Ipsos Corporate Reputation

Reputation on the rise: Safeguarding your brand reputation through investment in cyber security

There is a difference, it seems, between knowing something and really knowing something. As a professional of 15 years’ experience in the brand reputation space there are a number of issues that I have to talk to clients about again and again, where it is clear that the people I am speaking to know, and largely agree with, what I am saying… but then either fail to take the appropriate action or come back and ask the same question a year or so later. There are a number of these issues; whether general public marketing affects the opinions of politicians is one, as are questions about how to improve trust.

One that is perhaps less obvious a question is the importance of cyber security to reputation. However, it is a topic that has come up frequently over the years, both from clients asking about it through to Ipsos writing articles and thought pieces on the subject. Myself and colleagues wrote about the cybercrime threat to reputation back in 2016 and 2017, and warned that businesses were perhaps overconfident and underprepared for the risks posed by cybercrime in both 2018 and 2019.

Nevertheless, we still got the sense that despite our clients knowing that cybersecurity is a potential threat to their hard-worn corporate reputation, they somehow didn’t really take it seriously. I get that IT is less sexy than marketing and events when it comes to reputation management, but it is certainly as important. Losing data on a large scale strikes a blow against any company’s ability to portray themselves as competent, well managed or trustworthy.

Nearly 9 in 10 senior industry leaders invest in cyber security to protect the reputation of the companies they work for. It’s high time you joined them.

Bearing all this in mind, I was enthused to see data in Ipsos’s 2020 Captains of Industry survey that seems to indicate senior business leaders are not only cognizant that cybersecurity is important from an operational perspective but also from the point of view of reputation management.

When asked directly to give the main reasons for investing in cybersecurity, nearly nine in ten Captains of Industry said that it was “to protect our reputation”, with 30% saying that it was the most important reason. Only business continuity was more important. This is a huge endorsement of cybersecurity as a reputational shield, and one that is being embraced by business leaders themselves rather than being forced upon them by shareholders or customer demand (the more traditional triggers for investment in cybersecurity).

Given the importance of reputation – it is now the third ranked factor that Captains of Industry look for when judging an organisation – the way cybersecurity is being directly linked to reputation is huge positive and suggests that business leaders (and my clients) are beginning to understand its importance. I would even go further and suggest that cybersecurity not only protects a firm’s reputation, but it also safeguards its financial performance and perceptions of the quality of its management, the top two factors listed by Captains of Industry when judging a company or organisation.

While I am under no illusion that questions about the importance of cybersecurity to reputation are going to go away, hopefully these results indicate that we have reached a tipping point and that soon cybersecurity will take its place alongside the other recognised and respected tools of reputation and brand managers.

For more information please contact:

Carl Phillips
Director & Global Stakeholder Research Lead
Corporate Reputation,
Technology Sector

Carl.Phillips@ipsos.com

Fashion Victims: The Losers in the Fast Fashion Race

What can comms. leaders learn from the challenges facing companies in the fashion Industry?

The fashion industry has been under the spotlight recently for all the wrong reasons. The industry is going through a period of rapid change, brands and retailers are increasingly exposed to Environmental, Social and Governance (ESG) issues in their supply chains, resulting in an intensified threat to reputation. Just last summer Boohoo was caught up in allegations around poor working conditions and allegations of paying employees in their supply chain below the minimum wage.

The restrictions imposed on consumer life throughout the COVID pandemic have acted as a rare speed bump on an industry that has otherwise been evolving unabated at a frightening pace. Ipsos Sustainability Monitor (SBM) 2020 data reveals that over half of consumers (55%) are buying less clothing than they were pre-pandemic. With the world on pause we ask what’s next for the fashion industry? How do brands best navigate these issues? How engaged are consumers in these issues? And what can comms leaders, across all industries, learn from the challenges being faced by the fashion industry?

Fast Fashion: a quick overview

Fast Fashion: “Inexpensive clothing produced rapidly by mass-market retailers in response to the latest trends.”

Since the late 90s, globalisation has opened-up Western markets to cheaper labour in the East. Cheaper clothing and ever shortening fashion cycles (including the development of the weekly ‘micro season’) means that clothing production doubled between 2000 and 2014, while the average number of garments purchased by the average Western consumer increased by 60% (McKinsey).[1]

Fast fashion is fuelled by celebrity culture, fads and the 24/7 nature of social media. SBM 2020 data shows that three-quarters of consumers agree that clothing and fashion are becoming cheaper and more throw-away in nature. And while just 14% of consumers say they feel under increased pressure to keep up with the latest trends and fashion, this rises to 24% among the youngest group (18-34 year olds). The fashion industry (and fast fashion in particular) are associated with serious ESG issues, outlined below.

