Ipsos Global Reputation Centre

Taking a stand – do the rewards of corporate activism outweigh the risks?

Corporate activism is both an opportunity and risk, with Council members acknowledging both sides of the debate in equal measure.
There is widespread acknowledgement that corporate activism is expected by consumers, but is also very hard to do well.
Authenticity is the key, with campaigns that are true to your corporate values having the greatest chance of success.

In 1966 Robert F. Kennedy made a speech in which he referred to a Chinese curse “may he live in interesting times”. The world was an uncertain place in the 1960s, with risk and opportunity both abundant.

It seems history is very much repeating itself as social and political disruption gathers pace, alongside the myriad opportunities being created by the digital economy.

So what’s the role of business given this backdrop? Can it be a force for progressive change in a world where anti-establishment beliefs are in the ascendancy? Or, indeed, will more companies choose to adopt a tone of ‘regressive activism’, for equally pragmatic or idealistic motives? More fundamentally, can the voice of business even be heard when the prism of fake news is applied to so much communication?

Well, Council members believe that businesses do have a licence, or even an obligation, to speak out on the big socio-political and cultural issues of the day (the environment, tolerance and diversity, and social justice are most often mentioned).

"BUSINESSES ARE PART OF THE COMMUNITY SO THEY SHOULD HAVE A VIEW. LEADERSHIP SHOULD NOT STOP AT FINANCIAL ISSUES."

This is nothing new – think of Lever Brothers, or Carnegie and Rockefeller in the US. In a world that seems more connected, but more polarised, than ever, the pressure is growing on businesses to connect with people in an authentic and meaningful way — to tackle issues that really matter to society as a whole rather than focusing purely on the bottom line.

In large part, Council members attribute this pressure to the growing expectations of customers, opinion formers and especially employees, who want to understand more about a company’s purpose and values, before they invest their money, time or goodwill. Nowadays what your business stands for is as important as what it sells. People want reassurance that businesses can be on their side, understand their issues and be prepared to fight their corner.

This is borne out by a 2016 Ipsos study across 23 countries, in which 63% of the public said they tend to buy brands that reflect their personal values – up from 54% in 2014. And in fast-growing economies such as India, China and Indonesia, the proportion was higher still.

Council members tend to agree. More than half (56%) say their consumers expect them to take a stand on socio-political issues, against a quarter (23%) who disagree.

"THEY ARE MORE SOPHISTICATED CONSUMERS AND THEY PERHAPS SEE THERE IS NOT MUCH FUNCTIONAL DIFFERENTIATION BETWEEN BRANDS, AND MAKE THEIR DECISIONS MORE ON WHETHER IT IS THE SORT OF COMPANY THEY WOULD LIKE TO BE ASSOCIATED WITH."

In reality, of course, decisions about when and how to take a particular stand are complex. But we can distil the views of the Reputation Council into five guiding principles.

1. Above all, be relevant and authentic.

Any public position must reflect the genuine purpose, values and actions of the company. To paraphrase Mark Zuckerberg, focus on the fundamentals. Trust in businesses (along with other elites) is low, there’s lots of noise, and people are quick to sniff out self-interested, trivialising or opportunistic positions.

On the other hand, a stance which is aligned with a strong social purpose that is true to your values can bring benefits beyond the purely altruistic – creating a real connection with customers, helping to attract the best talent and leading to better engagement with influencers. A clear social purpose also acts as a road map, clearly outlining the issues a business will, and will not, engage on (particularly useful guidance when resources are limited).

"AS A BUSINESS YOU NEED TO FIND THE AREAS THAT ALIGN WITH YOUR PURPOSE AND YOUR BRAND AND, AS LONG AS YOU HAVE A POLICY, IT IS EASIER TO DEFEND THE AREAS THAT YOU ARE SUPPORTING AND THE AREAS THAT YOU DON’T WANT TO GET INVOLVED IN."
2. Practice what you preach.

Any stance will lack credibility if the business can’t show a track record of action. If you’re taking a stand on diversity, you’d better be sure you measure up within your own business. And wherever possible, show the tangible value of your work to people’s lives.

The companies which Council members most admire are agents of change, not bandwagon-jumpers. Qantas’ campaign in support of same-sex marriage in Australia, despite opposition from some influential stakeholders, is cited by a number of Council members as a genuine, powerful example.

"I THINK THE CHALLENGE FOR BUSINESS IS TO COMMUNICATE THEIR ROLE IN THESE SOCIAL POLICY DEBATES IN A MEANINGFUL WAY AND NOT LOOKING PERHAPS SELF-INTERESTED, AND BEING CREDIBLE AND BEING IN IT FOR THE LONG TERM AS WELL. AND ACTUALLY BEING ABLE TO DEMONSTRATE THE VALUE OF WHAT YOU ARE DOING."
3. Don’t get party political.

Council members are strongly of the view that companies should avoid
issues which are closely aligned with party political agendas – at least publicly. In the main, such themes (Brexit and the Trump presidency are mentioned a lot) are seen as too polarising, too short-term and above all too risky for corporates to get embroiled in. But as major social and cultural movements become increasingly politicised, this may be a fine distinction for activist companies to negotiate.

"I DON’T THINK THAT COMPANIES SHOULD GET INVOLVED IN POLITICS, THAT IS NOT WHAT WE DO AND IT IS NOT WHAT WE SHOULD DO… I DON’T WANT TO BE TOLD BY MY EMPLOYER OR BY THE COMPANIES I INVEST IN HOW I SHOULD BE VOTING."
4. Understand the risks.

