Companies that follow through on a ‘brand purpose’ to add meaning to products and services enable consumers to trust and connect on an emotional level, according to a new index that ranks the top 100 companies on this measure.
Purpose can be defined through a brand slogan, a commitment to sustainable living or schemes and projects that give back to local communities, but companies that come out on top do more than communicate purpose (see What is the brand index purpose?, bottom). They also see a benefit to their financial results and other key performance indicators (KPIs).
The top 10 companies in the index compiled by consultancy Radley Yeldar – including corporate giants such as Unilever, Lloyds Banking Group, PepsiCo and GSK – all go beyond words and show evidence of the outcomes of their decisions to address issues affecting individuals and society.
Unilever, for example, takes the number one spot in the ranking for its corporate goal to ‘make sustainable living commonplace’, which is evident in projects such as Foundry Ideas, a global crowdsourcing platform that looks to solve sustainability issues in the areas of sanitation, hygiene, and nutrition.
“One of our core beliefs is that you cannot have a healthy business in an unhealthy society,” says Unilever chief marketing and communications officer Keith Weed. “Sustainability is all encompassing at Unilever and it bridges between environmental and social sustainability, to enable people to live sustainably and businesses to operate sustainably.”
Sales gains from CSR
Despite lingering doubts from sceptics about the financial benefits versus the costs of corporate social responsibility, there is also a demonstrable positive effect on sales from Unilever’s approach. Weed adds: “We know that consumers want brands with purpose. Global spending on ‘responsible consumption’ products is $400bn (£262bn). In the US, RC products have grown around 9% annually in the past three years. For our brands, we outpaced the global average with a 10% increase in sales for those communicating on sustainability, according to Nielsen.”
Unilever’s brand purpose is best summarised by its sustainable living plan, which the company describes as a commitment to “reduce its [environmental] footprint to future-proof its supply base, reduce costs and provide direct benefits to consumers to help improve their health and well-being”.
For PepsiCo, which is ranked number seven in the index, its ‘Performance with purpose’ initiative is a vision to deliver financial performance over the long term by integrating sustainability into its business strategy.
“Performance with purpose helps drive our business growth and prepares us to meet the needs of our changing world,” says Indra Nooyi, chairman and CEO at PepsiCo.
“By continuing to apply our scale and capabilities to address shared societal challenges, we will further strengthen our company and the communities where we operate.”
However, brand purpose is more than just a driver for business growth; it is also a differentiator at a time when so many companies are struggling to stay profitable while competing on price.
Why is brand purpose important?
The premise of Radley Yeldar’s ‘Fit for purpose’ report, in which the index is published, is that the role of the corporate brand has changed radically because of technology, the proliferation of content, increasingly savvy consumers and sustainability moving from fringe to mainstream.
Brands are expected to be transparent in their actions and to follow through on commitments to wider society in order to gain trust from consumers, who are increasingly looking beyond a product to see whether the corporate brand is one with which they want to align.
“[Consumers] expect transparency, authenticity and higher standards of ethical conduct from organisations,” says Ben Richards, consulting director at Radley Yeldar.
He believes that branding has changed as a result of digital media creating real-time conversations about companies’ activities and new ways for information to reach consumers – whether or not executives want it to.
Richards says: “It has changed brand management because if you put something out there, you are accountable for doing it, and consumers have the voice to call you out on doing whatever it is you promised.”
“We know that consumers want brands with purpose. Global spending on ‘responsible consumption’ products is $400bn”
Keith Weed, Unilever
Electronics company Philips, which ranks second in the index, has established an ambitious target to improve three billion lives a year by 2025. It has also set KPIs to measure its progress towards achieving it.
Last year, Philips introduced seven new ‘green’ healthcare products to improve patient outcomes and increase access to care. Green product sales reached 52% of total sales and 55% of the company’s energy usage came from renewable sources.
Global head of brand at Philips Richard Wergan says the 2025 commitment is “no small undertaking”. He claims the ambition is driven across all activity at the brand and it acts accordingly through the product development pipeline, marketing communications and messaging.
Philips has its own index to measure the number of lives improved on an annual basis, which is calculated using an algorithm that looks at demand for products with a direct relation to health and how many people those products have affected. Wergan adds: “It’s important that we have other elements that are not just commercial. The Philips Foundation, for example, is an important part of the corporate social responsibility programme.”
The foundation uses the brand’s expertise, innovations and global partnerships to the benefit of young and underprivileged people and communities around the world. It aims to take insight from a community level in one country and apply it across multiple communities in numerous countries.
Role of brands in society
Brands that are high up in the Radley Yeldar index follow similar principles in terms of the commitment they make to society.
“To me, brand purpose is about explaining who we are as a company, what we stand for and what our intrinsic values are beyond the products you see on the shelf,” says Katy Gandon, head of external affairs at L’Oréal UK and Ireland.
The cosmetics brand, which is 25th in the brand index, achieves this through a focus on science. As well as its recent campaign #changethenumbers, which looks at promoting positive perceptions of women in science, it is involved in other schemes.
