Ipsos Corporate Reputation

It’s the environment, stupid!

Environmental concerns are no longer just pressing ethical issues, but questions of financial prudence. Over half of British consumers feel we are experiencing a climate crisis, and over one third say they would switch or boycott a financial organisation if its investments have a detrimental environmental impact.

Despite big concerns around Covid-19, the environment remains a priority for the public, and businesses will be expected to continue the transition to a sustainable economy in the post-crisis period.

Whilst it doesn’t roll off the tongue with as much zest, James Carville’s ‘the economy, stupid’ slogan is aptly modified for Larry Fink’s announcement earlier this year that BlackRock would base future investments with environmental sustainability as a central goal… ‘It’s the environment, stupid!’. If anyone could ‘wake up’ the market to the tipping point which has now been reached around the environment, it is the Chief Executive of the world’s largest asset management firm. “Awareness is rapidly changing” wrote Mr Fink in the company’s annual letter, “and I believe we are on the edge of a fundamental reshaping of finance”. This has been compounded more recently, with the announcement that the UK’s biggest pension fund, the government-backed National Employment Savings Trust (Nest), will begin divesting from fossil fuels, and BlackRock “launching a selection of ESG multi-asset ETFs, to provide investors with a cost-efficient, transparent and sustainable way to invest”.

Data from Ipsos’s 2020 Sustainable Business Monitor survey amongst the British public echoes these sentiments. With a majority of the public now feeling we are dealing with a climate crisis, it appears that cash may no longer be king in investments. Only 21% now claim to care more about financial returns on investments than on whether the financial provider is ethical in how it invests money. This is compared to 28% of the public who prioritise ethics over financial returns and 26% who feel they should be given equal footing. Even allowing for the possibility that consumers may not be quite so ethical when faced with this trade-off in reality, it is clear that there has been a change in the drivers of investment decision making.

Returns on investment or ethical considerations?
Views on Climate Change

The growing imperative for investors to prioritise companies with a good sustainability track record is brought into sharper focus when looking more closely at the attitudes of millennials. Findings from the Ipsos Sustainable Business Monitor show that 54% of 18-34 year olds would be concerned about investments in Oil and Gas, compared to 47% for the UK public overall. This isn’t limited to the UK either; sustainable investing interest among US millennial investors jumped from 84% in 2015 to 95% in 2019, according to Morgan Stanley’s Institute for Sustainable Investing.

Which sectors concern the public regarding investments?

So, what does this all mean? Unsurprisingly, that Fink is right.

Over one third of those asked said that investment in projects or companies that have a detrimental environmental impact would lead them to ‘switch from’, ‘stop using’, or ‘boycott’ a financial organisation. Indeed, sustainable investing is ranked alongside executive remuneration – an issue that has a long track record of being a strong driver of negative opinion for the finance sector.

Switching / Boycotting financial organisations

This sentiment is further reflected at a global level when looking at Ipsos data from the recent Earth Day 2020 report, highlighting that even when set against the crisis situation that COVID-19 has presented, concerns around the environment remain steadfast. Over 7 in 10 people around the world agree that climate change is as serious as the pandemic, whilst 65% agree that in the economic recovery from COVID-19, it’s important that government actions prioritise climate change.

Seriousness of climate change in comparison to COVID-19
Support for a 'green' economic recorvery from COVID-19

Recognising the growing commercial opportunity facing the sector, and the long-term risk of investing in environmentally unfriendly industries, Fink notes that “as a fiduciary, our responsibility is to help clients navigate this transition [the reallocation of capital]. Our investment conviction is that sustainability and climate-integrated portfolios can provide better risk-adjusted returns to investors”.

But where does this leave industries which have been traditionally harmful to the environment, such as the oil and gas industry, for a long time the bedrock of investment portfolios and still an essential service despite growing environmental concern?

In light of BlackRock’s position, The Economist wrote: “[t]o cynics, all the climate-friendly noises amount to little in practice, since few people are ready to make carbon-cutting sacrifices that would force oil firms’ hands. But noises are sometimes followed by action. Should they be this time, the 2020s may be do-or-die for the oil industry”.

It isn’t a case of ‘adapt tomorrow or die’ for fossil fuel companies however, and Fink makes this clear, forecasting “the energy transition will still take decades”. Citing fairness and justice, “we cannot leave behind parts of society, or entire countries in developing markets, as we pursue the path to a low-carbon world”. The demand for energy will continue whilst technology works to bring cost-effective replacements to conventional fuel sources, but it is incumbent on the sector to aggressively pursue cleaner energy; not only from an ethical perspective, but also in order to remain an attractive investment. The same is also true for a number of other sectors which have for a long time been harmful to the environment, and must adapt with the new way of sustainable investing.

