As companies continue to define their role with Social Impact – what purpose means for their brand, how to truly integrate Diversity, Equity, and Inclusion (DEI) across all operations and functions of their business, and how to navigate Environmental, Social, and Governance (ESG), Spectrum has evaluated the current landscape based on Q1 trends and has put together our top five considerations companies should be thinking about in the months and year ahead.
1. Economic Uncertainty is Not the Time to Scale Back on Social Impact
As inflation continues to influence consumer purchasing worldwide, numerous surveys and studies make it clear that companies should not scale back their ESG programs nor shrink their outreach to inform customers about their Social Impact efforts. Companies can’t afford to overlook the importance of sustainability and social responsibility in stakeholders’ minds if they want to preserve and build brand loyalty. Stakeholders need a compelling reason why they should continue to support a brand, and consumers and investors continue to indicate they want to support brands that provide fair and living wages to all employees, address climate change/justice issues and truly and authentically incorporate DEI into all elements of their business.
2. Companies Must Backup their Social Impact Talk with Action
In late 2022, TriplePundit conducted a survey that found less than 20% of more than 3,000 US consumers said they'd be impressed by a billion-dollar company donating $5 million to a social cause like racial equity, with the majority agreeing that "business should do more." All stakeholders are looking for companies to demonstrate how they are making a meaningful and authentic impact via their business operations. Whether that is committing to fair and just pay for all employees, looking for meaningful ways to cut unsustainable impacts on the environment, committing to a social justice issue, ensuring DEI is woven into all business operations, etc. Stakeholders want to know how a company is affecting real change vs. simply talking the talk and writing a check. For example, Warby Parker has ingrained Social Impact into its company’s DNA from day one with its Buy a Pair, Give a Pair program. Warby Parker’s mission is to alleviate vision impairment, and since its founding has donated more than 10 million glasses across the globe.
3. Consider Incorporating Social Impact into Your Marketing Mix
ESG programs that produce strong impacts alone won’t translate into increased positive stakeholder sentiment if the company is not investing in communicating their company’s ESG/Social Impact stories. Earned media has become increasingly more challenging to place these stories due to shrinking newsrooms and competing attention from the many companies increasing their ESG and Social Impact initiatives over the past three years. In order to get these stories out to the public, companies are investing in Social Impact marketing, whether that is directly mentioning impact initiatives on packaging (OXO now puts it’s 1% for the planet on its packages), including Social Impact work in commercials like CVS Health “HERe, Healthier Happens Together” or crafting entire marketing campaigns around Social Impact like United Good Leads the Way. It is important to note, if you decide to include Social Impact successes and stories within your marketing efforts, that you back up all claims and consider regulatory compliance.
4. Representation Matters
Increasing diversity at all levels within an organization will continue to be critical to moving forward a more inclusive workforce but companies also need to ensure they are advancing more diverse representation in everything they do. For example, before launching an internal or external program, companies need to evaluate if they are representing the true demographic makeup of your geography (racial/ethnic, varying abilities, gender, religious affiliation, sexual orientation, size, etc.). If it’s connected to clinical trial recruitment what is being done to ensure there is a truly representative sample of your patient population? If it is visual content, how is your company ensuring diversity is represented and challenging what has traditionally been considered to be the norm/ideal?
5. ESG Is Not Going Anywhere
ESG came under criticism in 2022, especially with Elon Musk taking aim after Tesla lost its place on the S&P 500 Index, and as conservative lawmakers in the US continue to question its value and need. However, companies with robust ESG programs and reporting continued to see strong interest from all their stakeholders, especially investors. According to research from Morningstar in the fourth quarter of 2022, global sustainable fund flows attracted $37 billion of net new investments compared to $200 billion of net withdrawals in the broader market. In addition to investors, ESG will continue to be an imperative when doing business with other organizations, states and countries. For example, in January, the state of California (the world’s fourth largest economy) introduced legislation that would require large US companies to disclose their greenhouse gas emissions. Furthermore, on January 1, 2023, Germany’s Act on Corporate Due Diligence in Supply Chains (Supply Chain Due Diligence Act) went into effect. ESG not only allows an organization to report to all its stakeholders what it is doing to affect purpose driven change, but it is also increasingly becoming an imperative to conducting business.
This article was orginally published on LinkedIn by Kay Brungs Laud, SVP, Social Impact.