Figure A) ESG issues typically associated with fast fashion (and the wider clothing industry)

  • Environmental issues: The fashion industry is considered by the UN Conference on Trade and Development (UNCTAD) to be the second largest polluter in the world, after the oil industry (UN)[2]
  • Social issues: Forced/ slave labour, child labour, dangerous working condition… The Clean Clothes campaign reports wages in Eastern markets are typically a fifth of average living wage there.[3] Average working days are 14-16 hours, 7 days per week (Clean Clothes Campaign)[4]
  • Governance issues: Overproduction is a massive issue. More than half of fast fashion produced is disposed of in under a year, (McKinsey)[5] with consumers keeping clothing on average half as long as they did 15 years ago

1) Ethical considerations and the impact on purchasing behaviour

ESG issues around fast fashion and the clothing industry have been widely reported. As consumer awareness grows, we might speculate that ethical considerations will come to take on more importance in the minds of consumers. But how much impact do ethical considerations have over clothes purchasing decisions?

When it comes to what actually drives clothes purchase decisions, the more conventional levers such as price style and quality hold the most sway. None-the-less almost a third of consumers say that ethical issues are one of the top 3 factors that influence their decisions over clothes purchases (and 8% say that it is their primary consideration).

In the era of fast fashion it is perhaps surprising that ‘trends’ (keeping up with friends, celebrities, social media and advertising) is the least selected factor influencing clothes purchases. Caveats should be applied (the results are self-reported and people might underplay the amount of influence trends hold on them, the sample is 18+, missing a key demographic target for fast fashion, teenagers). But the result does suggest that fast fashion is concentrated not only in small proportion of the worlds markets (Western markets) but also within a small proportion of the population within those markets. A small number of people are likely to be responsible for a lot of clothes purchases. While 30% of consumers say they buy more clothes than they need, this rises to 42% among those that say ‘trends’ are a top 3 influencing factor, and 55% among those that say that ‘trends’ are the primary influence on their clothes purchases (SBM data 2020).

#1. Know your customer: For 3-in-10 consumers ethical issues are a key decision-making criterion in what clothes they buy. Whether your business is in fashion or elsewhere, there is clear reputational risk in not being aware of, or not fully understanding what motivates and what matters to your customers.  

Chart B: Ipsos SBM data 2020: Clothing and fashion purchase decisions

2) Consumer disconnects over ethical issues

What consumers want they don’t necessarily get

Ethical issues play an important secondary role in clothing purchase decision making but what action do consumers think should be taken? Four-in-five consumers agree that brands and retailers should do more to help protect the environment and safeguard workers’ rights within their supply chains, and 77% of consumers say that clothing brands and retailers should provide more information. However, there is a large disconnect between what consumers want and what they get. Just 17% of consumers agree that the fashion industry provides enough information about the environmental and social impacts of the manufacturing of clothes.

Consumer good intentions not necessarily reflected by their actions

When it comes to taking personal action, although 56% of consumers say that if a clothing brand was associated with environmental pollution in its manufacturing process, they would be putting off from buying clothing from that brand, just 28% of consumers have researched brands that provide ethical clothing.

#2. Be transparent: As globalisation has increased the complexity of supply chains in the fashion industry, it’s becoming harder for many brands and retailers to maintain transparency. Whether your business is in fashion or elsewhere, consumers want to be able to make informed decisions, they want to be provided with clear and complete information (and they probably expect you to do at least some (if not all) of the legwork).

Chart C: Ipsos SMB data 2020 & Ipsos Sustainable Fashion Survey 2018 data: The disconnect between consumer good intentions and their actions

3) What's to be done?

Consumers clearly want more ethical accountability from brands and retailers. But by what means do they want this delivered? In 2019 the Environmental Audit Committee (EAC) published its “Fixing Fashion Report”[6] making 18 recommendations to the government to help clean up the industry, including;

  • Mandatory environmental targets for fashion retailers with a turnover above £36 million
  • More proactive approach to enforcement of the National Minimum Wage with greater resourcing for HMRC’s National Minimum Wage team to increase inspection and detection work
  • The Government should publish a publicly accessible list of retailers required to release a modern slavery statement. This should be supported by an appropriate penalty for those companies who fail to report and comply with the Modern Slavery Act

The Ipsos SBM 2020 survey tested what level of consumer support there would be for clothing and fashion brands and retailers that adopted similar commitments through their own volition. Across the 8 statements tested by the SBM survey (see chart D) between 67% and 78% of consumers said that the measures would make them feel more positively about a clothing brand or retailer. Commitments to national minimum wage (43%) and proof of compliance with the Modern Slavery Act (40%) had the most ‘much more’ positive impact. There are notable differences by demographics.

