the UN solve the problem of hunger in the world. Bold statement indeed but they have committed to sharing their profits in order to help people all over the world, many of whom may never even get to know their brand nor become their customers.

The other lecture that stood out for me was one by a retired gentleman – with an extraordinarily distinguished, decades-spanning career in Corporate Communications – whose last role was that of global Head of Comms for one of the major energy giants. He shared with us that said company had defined that one of their fundamental strategic pillars for future growth was directly linked to how effectively they are becoming a socially-responsible company. 

Corporate reputations continue to be complex in their nature and their drivers difficult to identify but one thing is becoming clear: companies who have a social purpose and commit to bold actions to help solve global problems – and communicate it effectively - will not only be doing good: they will have a competitive advantage over the ones that do not.

The age of socially responsible companies is just beginning.

?Daniel Medina is a partner and co-founder of ZM&Associados