BUSINESS • CULTURE 09.24.19
Capitalism got a "modifier" last month when the Business Roundtable (BRT) made "a small, symbolic but significant move," announcing "shareholder value" and "mere wealth creation" are no longer seen as the "sole" objectives of business, Fortune reported.
BRT's new Statement of Purpose "outlines a modern standard for corporate responsibility." It was signed by 181 CEOs, "who commit to lead their companies for the benefit of all stakeholders" by
- Delivering value to customers
- Investing in employees
- Fostering diversity and inclusion
- Dealing ethically with suppliers
- Supporting communities and the environment
- Generating long-term value for shareholders
The influential association of CEOs of major U.S. companies overturned the conventional business wisdom of "shareholder primacy" that holds profit is "the only social responsibility of business," Fortune.
Axios wrote "several unambiguous social trends" are calling for American CEOs to be "de facto politicians." Employees are insisting companies stand for more than profits, consumers are buying based on a brand's "social purpose," and the media is holding companies accountable.
"It's been a journey" that was necessary because “people are asking fundamental questions about how well capitalism is serving society,” said Johnson & Johnson CEO, Alex Gorsky, Fortune.
It doesn't matter if the issue is progressive or liberal. "Brands with the best reputation among consumers are the ones that stand for issues," according to a March Axios/Harris poll.
"Belief-driven buyers" make up almost two thirds of consumers. They look beyond price to the "values and purpose" of a brand because they believe their purchases make more difference than their vote. They're looking to brands "to fill a void in global governance," according to Edelman's Trust and Brand's Report.
"My purchase of products each week makes more of a difference than my vote every four years in the broader debate on issues such as tolerance, environment and education. I want brands to stand with me. An enduring consumer relationship is now built on the basis of delivering on the promise of Brand Democracy," Edelman.
Consumers look for social purpose and trust backed by action.
The buying process is becoming less about what’s convenient and cheap and more about what’s sustainable and honorable, Forbes wrote.
Consumers reward trust. Sixty-eight (68%) percent said if they trust a brand they "will buy first, stay loyal to, advocate for and defend the brand," Edelman How Brands Can Earn Trust.
"People’s expectations for brands have evolved" from "function to belief." They still expect a reliable product and a gratifying customer experience, but that's no longer enough. Consumers know that brands have the "power to effect real change, and they will place their trust in brands that use that power on their behalf," Edelman's Trust Barometer Special Report.
Eighty-one (81%) percent of consumers say they "must be able to trust the brand to do what is right.”
Upwards of 70% "link purchase" to trust in a company's supply chain, reputation, values, environmental impact, and placing customers before profit.
More than half (53%) agree that every brand has a responsibility to get involved in at least one social issue that does not directly impact its business.
Edelman implicates growing uncertainly in the world, pressure from challenger brands, and people looking to brands to "provide a large-scale moral compass." They "want business to take the lead on change, and they want to feel as if they’re making an impact,” Adweek reported.
Brands aren't getting it right.
IBM CEO, Ginni Rometty said "Society gives each of us a license to operate. It's a question of whether society trust you or not," Fortune.
More than half (56%) of respondents think brands are "using societal issues as a "marketing ploy" or "trustwashing," Edelman In Brands We Trust?
Only one out of three said they "can trust most of the brands they buy and use."
And only 21% said they "know from personal experience" the brands they choose "keep the best interests of society in mind."
"Digital Disrupts Trust."
Earning trust in the digital era "can make or break" consumer trust. Fifty-five (55%) percent of consumers say that trusting a brand now matters more to them because they're worried about personal data and customer tracking, Edelman.
Data privacy, fake news, false information, and the pace of innovation "weigh heavily" in building brand trust, according to Edelman Trust in the Age of Digital Disruption.
Building a "digital trust machine."
Digital has created data challenges which can lead to "badly executed digital marketing" that undermines trust.
On the flip side, digital offers new ways to boost "relationships with consumers directly" and "solidify trust" by creating a "digital trust machine" that includes investing in trusted platforms and engaging trusted influencers.
"Search engines rank as the single most trusted online source for consumers." Investing in SEO should be a high priority since organic search leads to considerable site traffic.
Focus on helpful content and creative, personalized storytelling. Seventy-four (74%) percent of consumers say they found ways to avoid advertising, using ad blockers and changing media habits," Edelman.
Engage trusted influencers. Sixty-three (63%) percent say they trust what influencers say about a brand more than what the brand says about itself. They trust “a person like me,” first (38%). Secondly, an expert (35%). Least, a celebrity (13%), found Edelman.
Repeat the brand message across different channels. Only 35% trust a brand after one engagement. Trust strengthens after the message is seen repeated across three different channels, reaching 97% after six engagements.
Sequencing is important. Lead with peer voices and follow with social and paid channels to build the most trust, Edelman.
What can brands do to build trust?
Understand what makes people trust a brand. Product quality ranks 85% and ethical behavior is 81%, according to the Edelman Trust Barometer.
Align your strategy with consumer priorities to sustain your business and customer base in the long run, Forbes.
Understand that taking a stand could make some customers abandon your brand. Still, the "risk is worth the potential payoff," Adweek.
Make ethics a part of core brand identity by aligning it with a unique moral philosophy, socially responsible cause, or commitment to ethical practices, and integrate it into you company name, logo and marketing materials, Forbes.
Corporate responsibility: past and present.
"The idea of corporate responsibility has been around at least since the 1800s, and you can find it even farther back than that in the ancient Greeks," Knowledge@Wharton podcast.
In 2019, "there has to be some self-evaluation of how late-stage capitalism is dealing with some of the new challenges," former U.S. Secretary of State, Condoleezza Rice told Face the Nation.