Wednesday, March 21, 2012
Why global businesses must act responsibly
A while back, I read this interesting article in The Huffington Post, by Matt Browne. Titled, “Pro-Logo: Can Global Brands Become a Force for Good?” it suggests that global brands are more accountable now than they once were, and possess the potential to change the world for the better. Given that Millward Brown works with so many global clients, I hope he is right. It makes me feel that my job is more worthwhile than it might be otherwise.
I think Browne’s argument can be boiled down to two key quotes:
Global brands are the only ones who will ever have any incentive to improve environmental sustainability and labor practices, precisely because they are the only ones who will be held to account for their actions.
And:
In an era of subcontracting, outsourcing, and increased competition, CEOs are well aware that brand reputation is one of the few capital assets a corporation possesses. If better working conditions, sustainable production, or ethical supply chains are ways in which a brand can enhance its reputation, appeal and value, then doing good globally can be good for business.
As I have noted elsewhere, the value of acting responsibly is not always apparent. In the short-term, a company may make more money by acting irresponsibly or turning a blind eye to supplier practices. But in the long-term, these acts can have a very negative effect.
Nike learnt that global brands are held to a higher standard the hard way (read more on that here). And recently, Apple has been subject to scrutiny over working conditions at the Chinese factories of suppliers like Foxconn Technology.
And sometimes, even the most well-intentioned acts can result in negative outcomes. Victoria’s Secret’s commitment to buy organic fair-trade cotton from Burkina Faso, has recently been criticized for failing to safeguard against the use of child labor.
All three companies, Nike, Apple and Victoria’s Secret, are well-known, international brands. As such, they are of interest to many people and inherently newsworthy. Their fame is both a strength and a weakness, not shared by lesser known brands. Fame forces premium brands into what has been referred to as the “lonely leadership position,” because most consumers are not willing to pay for a company to act responsibly. Their primary interest is to get a good product at a good price.
The good news, however, is that savvy corporations use their clout to share the load across all companies in their industry. By publicizing how they are either addressing past problems or working to a higher standard than others, they can create a positive perception with their customers and differentiate their brand from the competition. In many cases the competition are compelled to follow.
So what do you think? Do global brands have the potential to improve the world we live in? Can a company create competitive advantage out of doing the right thing, even if customers are not willing to pay for the additional cost? Please share your thoughts.
This entry was posted on Wednesday, March 21, 2012
and is filed under Brands.
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