Taking a bold stand will be inherently divisive, and can be a bruising experience. It might bring rewards, but it will definitely carry risks. Three in five Council members (59%) believe the benefits of taking a stand are greater than ever. But three quarters (77%) say the risks are greater too. So it’s important to be selective. But if an issue lies at the heart of your corporate purpose, and the expectations of your stakeholders, then not speaking out may be the bigger risk.

 

5. Not every company has to be a direct social activist.

Council members often have to think about how a particular position will play out in different global markets, or among stakeholders with conflicting expectations, or have to work within regulatory restrictions on what they can say.

These businesses may have less of an appetite for controversy, perhaps preferring to engage collectively via trade associations or industry bodies. However, is important to bear in mind that they still feel they are engaging constructively on important issues – perhaps not taking such an overt, confrontational stand, but still having a principled point of view and being part of the discussion.

"FOR GLOBAL ORGANISATIONS, YOU HAVE TO WEIGH UP THE CONSEQUENCES TAKING A STAND IN ONE PART OF THE WORLD WILL HAVE ELSEWHERE, AND ONE ALWAYS HAS TO DEAL WITH THAT AMBIGUITY."

Final thoughts

Activist consumers and stakeholders increasingly demand to know where corporations stand on the issues which matter to them. They are looking for leadership that places social progress (in whatever way they define it) at the heart of the corporate agenda.

However, speaking out carries risks and can be divisive. But if it genuinely reflects the social purpose and values of the business, and is backed up with evidence of action, the reward can be a powerful, positive impact on reputation and relationships.

Methodology: 127 interviews conducted with Reputation Council members between April and August 2017.

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Unlocking the Value of Reputation: Full Report

THE DEFINITIVE LINK BETWEEN CORPORATE REPUTATION AND BETTER BUSINESS EFFICIENCY

Looking to make your company run more effectively and efficiently?

Management teams around the world face a variety of complex business situations daily. A great place to start boosting your business is by leveraging the power of your reputation.

Ipsos Global Reputation Centre research across 31 countries shows conclusive proof of the relationship between a good reputation and better business efficiency.

Our research explores:

BUILDING TRUST GIVES COMPANIES AN ADVANTAGE IN TELLING THEIR STORY IN TIMES OF CRISIS, MARKETING THEIR PRODUCTS EFFICIENTLY, AND TURNING STAKEHOLDERS INTO ADVOCATES.

Reputation and trust are powerful forces in business efficiency.

The social media landscape may be changing how people interact with companies. There may be regulatory issues impacting some sectors more than others. You may be doing business in a region that’s inherently more skeptical than the rest of the world.

But the bottom line remains the same: building trust builds reputation. And having a good reputation will result in better business efficiency.

Methodology: The latest wave of the Ipsos Global Reputation Monitor, conducted in September 2017, measured attitudes of more than 23,000 consumers from 31 countries toward 66 companies across nine industries.

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The link between trust, reputation and benefit of the doubt

BUILDING TRUST BUILDS REPUTATION. A GOOD REPUTATION BUILDS BENEFIT OF THE DOUBT, AND ENSURES YOUR VOICE IS HEARD IN A CRISIS.

Trust matters. When you trust someone, you give them the benefit of the doubt. If that person gets in trouble, you will hear their side of the story before jumping to conclusions.

Companies seek to build the same benefit of the doubt among their stakeholders. Without a strong reputation, companies risk not having a receptive audience for their story when they need one the most.

Globally, people are generally willing to give companies the benefit of the doubt (24% definitely and 48% probably). This willingness to give the benefit of the doubt is tightly linked to overall trust.

Among people who trust a company a great deal, more than half (59%) say they would definitely give that company the benefit of the doubt in a crisis. Among people who are feel neutral toward a company, that percentage shrinks to just 10%.

How benefit of the doubt varies by industry

The imperative to build a strong reputation to get the benefit of the doubt is greatest in high risk sectors. However, EVERY company has risk and can obtain a competitive advantage by building a reputation that they can draw on in times of trouble.

At the industry level, technology companies are much more likely to get the benefit of the doubt than others. Highly regulated industries are viewed more skeptically.

Globally, technology and automotive companies have the strongest reputations and consequently the strongest benefit of the doubt.

Benefit of the doubt and trust are highly correlated. When companies build trust, they are building up benefit of the doubt.

The link between trust and benefit of the doubt are most tightly related at the ends of the spectrum - companies with the best reputation get the most benefit of the doubt, and least trusted companies generate very little benefit of the doubt. Companies in the middle (trust-wise), have more variance when it comes to getting the benefit of the doubt.

Airlines, telecommunications, and oil and gas companies have the greatest challenges.

How benefit of the doubt varies by region

Overall, Europeans are more skeptical of companies, while Latin Americans are more likely to give companies the benefit of the doubt.

Generally, a majority of people in every region say they would “probably” give companies the benefit of the doubt during times of crisis. This likelihood to extend the benefit of the doubt is why it is so important for companies to make sure they react appropriately to crises. An over-reaction due to a few hard-core skeptics can cause more harm than good. Companies need to remember that they generally have the benefit of the doubt and should therefore be forthcoming, rather than defensive.

Skeptical Europeans are a tougher audience than people from other parts of the world.

The impact of regulation on trust and benefit of the doubt

Oil and gas, pharmaceuticals, and telecommunications companies face the greatest amount of regulatory risk, and have the lowest trust and benefit of the doubt scores. While risk is also high for insurance and banking, there is also some evidence of people feeling these industries are over-regulated.

The desire for regulation is highest in Europe and North America, and lowest in APAC.

Methodology: The latest wave of the Ipsos Global Reputation Monitor, conducted in September 2017, measured attitudes of more than 23,000 consumers from 31 countries toward 66 companies across nine industries.

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