18-34 year olds are much more likely to say that they would be ‘much more’ positive about brands across all of these measures:

  • 44% of 18-34 year olds said they would be much more positive about brands that set themselves environmental targets compared to 24% of 55+ year olds
  • 44% of 18-34 year olds said they would be much more positive about brands that made commitments to using sustainable materials compared to 28% of 55+ year olds

Women are also much more positive across all of the measures:

  • 46% of women felt much more positive about stores that set-up in-store schemes to help customers recycle their old clothes compared to 30% of men
  • 40% of women felt much more positive about brands that helped to reduce textile waste compared to 25% of men

Women and millennials with disposable income form a key target audience for the fashion industry. As ethical and ESG considerations climb up the agenda they are likely to hold more influence over brand reputation and consumer purchase behaviours. If your clothing range is targeted at younger consumers and women in particular, then commitments to the environment and the wellbeing of employees in your supply chain is quickly transitioning from a nice-to-have to a necessity.

#3. Collaborate with your customers: There is clear support for measures that help clean up the fashion industry and reputational rewards are available for brands that adopt similar commitments. Whether your business lies in fashion or elsewhere it pays reputationally to align your business’s commitments to those of your customer. Take pride in your commitments and collaborate with your customers.

Chart D: Ipsos SBM data 2020: Impact of brand and retailer ethical commitments

4) Conclusion & Recommendations: An opportunity to build brand reputation

Fashion at its heart is an outlet for self-expression, choice, freedom, communication, it’s a vehicle to bolster confidence, for consumers to feel good about themselves. Exploitation and corporate greed aren’t a great look for brands trying to make their customers feel good about themselves. And there’s evidence that fashion brands are starting to take a long hard look in the mirror.

Model examples   

  • Sustainable materials & Slow fashion - H&M offers a new ‘Conscious’ range. To qualify the product must contain at least 50% sustainable materials e.g. organic cotton or recycled polyester. Levi’s ‘Water<Less’ collection uses up to 96% less water in its denim production. Patagonia only uses sustainable materials in their outwear. They champion “slow fashion” by helping customers repair garments and encouraging customers to recycle and buy second hand
  • Circular economy – TK Maxx ‘Give Up Clothes for Good’ campaign has recycled 1.6m bags of clothing since 2004. They also have a zero waste to landfill target. M&S ‘Shwopping’ partnership with Oxfam 30million garments swapped and £21million raised for people living in extreme poverty. The circular economy is based on reusing and recycling materials rather than throwing them away
  • Codes of conduct – TK Maxx operates a ‘vendor code of conduct,’ committing vendors to use no child or forced labour, protect employee rights on wages, working hours and adhering to health & safety regulations in the workplace

Whether or not we see a return to business as usual on the high street as COVID-19 subsides, consumers are expecting more from businesses and brands, challenging them to perform a social purpose beyond simply turning a profit. This increased scrutiny presents a risk certainly, but with it also a growing opportunity. Ipsos Corporate Reputation Centre has 40 years’ experience in helping global businesses navigate reputational challenges.

Ipsos Recommendations

1) Know your customer – understand what issues concern them and to what extent it concerns them. How does this impact how they perceive your brand?

2) Transparency & third-party endorsements – good brand reputation is built on trust. Third party endorsements such as the Fair-Trade Foundation and the Impact Report are a means to showing your customers that you care and take their concerns seriously. Avoid shortcuts and greenwashing and practise what you preach.

3) Collaborate & take pride – show consumers that you are on their side, that you want to make life easier and more straight forward for them and that you can help bring clarity, speed and convenience to the purchasing decisions that they care about. Collaborate and work in partnership with customers towards shared goals.

Article links

[1] https://www.mckinsey.com/business-functions/sustainability/our-insights/style-thats-sustainable-a-new-fast-fashion-formula

[2] https://news.un.org/en/story/2019/03/1035161

[3] https://www.sustainyourstyle.org/en/whats-wrong-with-the-fashion-industry#anchor-environmental-impact

[4] https://www.sustainyourstyle.org/en/whats-wrong-with-the-fashion-industry#anchor-environmental-impact

[5] https://www.ellenmacarthurfoundation.org/assets/downloads/publications/A-New-Textiles-Economy_Full-Report.pdf

[6] https://publications.parliament.uk/pa/cm201719/cmselect/cmenvaud/2311/2311.pdf

For more information about how Ipsos can help you, get in touch:

Tom Cox
Research Manager
Corporate Reputation, Consumer Sector

Tom.Cox@ipsos.com

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