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Speaking Sustainably

Is your company a good company?

Good-bad

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Last year at this time, I wrote a piece with the exact same headline as this one. This time, I have some interesting new data and the beginnings of a framework to fill in the gaps. I’ve also got a sneak peek for you, from my presentation last week at GreenBiz 21. We’ll be publishing a full report with even more insights and ideas in April, but this deck will get you started.

In our annual Eco Pulse study, we ask a battery of questions that get at how Americans perceive companies’ actions for people and the planet — what do people expect of the companies they buy from, and how do those expectations drive brand preferences and product purchases? This year, we fielded an additional study to ask some new, deeper questions and to create some forced-choice exercises so we could better understand what Americans really believe a Good Company is and why.

Not at all surprising to the seasoned brand marketers reading this, great products and great customer service top the list of what makes a company good. Perhaps also not surprising, then, Amazon.com far and away tops the list of companies Americans name — unaided — when asked to identify a good company. ESG-related mentions round out the top three on the "what makes" list, so those are open-ended responses such as, "they treat their employees well… they give to the community… they care about the environment… they have good values."

But we should never confuse what makes someone like a company with what makes someone dislike a company.

What do people expect of the companies they buy from, and how do those expectations drive brand preferences and product purchases?

Facebook tops the list of examples of Bad Companies, followed by Walmart (which is also No. 2 on the Good Company list) and Wells Fargo. So, what gets a business on the Bad Company list? A bucket of ESG-related answers is most important — treating employees poorly, fraud/scandal/corruption, disagreement with their values or social stances, and generally being harmful to the environment.

The blanket takeaway here is that your ESG actions are a fantastic tool for preventing disfavor and deselection. Secondarily, they are a solid tool to drive favorability — provided that you have great products and great customer service.

There’s more to it than that, though, and while my GreenBiz deck and the report we’ll release in April get into a lot more detail, here are three key takeaways you should know:

1. Treating employees well earns you some Good Points (8 percent); treating employees poorly chalks up a lot more Bad Points (14 percent).

We’ve seen this theme for years, but it intensified as a result of COVID-19. If the word gets around that you don’t treat your people well, it will taint everything else you’re doing right. So to all the sustainability professionals reading this: yes, measure and manage your GHG emissions diligently but also measure and manage employee sentiment and work across your organization to ensure they’re being taken care of. As we all know all too well, intangibles make up 90 percent of a company’s value — and good will is one of the main intangibles.

Walmart is the best example of this scenario. Most of us know the amazing leadership role it has taken in moving sustainability forward. Some may argue with me, but I wholeheartedly believe the consumer packaged goods industry wouldn’t be as far along on reducing its environmental impacts if not for Walmart insisting that it happen. Walmart was more often listed as a good company (235 mentions) than a bad company (162 mentions), but it was No. 2 on both lists.

The top reasons for Walmart being named as a Good Company were price, variety and customer service, while the top reasons for Walmart being named as a Bad Company were treating employees poorly, followed distantly by bad service and poor quality/cheap. Very few people chose Walmart for its social/environmental record (less than 10). Walmart has made great strides in the last few years regarding its employees, but the stigma from the past sticks to this day. So, bottom line, if you get labeled as a company that doesn’t treat its employees well, it’s really hard to shake.

2. Taking a societal stand/displaying your values buys you a few Good Points (4 percent); taking a stand/displaying values that Americans don’t agree with gets you far more Bad Points (9 percent).

This one is interesting, and Nike is a really good example. They came in at No. 5 on both the Good Company list and the Bad Company list for exactly the reasons you would expect, based on another question we ask: Name a company whose products you’ve chosen — or not chosen — because of the manufacturer’s environmental or social record. Nike came in No. 2 on the list of companies chosen because of its eco/social record and No. 1 on the list of brands not chosen because of its eco/social record.

A lot has been written about Nike’s bold decision to back Colin Kaepernick, but my favorite — and the most relevant point to what we’re discussing here — comes from Jerry Davis, a University of Michigan Business School professor: "It turns out Democrats buy a lot more sneakers than Republicans. The demo that is willing to spend $200 on Nike sneakers is not the demo that’s going to boycott them because of Kaepernick."

Although the Kaepernick decision happened in 2018, in 2020, Nike was still reaping the benefits of the campaign in both brand reputation and sales numbers, despite continued criticism from some camps. A Harris poll pegged Nike’s overall reputation at a 54 percent positive ranking, up six points from 2018. The company’s value was reportedly up $26.2 billion as well.

3. Giving to communities and charities earns you a lot of Good Points (12 percent total); not giving to communities and charities doesn’t actually cost you any points.

When we asked Americans what makes a company good, we heard community/charitable-giving kinds of answers from 12 percent of Americans. When we asked what makes a company bad, nobody said, "They don’t give to charity or the community."

Target is a really good example on this front. The company comes in as the fourth-most popular unaided answer on two questions: Name a Good Company; and tell us the brand or product you’ve chosen because of the manufacturer’s social or environmental record. Reasons why Target is named as a Good Company are price, products, customer service and variety. Being community-focused came in as the sixth-most cited reason it’s a good company. And while it wasn’t a top answer for the second question — a brand chosen for its social or environmental record 6 percent — everyone who chose it cited community involvement/giving as a reason.

There’s a lot more here, including a framework for how companies should think about all of this and apply it to their commitment-setting and storytelling. So download the GreenBiz deck and stay tuned for the full report coming out in April.

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