Companies from within the fossil fuel and investment sectors which are leading the transition to a more sustainable future are on the right path, reinforced by public support. This should not be derailed. Communicators in these sectors therefore have the opportunity to maintain messaging around this transition, but with fairness in mind, should also remain sensitive to the societies whose energy programs are not as developed as some of the leading world economies. The transition to sustainable investing will need a collective effort – innovation from industry, reallocation of risk, government support and sustained societal scrutiny, but in adopting Fink’s position, it should be worthwhile effort for investors, producers, and consumers, from both an environmental and a financial perspective.

Contact: Alex Russell - Email | LinkedIn

Amid the uncertainty of the pandemic, the S of ESG is coming under greater scrutiny

Actions on E, S and G in tandem remain essential to corporate reputation

As ESG has surged up the consumer agenda, new Ipsos data shows that improving society is identified as the top priority for multinationals among consumers across the globe – perhaps not surprising given the social implications of the pandemic. While fundamental issues such as safe working conditions are seen as most important here, each company should carefully consider how to adapt its operations to improve sustainable business practice. Companies should continue to pursue actions on all three pillars of ESG though. Not just because E and G remain critical in the public’s eyes, but also as it – as we should all know now – makes good business sense to do so.

Companies’ role in creating shared value

Companies are increasingly assessed on the extent to which they bring ‘net benefits’ to society. Especially among the financial community and the media there is a focus on ESG: companies’ performance on Environmental, Social and Governance (ESG) issues that come with doing business. Not just because you ultimately shoot yourself in the foot if you run out of the natural resources you need, treat your staff unfairly, or become wound up in corruption scandals. No, also because doing the right thing has BECOME a source of value creation. Not least, this is because we – ‘the public’, consumers and employees – pay more attention to what companies do or stand for than we did a decade ago – be that their efforts to increase staff diversity & inclusion, meeting net zero goals, or paying their fair share of taxes.

In March 2021 Ipsos asked consumers across 28 markets to rank ESG priorities for multinationals. While all three aspects, ‘E’, ‘S’ and ‘G’, were seen as important, improving society (S) came out as the top priority, with 41% of the votes globally. Protecting the environment (E) followed at 31%, almost on equal footing with practicing good governance (G, 28%).

In 22 out of the 28 countries surveyed, improving society received the most picks as the top priority, with a majority of the vote share in Spain (54%), Poland (52%), Japan (52%) and Korea (50%).

These findings are not surprising in the context of COVID-19. Health & safety precautions in the workplace, as well as a desire for job security amid economic uncertainty, have, for many, become necessary concerns.

How should companies engage with the ‘S’?

Given the increased focus on the role of companies to contribute socially, where should they focus their efforts on the ‘S’ pillar of ESG?

Looking at which societal issues people want multinationals to address, our survey shows that improving working conditions and worker health & safety come top. This is true across all regions, from Europe to APAC, to Middle East-Africa, to LATAM through to North America. Potentially contributing here are new COVID-related concerns about ventilation, social distancing, face masks at work etc., on top of existing issues.   

Despite ample attention across (social) media for issues around gender equality and diversity, these topics came out lower down the list. Again, this holds true when looking in detail at the answers from people across different parts of the world. 

It’s impossible to give a blank slate answer to how companies can best create shared value on ‘S’. The priorities in the eyes of consumers listed above, give an idea. But what that means for each individual business is something that needs careful consideration. That’s why it’s so important for companies to engage with their stakeholders on these issues. Employees who feel their employer looks after them, will be more willing to go the extra mile: a ‘give’ for the ‘get’. Local communities who see that companies take their interests at heart, will be more open to dialogue and working together to create mutual benefits. Etcetera.

Ipsos advises businesses on how they should address ESG challenges and helps them to define, manage and communicate their priorities. A relevant example to multinationals is our advice on how to frame “benefits” of ESG strategies to consumers. As people aren’t driven by sustainability claims alone to take action (as they often feel they are doing enough already), it is most effective to couple these to an extra incentive personal to them. So instead of saying: “switch to renewable energy to reduce your carbon footprint” position this as “switch to renewable energy will save you money AND help you reduce your footprint”.

Finally, what’s left to say is that, as I have said before, investments in ESG issues should be financially responsible and prudent in their own right, giving shareholders a return on investment. Ultimately, genuine progress on ESG will help to protect companies’ social licence to operate and bolster their reputation.

