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Why global businesses must act responsibly

by Nigel Hollis | March 21, 2012

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.  

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  41. chiligum, March 25, 2012
    Brands have always been challenged to both a) to consistently stay true to their origin, purpose and essence and b) to continuously emerge and progress with change.

    Nowadays, successful brands have gained global awareness, while understanding local and cultural diversity and notably find a way into people’s hearts and daily life. Thus, brands do stand a good chance to impact the way, we feel about sustainability to master the challenges.

    Which challenges?

    Not only does a profound body of researchers and thought leaders raise the question whether our current economic, social and ecological system will evolve or collapse, -- but many more people got the message beyond the core of anti-globalization and anti-corporate movements. Reasonable people who give a damn (compare good.is and/or culturalcreatives.cc).

    To pursue the quest any further: "Do people exist to serve the economy, or should the economy exist to serve people?" (David Korten 2010; http://www.pbs.org/now/fixing-the-future/picture.html)

    Shouldn´t the need for sustainability be a given? Yet, the question remains, how we can do it? And here - fortunately - brand agencies come in, capable in their role as change agents and forward thinkers.

    From Millward Brown to Interbrand Inspired Foundation to Ogilvy to further brand leaders, there are people drafting, dreaming, creating, exploring, pioneering, imagining … Check this: Ogilvy Notes 2012, Rethinking Civilization for the Social Age; http://sellorelse.ogilvy.com/wp-content/uploads/2012/03/OgilvyNotes-2012.png

    Once, I heard someone saying "it is easy to be cynical about corporate social responsibility, but probably not helpful" …

    Now, let's get ready. As put by bbmg.com: “Are you unleashing the power of the New Consumer?” (Great study/paper to download from website)

    Thumps up!
  42. Gaurav, March 25, 2012
    Excellent post, Nigel.

    I agree that while some top players are forced into acting responsibly, actively pursuing it has its merit in differentiating the brand and evoking positive perception. Two examples that immediately come to mind:

    1. Unilever's loud and clear strategy on sustainability has not only won the company numerous corporate awards, but also differentiates the brand against other, bigger players in FMCG sector.

    2. Nokia's pioneering recycling campaign for old mobile phones puts the otherwise struggling company in a driver's seat for the very relevant initiative. Still early days to see the impact, but with service providers like Singtel joining in on the initiative, it certainly has potential.
  43. Erik, March 22, 2012
    Hi Nigel,
    I agree totally with your sentiments. BUT, sometimes I think we are comparing the moral behavior of a very advanced economy with the realities of the balance of the world (the other 4 billion people).

    The advantage that the rest of the world has is their cheap labor (and maybe minerals).

    Every once in a while I feel that the morality that the US tries to enforce is really just so that it can negate this competitive advantage.

    E.g. The US has a big enough income (or think it has a big enough income) to subsidize the poor. In developing countries the choice is not to be subsidized, but to be exploited or die.

    E.g. the US imports 13m. tons of tobacco leave from Malawi (60% of their GDP), which it blends and then export as cigarettes. When the price goes down everything suffers children education, child mortality, etc.
    When the price did go down in the past 3 years the US subsidized one US farmer with $1.5b.

    http://antismokingscam.wordpress.com/the-market/subsidizing-weeds/

    Barnes - the US farmer uses planters that plant 16 rows using one driver. A Malawian farmer uses one ox to plant one row. Yet the US farmer cannot produce at the going market rate? The US farmer gets his subsidy from non-smoking Americans, Unemployment in US is under control, A Malawian is pressurized to not use child-labor or infant mortality increases. I am also sure that Philip Morris did not reduce its price of cigarettes due to lower market price.

    This is just one example where the increased first world morality does not work. I agree with the sympathies in your paper, but my concern is that they negate the working a free-market economy as described in The Wealth of Nations where each nation is supposed to use its advantages which will result in a benefit to the greater community.

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