Why delivering social and economic value is good for business
The rise in ethical consumerism is impacting the companies and brands that we have all come to rely on. Palladium's Eduardo Tugendhat writes for Thomson Reuters Foundation News.
Business and ethics have never been more closely linked than they are today. Consumers and the next generation of workers demand better business practices and want to know about a company’s history, goals, and operations before handing over their loyalty.
From a 2016 Label Insight study, 94% of consumers are more likely to be loyal to a brand that offers transparency, and 73% were willing to pay more for products that offer complete transparency.
This rise in ethical consumerism is impacting the companies and brands that we have all come to rely on.
Customers want to know the provenance of what they consume and the effect of their purchases, from the environment to the communities where they were sourced, to how a business will use its profits from the sales. They expect businesses to deliver social and economic value.
Larry Fink, founder and CEO of the world’s largest investor BlackRock, recently threw down the gauntlet for businesses to contribute to society or risk their future growth: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
The positive social and environmental impact of a company is not just becoming a license to sell; it is becoming a license to operate.
Yet despite these calls for companies to do the right thing, many find it difficult to implement scalable and profitable strategies for growth that are inclusive and benefit all of society.
This is partly because social impact has been seen as separate to real commercial strategy - at best, well-meaning corporate social responsibility (CSR), and at worst, a public relations cost. Even the most successful CSR initiatives can suffer from short-term thinking that misses real opportunities to impact communities – and their business’ bottom line.
The key to sustainable prosperity is to recognise that a proactive contribution to society is not just the right thing to do; it is an opportunity for businesses to realise their long-term commercial goals.
But what opportunities are there exactly?
There are three key areas ripe for exploration: building sustainable supply chains, bridging the skills gap, and accessing hard to reach markets.
This article was orginially for published for Thomson Reuters Foundation News. Please click here to read the full article.