#Fail: Why CEOs and consumers are out of step on sustainability

Two Steps Forward

#Fail: Why CEOs and consumers are out of step on sustainability

A new global study on consumers and companies reveals a troubling disconnect on sustainability. Its findings shed much-needed light on why consumers remain both hopeful and skeptical on whether companies are truly engaged — and what it means for business to live up to society’s expectations.

“Business is failing to take care of the planet and society” is the stark conclusion of a new global study by Accenture, the global management consultancy, and Havas Media RE:PURPOSE, a communications and marketing company. Its survey of 30,000 people across 20 countries on five continents found that nearly three-fourths (72 percent) believe that business is failing to live up to expectations.

The report, “From Marketing to Mattering,” is a follow-on to the UN Global Compact-Accenture CEO Study on Sustainability published last fall, in which two-thirds of CEOs admitted their companies are not doing enough to address sustainability challenges. That’s similar to the percentage of consumers in the latest research that say businesses are failing to take care of the planet and society.

At least there’s agreement on that front. From there on, consumers and companies seem to be ships in the night.

The survey found that companies' conventional social responsibility and sustainability reporting activities aren’t sufficient. “Today’s citizen consumer has higher expectations of business. Dissatisfaction may be regarded as the product of traditional approaches to communicating sustainability, centered on philanthropy and corporate social responsibility, with no clear integration into the products and services people consume, or the connection through their products that brands share with consumers.”

In other words: What's in it for me?

The report concluded that while people around the world hold business directly accountable for their quality of life, “brands are failing to connect corporate sustainability efforts to the expectations and priorities of their consumers, and with the failure of traditional approaches to sustainability all too readily apparent we see an urgent imperative for companies to understand how they can better engage the consumer in their sustainability stories.”

One big problem, according to the report, is consumers don’t feel that the sustainability stories they're hearing from companies relate to their lives. Moreover, companies seem to be least effective in places where they've been communicating longest:

These traditional approaches have failed to engage and persuade the consumer, most notably in those markets where sustainability branding and communications have taken root most deeply. In Western Europe and the United States, those economies most affected by the financial crisis, the crisis in trust is readily apparent, with fewer than 20 percent of respondents expressing their confidence in companies’ efforts to take care of the planet and society. Strikingly, in those economies with a large, emerging middle class, people are less skeptical and public confidence is significantly greater: two-thirds of respondents in Nigeria and India, for example, believe that business is playing its part.

Think about it: Confidence is higher in Abuja, Nigeria, than in Albany, N.Y.

Overall, expectations of business are high across economic lines. In developed markets across Europe and North America, for example, people are more despondent about the future and want business to help. On the other hand, people in higher-growth economies are highly engaged and expect business to help them attain their optimistic vision for the future. But optimistic consumers are more demanding: Researchers found a clear correlation “between respondents’ optimism regarding their quality of life and their expectations on business not just to look after ‘the planet’ in an abstract manner, but to deliver direct and tangible improvements to their own quality of life.”

It’s not that consumers are sitting idly by. Where expectations are high, so is engagement. The researchers found a strong correlation between countries where respondents express high expectations on business to improve their quality of life, and those where consumers are actively considering and seeking information on sustainability performance. “Not only are consumers in emerging markets more engaged on sustainability, but they expect companies’ efforts to benefit them directly — and they will actively look for information to validate companies’ claims.”

The report also highlights global consumer segments in which sentiment differs. For example, “young optimists” aged 18 to 34 are the most engaged on sustainability. Two-thirds actively buy sustainable brands and almost a quarter “always” consider the social and environmental ethics of brands when making purchasing decisions, or so they claim.

Perhaps unexpectedly, young men globally — those aged 25-34 — “are consistently more likely to actively consider sustainability factors in their purchasing decisions, seek information on companies’ sustainability performance, and recommend ethical and responsible brands to their friends.” In other studies, young women, especially new moms, are more engaged as consumers on environmental and social issues.

The study suggests three areas of action that will help companies engage more effectively with consumers:

  • First, companies “must promote a commitment to honesty and transparency throughout their organization’s operations in order to realize their full value.” Corruption in both business and government ranked as a leading challenge for respondents across all 20 countries surveyed. “Companies must be able to hold themselves accountable to consumers who are armed with greater access to information and social media tools that help them expose disingenuous corporate behavior.”
  • Second, companies “must meet expectations for responsible business practices while delivering tangible improvements to consumers’ lives.” It’s not enough to be seen as ethical or socially responsibility; there has to be a personal benefit. “This is particularly so in mature markets, where consumers increasingly consider sustainable corporate credentials as a given.”
  • Third, companies “must shift their communication with consumers from a focus on their sustainable credentials and corporate performance to a clearer demonstration of their purpose and relevance to the society and the environment.” This is especially relevant in emerging markets where companies are seen as playing a major role in improving health, education and other fundamental quality of life factors.

On the one hand there appears to be a huge opportunity here — one that’s been largely unmet for two decades — for companies to more effectively connect the work they’re doing on their supply chains and operations with the benefits to consumers and, especially, to communities and the world at large.

On the other hand, it remains unclear whether — in an age of polarization and sensational, gotcha journalism and blogging — consumers are ready, willing and able to hear what companies have to say. Can companies craft stories and messaging that simultaneously connect the dots, appears authentic and can be backed up with compelling facts? And even if they can, will they be believed?

It’s a story that’s far from written.

Broken heart green leaf image by surasaki via Shutterstock.