Ethical Business vs Consumer Frustration

James Meldrum, co-founder of the first food Australian food business to be certified as a B Corp, Whole Kids, draws on new research and his own experiences to reflect on what corporations can really do to break through the consumer skepticism and frustration around ethical business.  

For all the time, energy and resources that business have dedicated to building a brand with sustainability at its heart, most consumers are simply not believing all the messages.

What can business can do to break through the skepticism and consumer frustration?

The Accenture survey found that poor engagement from consumers with the business sector’s sustainability efforts may be partly explained by the focus of companies on relaying on abstract metrics and measurement tools. The report notes that “perhaps driven by concerns over ‘greenwash’, and informed by an internal focus on measurement and reporting, business has collectively decided that the way to engage consumers on sustainability is to present more facts and figures to appeal to rational decision-making”.

In a nutshell, this means companies are producing reams of data, graphs and analysis to ‘prove’ that they are making efforts to be more sustainable. Who hasn’t come across a company’s website and found a massive tome detailing their sustainability activities and results? However, while such reports may speak to reporting agencies and other corporate interest, they fail in communicating how these benefits relate to the lives of their customers and people in general.

While it is important for businesses to produce the ‘hard’ evidence and quantifiable data to support their sustainability claims, they also need to understand how to communicate these benefits on a more emotional level to consumers.

The report survey found evidence to reinforce this point: “companies are missing an opportunity to frame sustainability in terms of their positive impact on the health, wealth and livelihoods of their customers and the communities in which they operate”.

And it’s an opportunity that is leaving many consumers with unmet needs and frustrations. For companies that can close this gap, there are significant future benefits. Consumers are becoming more aware of the ethical and environmental performance of businesses and will rewards those brands are can clearly demonstrate (in a language that customers understand) how they are benefiting the planet and communities. Loyal customers are also more likely to refer a brand or product to their friends.

Think of those businesses that are connecting deeply with customers on an emotional level by effectively communicating their purpose, social and environmental commitments and, more importantly, evidence of their community and environmental impact: Patagonia, TOMS Shoes,Method and Wholefoods Market.

The Accenture report suggests companies pursue three imperatives to better engage companies:

Companies must promote a commitment to honesty and transparency

While this may seem obvious, one of the key problems here is the depth of commitment that companies are willing to make. I mentioned in a previous blog post that there are significant differences between operating a business with a deep commitment to a core purpose built on sustainability and positive social/environmental impact, and developing corporate social responsibility (CSR) programs and other marketing-driven activities that may not be truly embedded within an organisation’s structure and culture. Indeed, the Accenture report notes that “consumer perceptions will be formed not only on the messages you [as a business] promote, but on the way you define and articulate your purpose, and act upon it in the most transparent way possible”.

Companies must look to innovate to genuinely improve the lives of their customers

Many consumers are already engaged on environmental and social issues, and many are active in looking for information to assess how a company is performing in addressing these issues. It is important to recognise that consumers can engage a company on different issues and on different levels. What may be important for one group of consumers may be immaterial to another. For example, a food company may be scrutinised by one set of consumers on that company’s efforts to reduce childhood obesity, while another group of consumers may be more interested in that company’s performance on addressing ethical ingredient sourcing. The challenge for a business is to understand the breadth of social and environmental issues that their customers are concerned about in their daily lives, and what role (if any) that business can participate in delivering tangible improvements.

Companies must communicate more overtly throughout the consumer journey, to enhance their credibility as they move from ‘marketing’ to ‘mattering’

The report suggests the key action here is to move from communicating incremental efforts and outputs to clearly demonstrating a credible purpose and impact. Where communities are experiencing immediate and urgent social and environmental issues (for example, land degradation, air and water pollution, inequity in the provision of social services, and so forth), people are turning to businesses in their local markets to, in one sense, “prove their value” and why they matter to consumers. Companies need to show “how they make a meaningful difference to [people’s] quality of life”.

About the Author: James Meldrum is a co-founder of Whole Kids. Whole Kids is the first food Australian food business to be certified as a B Corp and one of the founding members of B Corporation Australia. The company aims to bring about long-term sustainable change in the way food is sourced, manufactured, distributed and ethically marketed to children (and families).