Why Transparency is Here to Stay, and How Your Firm Can Embrace It

Speaking Sustainably

Why Transparency is Here to Stay, and How Your Firm Can Embrace It

In these days of economic collapse, everything's under scrutiny: purchases, values, government, business institutions. When it comes to sustainability, consumers feel they're doing their part, and many are now demanding the same of the business community. Companies are now expected to offer solutions to some of our society's most entrenched problems. Truth is, many companies today are making great strides in the sustainability space, but those stories aren't making it to consumers' ears.

In Eco PulseTM 2011, corporate reputation surged into third place as a criteria for deciding if a product is green (in other words, "I need to believe the company is green before I'll believe the product is green"). More than half of Americans, 52 percent, said it was important. This strongly signals that more and more consumers are increasingly interested in the stories behind the products they buy. And from what we hear in focus groups, they don't expect businesses to have blemish-free stories, but they want to know what progress you're making.

The stony silence of some companies on sustainability -- coupled with the dramatic fall and continued instability of some of the country's biggest institutions -- has eroded consumer trust. According to the Edelman Trust Barometer, consumer trust in business hit an all-time low during the Great Recession, but it's starting to make some small gains. However, this trust may be short-lived if corporate change doesn't stick. More than half of American consumers, 59 percent, believe that after the recession is over, business will return to "business as usual."

In fact, consumers now rank trust and transparency higher than the quality of products and services, prices and financial performance. According to Edelman, these are the factors most important to corporate reputation:

  • Transparent and honest practices: 83 percent
  • Company I can trust: 83 percent
  • High quality products or services: 79 percent
  • Communicates frequently: 75 percent
  • Treats employees well: 72 percent
  • Good corporate citizen: 64 percent
  • Prices fairly: 58 percent
  • Innovator: 48 percent
  • Top leadership: 47 percent
  • Financial returns: 45 percent

At a recent personal care products conference, one business executive shared his perspective. "We are increasingly being called on to provide detailed information on our supply, manufacturing techniques and safety data. Customers are now taking a very deep look at the natural and botanical ingredients they are sourcing, whereas five years ago, it seemed we received only occasional inquiries.

"I believe the demands for transparency and disclosure will increase in the future as manufacturers work to increase supply chains security and obtain data that can justify green claims," Martinez continued.

"I think it is also possible that we'll see the core principles of sustainability enter the dialogue about green ingredients. Green ingredients may no longer be judged solely on their origin, but rather on a combination of environmental performance, social justice, such as fair trade, and economics."

So who's doing it right? Here's one recent example: Domtar Paper. The company now provides a "Paper Trail" that allows customers to see the environmental impacts of different paper stocks. According to the press release, "The Paper Trail develops personalized reports that measure Domtar products across five categories: water usage, the distance fiber travels to a paper mill, greenhouse gas (GHG) emissions, waste sent to landfills, and renewable energy usage. The data is displayed in real-world equivalents, with comparisons to issues such as the amount of water the average household uses or the amount of waste it generates. The Paper Trail will also illustrate how Domtar compares to the rest of the industry in these particular categories." The Paper Trail will also share information about each of Domtar's paper mills.

Here's the takeaway: it's great to publish a corporate sustainability or social responsibility report, but most consumers won't read those, so your stories aren't reaching them. And we know it's those stories they want to hear. It's time to take those stories to the people and free them from an annual report. It's time to share them in new forms of communication, start the dialogue, and become (and stay) more transparent.

This article originally appeared on The Shelton Group's blog, and is reprinted with permission.