For more information please contact:

Marloes Klop
Research Director, Corporate Reputation

Marloes.Klop@ipsos.com

Technical details about the survey

These are the results of a 28-market online survey conducted by Ipsos on its Global Advisor platform. Ipsos interviewed a total of 14,000 adults aged 18-74 in the United States, Canada, Malaysia, South Africa and Turkey, and 16-74 in 23 other markets. The survey was fielded between 19 February and 5 March 2021.

The sample consists of approximately 500 individuals in each of Argentina, Australia, Belgium, Brazil, Canada, China (mainland), Chile, Colombia, France, Germany, Great Britain, Hungary, India, Italy, Japan, Malaysia, Mexico, the Netherlands, Poland, Peru, Russia, Saudi Arabia, South Africa, South Korea, Spain, Sweden, Turkey, and the US.

The samples in Argentina, Australia, Belgium, Canada, France, Germany, Great Britain, Hungary, Italy, Japan, the Netherlands, Poland, South Korea, Spain, Sweden and the US can be taken as representative of their general adult population under the age of 75.

The samples in Brazil, Chile, mainland China, Colombia, India, Malaysia, Mexico, Peru, Russia, Saudi Arabia, South Africa, and Turkey are more urban, more educated, and/or more affluent than the general population. The survey results for these markets should be viewed as reflecting the views of the more “connected” segment of their population.

The data is weighted so that each country’s sample composition best reflects the demographic profile of the adult population according to the most recent census data.

Where results do not sum to 100 or the ‘difference’ appears to be +/-1 more/less than the actual, this may be due to rounding, multiple responses, or the exclusion of “don’t know” or not stated responses.

The precision of Ipsos online polls are calculated using a credibility interval with a poll of 500 accurate to +/- 4.8 percentage points. For more information on the Ipsos use of credibility intervals, please visit the Ipsos website.

The tech sector always bets that product quality will override privacy concerns

Probably the most common criticism levelled at the tech sector is the one about privacy – the sense that the tech sector, or government enabled by the tech sector, are collecting far more data on individuals than they should, and that the data is then being sold or used for unclear purposes. While the tech sector sticks closely to its cherished, and well-proven, ideology that positive user experience nearly always mitigates these concerns in practice, it is also true that the concerns of pro-privacy groups within society, and government, are getting louder and more prominent.

Stark evidence of this can be seen across two, relatively recent, product launches. Both of which have attracted major criticisms from privacy and digital rights campaigners, while at the same time being major commercial success stories.

Concerns around business and government use of personal information is high on a global scale

Let’s look at those concerns first – the 2020 Ipsos Global Trends survey[1] shows in stark detail the level of concern that exists around the world about what is being done by companies and governments using the personal data being collected from people when they go online.

A rise in private sector surveillance

So, bearing such concerns in mind, let’s examine the news coverage of Amazon’s Ring product line over the last few weeks. Ring is a video doorbell system, which seems innocuous, but with millions sold what you end up with is a potential surveillance network the size of which has never been seen before, and all in the hands of Amazon. And what has Amazon done with it? For one it initially entered into partnership with a large number of law enforcement agencies in the US that allowed them access to the videos it records without a warrant being required[2]. To quote from the Guardian, because of Ring “law enforcement are given a backdoor entry into private video recordings of people in residential and public space that would otherwise be protected under the fourth amendment”. While Amazon has recently extended its moratorium on sharing its facial recognition software with police, a ban it says that will stay in place until Congress creates the appropriate safeguards, it is puzzling why a similar approach to sharing data with law enforcement has not been adopted with Ring. Especially given the high-profile critique of the product by former Amazon software engineer Max Eliaser;

“The deployment of connected home security cameras that allow footage to be queried centrally are simply not compatible with a free society. The privacy issues are not fixable with regulation and there is no balance that can be struck. Ring should be shut down immediately and not brought back[3]

Now Amazon can certainly say that they are following the law as it exists and that the capabilities and requirements of the Ring product are all made available to the consumer at the point of sale. Amazon has acknowledged some of this controversy and has consequentially changed how police ask for video content, now requiring the police to ask for footage via the Ring Neighbors app, allowing local users to comment or assist as they judge best[4]. However, to a background of high consumer concern about how personal data is being used and with Ring cameras being described as “a threat to privacy at best and a danger to society and democracy at worst[5]”, critics may accuse Amazon of not thinking product features through a bit more carefully. That said, when they have a product that has shifted many millions of units in the US alone it is clear that, as ever, product utility quashes privacy concerns at point of purchase. A fact underlined by the 4.6 rating the Ring 3 has on Amazon.com, a rating based on 33,000+ reviews.

