Studies show it pays to be ethical

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Three studies in the past week have highlighted the importance of corporate social responsibility (CSR) to companies’ commercial fortunes. Interbrand named Toyota as the world’s greenest brand. Goodbrand established a link between a business’s ethical credentials and the preferences of affluent ethical consumers, and 23red found that 91% take ethics into account when purchasing.

The timings might be coincidental, but the findings are not. It is hardly surprising any more that consumers claim a company’s social and environmental impacts influence what they buy, and from which brands.

What is perhaps more interesting is what these studies say about the effects of marketing in this area. Perception is just as important as actual environmental performance.

While McDonald’s, General Electric and Coca-Cola all score higher on perception than performance, according to Interbrand, L’Oreal, Nokia and HSBC all perform better on environmental measures than consumers believe. Some brands, then, enjoy better ethical reputations than others, owing to their marketing as much as their actions.

Being seen as ethical is a valuable commercial advantage, according to Goodbrand’s Social Equity Index study. It has found that ’highly ethical’ consumers – top out of four levels of ethical awareness – tend to be more affluent than the less ethical and also favour those brands that they perceive to show the same concern for CSR.

Supermarkets have earned particularly good reputations in the minds of consumers, according to Goodbrand. For example, Marks & Spencer’s CSR commitments under its Plan A initiative appear to be having a positive impact on people’s perceptions, as well as being financially profitable.

Highly ethical consumers make up 19% of the population, the study says. That is a sizeable chunk, but still represents only a minority of people who are taking proactive steps such as checking out companies’ ethical credentials for themselves. In 23red’s survey, 74% say they want to know more about a brand before buying, but how often do consumers really follow through on that?

Communicating a brand’s principles and its record is therefore a big part of exploiting the commercial benefits that really do exist in CSR. As Marketing Week argued at length in an April cover feature, sound social and environmental policies are already helping to boost companies’ profits.

The caveat, of course, is that when ethical messages do not match up to practice, brands often get found out. Consumers who care about these matters also have a habit of being inquisitive and vocal, and hell hath no fury like an environmentalist scorned.

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