An increasing number of companies today strive for a triple bottom line – profit, people and planet, shifting from simple performance-based thinking towards prioritisation of purpose.
When leading NGOs, sections of the media and substantial parts of the public view corporate sustainability announcements as ‘greenwash’, business leaders can be forgiven for feeling trapped between an obligation to act and concern for the commercial and reputational impact.
What, then, is driving major ‘green’ announcements when the reaction from some quarters is hostile?
Before making a big move on sustainability, senior decision-makers must consider bottom-line cost, reputational impact and customer behaviour.
Reputational impact in the media and among the public is a first consideration for those in PR. We therefore asked consumers across Western Europe for their views on corporate reputation and which issues would most negatively impact the reputation of a company if they failed to act.
Failure to address environmental impact came first. It wasn’t just a background concern. Respondents deemed it bigger than failure to address equal pay for men and women; providing employee benefits and implementing health and well-being policies. This isn’t a surprise when four in five people say that they are very or somewhat concerned about climate change and the environment20.
Millennial customers are usually seen as the main demographic group driving corporate action on the environment. However, fascinatingly, the age group most likely to suggest failure to act on the environment would affect reputation was 55+. The second most likely was 45-5421.
The public across all age groups is also split evenly on whether individuals or companies are responsible for taking action on the environment. Ultimately, people might say that failure to act on the environment would harm a company’s reputation. But that is not the same as saying that you personally would view a company more negatively or stop purchasing from them. Consumers are still choosing to fly, even if Greenpeace thinks an announcement is ‘greenwash’.
Why then might a company choose to take significant action on the environment? There is a vital driver for “green” announcements which is often missed by business leaders, the media and those who work in public relations, and public affairs. Our fundamental values, and the actions we then take are far more interesting for corporate decision makers than a simple opinion on a corporate reputation. Actions speak louder than words.
For example, about two-thirds of people agree that society should address long term challenges like climate change even if it means short term cost to individuals. Six in ten people say it is somewhat or very important that the values of the company they work for align with theirs. And a similar proportion of people think it is somewhat or very important for peers to know that the company they work for is responsible and acts in line with their personal values.22
This driver is so strong that just under 30% of people would be somewhat or very likely to consider taking a pay cut to work at a company that acts in a way they feel is responsible, acting in line with their personal values. With Millennial employees, this percentage rises to 40%.23
Older generations may be more likely to think that a lack of action on the environment would hurt reputation. But younger audiences may not want to work there.
We did find some differences by country in our analysis. It’s worth noting that that the UK is the only country of the four we polled where a majority didn't agree that long-term challenges should be addressed even with short-term individual cost. Those in Germany are more likely to hold corporates accountable to tackle the climate crisis.24
But the key point is that Millennials are no longer the next generation or a customer subset. They are nearly 40 and they’re managers, directors and decision makers in FTSE 100 and Fortune 500 companies.
For major companies attracting, retaining and motivating staff are just as important as external reputation. And acting on the environment should be a top priority.
Being sustainable does not mean choosing between commercial success and social responsibility. The UK’s adoption of a 2050 Net Zero emissions target means there will opportunities for companies that offer solutions to the most difficult problems in decarbonisation. As the below case study from investment group Octopus demonstrates, putting sustainability at the heart of a business’s ethos also brings reputational benefits that will help companies prosper, including in recruitment and retention.
Octopus have seen first-hand the advantages that come with embracing such a purpose. The company says it approaches business from an ambition to be a group that someone would be proud to tell their grandchildren about. Some 70% of Octopus is owned by its employees and about 85% of its people take part in a monthly share-save scheme, giving staff a genuine sense that they are contributing to the organisation’s development. Octopus says it has been challenging convention and turning bright ideas into game-changing businesses for more than two decades, with a focus on backing high-growth small companies. Offering smart, simple solutions that leave customers feeling totally taken care of by a trusted supplier, its founding principle is that people deserve better. As a major investor in renewable energy and zero carbon transport, Octopus believes that a focus on innovative technology and the end consumer can revolutionise the energy landscape and says it relishes the opportunities that will flow from a Net Zero economy. Since entering the renewables market in 2010, Octopus Renewables has grown to become the largest investor of solar power in Europe, as well as a leading investor in onshore wind. Its portfolio of clean energy assets with a combined capacity of 50GW hours produces enough electricity to power homes in a city the size of Manchester. Octopus is a firm believer that consumers should not have to choose between lower bills and going green. Octopus Energy, the group’s energy supply business, was among the first in the UK to ask why energy companies were not making energy greener, smarter and more affordable for everyone. It also recognises that not every firm has the means to move to a sustainable business model overnight. As for its own enthusiasm for tackling Net Zero, it says that stems from a quest to prove the potential of its investments, whilst simultaneously doing its bit to make the world a better and more prosperous place to live.