From surveillance to tracking

Enough with Amazon, I hear the tech fans cry, that’s just one of the major brands. Well, let's turn to Apple and its brand-new gadget - the AirTag. A device sold as the means to find things you have lost, via a Bluetooth signal that alerts sympathetic devices that are web-enabled. Perfect for finding your luggage, your car, or, as has been pointed out by a wide range of news agencies, the person you are stalking.

Apple has attempted to build in safeguards to prevent “unwanted tracking” but the slew of media coverage over the last few weeks that point out how ineffective those safeguards are in practice probably shows how little thought the designers of this product put into thinking about the downsides of this product compared to the potential upsides. The warning sound that alerts the user to unwanted tracking is easily missed, and while people with an iPhone might be able to find unwanted AirTags those with Android phones cannot (right now).

While plenty of apps, charmingly called “stalkerware”, exist to help one person track another, and there are other products similar to AirTags where the manufacturers have put far less effort into stopping them from being used for nefarious purposes than Apple has. However, part of the surprise here is that, as The Washington Post articulates well “AirTags show how even Apple, a company known for emphasizing security and privacy, can struggle to understand all the risks involved in creating tech that puts everyday things online[6]. This disconnect between a company that is often praised for its firm stance on personal privacy and the potential misuse of this product is vast and easily fixed with little effort. As Wired suggests “Apple leadership needs to give abuse survivors and experts a central place in its development process, incorporating their feedback from the start. Otherwise, the company will continue to make products that endanger people more than they help[7]”.

Responding to this wave of criticism[8] Apple has announced some changes – reducing the amount of time before an AirTag starts beeping once it is away from its owner's iPhone and promising an Android application as well. Just like Amazon with Ring its good to see Apple responding to the issue, but it again raises the question of how a product like this got to market with these issues when Apple usually takes these issues so seriously. That said, just as with Amazon’s Ring it is highly likely that this product will sell incredibly well despite any privacy concerns due to its sheer usefulness. In fact one industry analyst in Forbes[9] confidently predicts its success, and possible billion dollar revenue for Apple, due to the vast number of devices the product can connect to and the popularity of the Find My app among Apple product users.

Consumers value privacy – as well as products that make their lives easier

Ultimately the tech sector knows its customers very, very well and knows that while there are people who may not buy these products because of privacy issues there are far more people who will ignore those concerns and buy them anyway. Negative media coverage of the like described above will have very little impact on the level of individual customers. That said, increased media focus on perceived privacy issues reinforces some of the negative reputational themes that affect the tech sector and the brands within it and are currently fuelling many of the debates that are ongoing around the world among legislators thinking of new regulation. Innovative new products that skirt the edge of what is appropriate, or legal, when it comes to privacy is one thing, as long as they are profitable, but fuelling the fires of regulation is another. The tech sector may want to ponder this.

Article links

[1] Markets: Argentina, Albania, Australia, Belgium, Brazil, Canada, China, Chile, Colombia, Denmark, France, Germany, Great Britain, India, Indonesia, Italy, Japan, Mexico, Peru, Poland, Russia, Romania, Serbia, Saudi Arabia, South Africa, South Korea, Spain, Sweden, Turkey, and the United States. 

Method The survey for the 2020 edition was carried out online using the Ipsos Online Panel, and face to-face interviewing in Albania, Montenegro and Serbia. The results are weighted to ensure that the sample’s composition reflects that of the adult population according to the most recent country census data. Total global data has not been weighted by population size, but are simply a country average.

Fieldwork dates June-July 2019

[2] https://www.theguardian.com/commentisfree/2021/may/18/amazon-ring-largest-civilian-surveillance-network-us

[3] https://amazonemployees4climatejustice.medium.com/amazon-employees-share-our-views-on-company-business-f5abcdea849

[4] https://www.cnet.com/home/security/rings-police-problem-didnt-go-away-it-just-got-more-transparent/

[5] https://thenextweb.com/news/amazon-engineer-ring-should-be-shut-down-immediately-and-not-brought-back

[6] https://www.washingtonpost.com/technology/2021/05/05/apple-airtags-stalking/

[7] https://www.wired.com/story/opinion-apples-air-tags-are-a-gift-to-stalkers/

[8] https://www.bbc.co.uk/news/technology-57351554

[9] https://www.forbes.com/sites/timbajarin/2021/04/20/airtags-are-apples-next-billion-dollar-business/?sh=4f60c605d187

For more information please contact:

Carl Phillips
Director & Global Stakeholder Research Lead, Corporate Reputation

Carl.Phillips@ipsos.com