In 2007, together with the United Nations’ sustainable development agency, the company established the L’Oréal-Unesco For Women in Science fellowships. It has awarded a total of £480,000 to a network of 37 fellows, helping female scientists to further their careers and research in the UK and Ireland.
The brand has also partnered with the Royal Institution since 2009 to promote curiosity and investigation-led learning for children aged seven to 18 through the L’Oréal Young Scientist Centre. And it is working with Generating Genius, which gives young people from disadvantaged backgrounds support and encouragement to pursue science, technology, engineering and maths degrees at university with its programmes.
Which brands are ‘fit for purpose’?
The top 10 companies in the brand purpose ranking are not perfect, according to the report, but what they have in common is the “courage to stand for something”, says Radley Yeldar’s Richards.
He adds: “Be brave and bold enough to stand for something because a lot of those brands towards the bottom of the [index] have a weaker sense of purpose.”
The report splits the top 100 into four groups to show which brands are doing well and those that could improve to rise up the index. The ‘super-fit’ group, which consists of 35 brands including Google, Sky and Danone, are companies that clearly demonstrate that they want to do more for society and have actions in place to start doing so.
The next level down is ‘heavyweights’ made up of 29 brands such as BT Group, Aviva and SABMiller, and are judged to be doing good work, but the way they communicate it could be improved. Facebook, Apple and McDonald’s are part of the 16 brands in the ‘middleweights’ category that are clear on brand story but are lacking in actions that would see them live and breathe brand purpose on a daily basis.
Finally, the 20 ‘lightweights’, including Diageo, Citigroup and The Walt Disney Company, have an implicit sense of social intent or purpose, but it is not well articulated and therefore there is room for improvement in putting purpose into action.
As well as these observations, Richards recommends that brands be forward looking. He gives Lloyds Bank, ranked in the super-fit group in third place, as an example: “Its reputation has been in an interesting place with PPI mis-selling, but it’s the real forward-looking approach to helping Britain prosper that is driving the organisation [ahead].”
Nestlé is ranked at five in the overall index and second in consumer goods behind Unilever when split by sector. As with Lloyds, Nestlé has had its share of public criticism, particularly for its marketing in developing countries of baby milk products that lack the immunity benefits of breast milk. However, it has countered this over the years through its forward-looking ‘creating social value’ initiative.
This looks at three areas – nutrition, health and wellness, and rural development – in terms of business opportunity, operational challenges and environmental sustainability, all of which are underpinned by a duty to protect scarce natural resources.
Hilary Parsons, senior public affairs manager at Nestlé, says: “For a company to prosper over the long term and create value for shareholders, it must create value for society at the same time. Brand purpose is the unique benefit your business brings to the world; it’s how you make your business stronger by making the world better.”
Parsons adds that Nestlé’s social value initiative is built into its “basic business approach”. It aims to create a profitable business for shareholders by benefiting society, dictating that business investments must be good for the company and the communities where it operates, while also allowing a long-term view. “We will not sacrifice long-term business success for short-term gain,” she adds.
The social value commitment is seen in product communications for Nestlé’s brands, including Häagen-Dazs’s support of honey bee research, Nespresso’s ‘ecolaboration’ programme and Purina’s recycling efforts. It is also present in the company’s ‘nutritional compass’, which provides standardised nutritional details across its products, and QR codes on packs which consumers can scan with their mobile device to access additional nutritional and environmental information online.
Attracting talent through purpose
Purpose is not only key to maintaining and repairing reputations but also to recruiting talent in the future. According to Unilever, it is the third most sought-after employer globally on LinkedIn, with half of graduate entrants citing the company’s ethical and sustainability policies as the primary reason for wanting to join Unilever.
In addition, more than 76% of all Unilever employees feel their role at work enables them to contribute to delivering the sustainability agenda.
Attracting talent is also key for Philips’s Wergan. He says: “Millennials want to work with companies that can be trusted. They want to work for organisations that they aspire to be a part of.”
Brand purpose affects every facet of companies today, both internally and externally. Many brands already have plans in place and are taking action on promises made to consumers. Those that make promises that they cannot fulfil have nowhere to hide in a world that is increasingly calling for transparency and authenticity.
What is the brand purpose index?
To create this index, communications consultancy Radley Yeldar built an assessment tool that offers corporate brands a snapshot of how the world might see them.
It assesses the quality of ‘brand purpose’ statements, and the extent to which purpose is embedded into and connected across their external communications, behaviour and performance.
The report also states that purposeful brands go beyond a well-crafted set of words, so it is not enough to have a polished statement of purpose without any evidence that a company is living up to the promises made.
The companies included in the index are the result of an analysis of external communications from the top 170 companies of the Financial Times 500 combined with the FTSE Eurofirst 100 share index.
Each is given a percentage score for four factors: purpose and story, communications, behaviour and performance.
The ‘purpose and story’ metric is given special weighting in order to create four hierarchical categories: ‘super fit’, ‘heavyweights’, middleweights’ and ‘lightweights’. These are then placed consecutively with the overall scores within these groups determining the order of the top 100.