Being a business that values purpose as well as profit has been a growing trend for the past decade.
Every major brand is taking a bite at the social responsibility cherry and with good reason. Recent research by management consulting firm, Brain & Company has shown that ‘81% of companies say that sustainability is more important today than it was 5 years ago and 85% say it will be more important still in the future’. And the World Economic Forum predicts that profit with purpose is set to become the new norm.
As a result, using ‘social good’ as a marketing tactic has become standard practice, with many brands using their CSR efforts to drum up business. However, as the popularity of this type of campaign grows, so does the public’s scepticism. People can see through the smoke screen of ‘goodness’ and are demanding transparency, honesty and openness when it comes to organisations that include purpose and profit
When purpose over profit goes wrong…
Purpose-led strategies can be hugely rewarding for businesses, however they have to be considered carefully and there are plenty of examples of where it hasn’t quite gone to plan!
In 2018, craft beer company BrewDog launched their attempt to address the gender pay gap with a range of IPA’s ‘for girls’. They released Pink IPA (a play on their existing Punk IPA drinks) with pink packaging and a 20% discounted price for anyone who identified as female. The price difference aimed to reflect the 18.1% gender pay gap between men and women.
However, the campaign was considered a whopping failure as people took to twitter to criticise its over-simplified and insensitive handling of the issue. Ironically, the campaign even led the company to be successfully sued for sexual discrimination in 2019 when a man claimed he had been “forced to identify as female” in order to persuade bar staff to sell him the drink. A judge agreed that the man had been unfairly treated because of his gender and BrewDog was forced to pay him £1,000 in compensation.
BrewDog launched the product with a sarcastic tweet: ‘We’ve created a beer for girls. And it’s pink. Because women only like pink and glitter, right? #sarcasm’. An idea that fell far short of the mark as people were quick to point out that a joke which requires explanation through a hashtag is probably not a very good one. Paul Domenet, an executive at design firm Drew Gibbons suggested that ‘however much they clothe it in a good cause, it might be more to do with wanting more of a share of the lucrative female drinkers’ market.’
Another company who have been criticised for their dubious claims of sustainability is H&M, who have recently been condemned by the Norwegian Consumer Authority (CA) for the ‘insufficient’ information about the sustainable nature of their ‘sustainable style’ collection. A statement made by the CA reads: ‘The information on the collection was general and did not specify the actual environmental benefit of each garment sufficiently, for example the amount of recycled material for each garment’.
The truly ethical nature of the company (who have just been named as one of the most ethical companies in the world by the Ethisphere Institute) has been under fire for years. Recently, the labour rights movement Clean Clothes Campaign pointed out that H&M still has not delivered on its 2013 promise to pay 850,000 workers a living wage by 2018, making their latest promises to become 100% ‘climate positive’ by 2040 and to use 100% recycled or sustainably materials by 2030 now seem more like hollow words.
Others point out that an industry which relies on the idea of fashion as a disposable commodity can never be environmentally conscious. In the UK alone, more than 300,000 tonnes of used clothing end up in landfills every year. The environmental harm caused by this practice can, in no way, be counteracted with the production of more supposedly ‘ethical’ garments.
More and more consumers are waking up to the idea that H&M’s stance on sustainability is likely more to do with marketing than a genuine interest in social good. Shannon Whitehead writing for HuffPost stated ‘if H&M was truly serious about sustainability, then it would focus on changing its business model – not on making more clothing under the guise of a feel-good name’.
Consumers are aware of meaningless marketing practices and are less likely to give business to companies they feel have abused their trust.
Focus on internal culture first
However, it is not all bad and although it pays to think carefully before launching any campaign it doesn’t always mean we will get it right! We have worked with many clients who really care about making a positive impact with their businesses and who focus on ’doing the right thing’ by embedding a culture of social good from within the heart of the organisation. They get their internal culture right first before going external.
What are the benefits?
So why bother? If there is so much to lose by getting it wrong, what are the benefits to your business of taking a successful purpose and profit stance?
Aside from doing the right thing, it is worth considering that nowadays customers are being spoiled. They have access to more content than they possibly need, 85% of consumers use the internet to inform their buying decisions and it’s getting harder to compete with big brands while tendering for projects.
We know that consumers today want the businesses they buy from to take a stance on social issues. Considering this, investing in a cause that aligns with your company’s brand and measuring the impact of this is a great way to show customers that you are doing this authentically and that you care.
Social good, done good.
For example, the toothpaste company Colgate, launched a campaign with the message ‘turn off the faucet while brushing’ with the aim of saving water in 2016. Colgate aligning themselves with this cause made sense as it was totally relevant to their product and an area in which they had the potential to make a tangible difference.
Colgate measured the impact of this campaign and as part of Climate Week NYC 2018 they released their findings. They discovered that 70% of American consumers who had been aware of the Save Water campaign said that it had influenced their personal actions with regard to saving water and that globally, the turn-off-the-faucet campaign could lead to a potential reduction of 50 billion gallons of water a year, making a significance reduction in the amount of energy used by a hugely energy intensive industry.
So, what’s the future of growing a profit and purpose business?
The great thing about embedding social good strategies in your business is that transparency always wins. A recent study even showed that 66% of consumers think that transparency is one of a brand’s most attractive qualities.
Transparency wins: Chobani
Chobani, the $1.5 billion dollar business that is America’s leading yoghurt company is a great example of a business who are open and honest about their dedication to social good. Their success is often attributed to the fact that the culture of the whole company is structured around social impact.
In fact, they have an equity sharing program in which employees collectively own 10% of the business. Founder, Hamdi Ulukaya, credits this system for the great pride and ownership that his employees take in their jobs as they are seeing a bigger return on their hard work, the better the company performs. On top of this, factory workers are paid well over minimum wage and Ulukaya has made a point of actively hiring refugees as well as helping establish the Tent Foundation which encourages companies to hire and support refugees.
It is the practice of collaboration that has allowed Chobani to have the greatest impact. Through the Chobani Foundation and the Chobani Incubator they fund start-ups in the health and wellness space and gives its employees the opportunity to volunteer. Ulukaya believes that purpose-focused collaboration will not only strengthen your team and improve workplace morale but that it is worth thousands in word of mouth advertising.
Investing in purpose over profit is investing in the future
There is no denying that purpose led business strategies are the future. While there is a risk that you might lose business to a poorly considered and superficial CSR campaign, the benefits to your business of a well-thought out, relevant and collaborative commitment to social good that is built into every level of your company are innumerable.
Over and above economic success, the social impact of your company’s actions will build customer trust, attract committed employees and increase your word of mouth advertising exponentially.
Social good strategies in business is no longer just ‘a nice idea’ or a risk too big to take. An authentic and genuinely impactful stance on social causes is now expected of companies.
An investment in purpose over profit is an investment in the future of your business.
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Written by Betty Henderson