Why Jeff Swartz is right about the relationship between customers, ethics and profit, and how twittering critics are beyond brand control
Jeff Swartz, the ebullient leader of Timberland, has done more than most to show that sustainability can pay for a major brand. So his take on what the financial crisis means for responsible business is worth hearing.
Instead of being a threat, Swartz says, the financial crisis offers a huge opportunity for brands with a sustainability message. With public trust in business at an all time low, brands able to convince consumers that they stand for something more than profit should thrive, he argues.
Swartz warns brands not to underestimate the strength of anti-corporate feeling in North America and Europe. The anti-capitalist mood may have been best captured by protestors in London or activists who took a bus tour around the luxury homes of AIG executives in the US, but the sentiment is felt by many, he says. The anger many feel towards the finance sector could easily spill over to affect businesses in other troubled sectors. Put simply, business is facing a crisis of legitimacy.
So how on earth could this be an opportunity for brands? Easily, says Swartz. A disaffected public is searching for someone to trust. A good way for brands wanting to meet this emotional demand is to show that they are committed to addressing social and environmental issues that resonate with customers. Brands that are open and honest about how they are tackling these challenges will win back the trust of consumers, Swartz believes.
It is hard to argue with this analysis, although for many brands to do what Swartz suggests would take an awfully long time. Yet winning back their social licence to operate is the biggest challenge facing companies today. The deal between business and society has been broken. Business was supposed to create wealth and in return society would be quietly supportive. Now the finance sector has failed to keep its side of the bargain, many will start to question whether companies in other sectors can be trusted either.
If companies lay off staff in large numbers, the competence of executives will be questioned by employees and unions. If their share prices struggle, investors will get the jitters. If they are found to be minimising tax bills to protect earnings during the slump, they could face a regulatory backlash. These things are already happening to businesses in all sectors, not just finance.
So corporate responsibility – as a way for business to engage with and explain itself to society – is more important now than ever. Corporate responsibility emerged as a way for business to make itself more acceptable to society. Dropping it now, when trust in companies has slumped, would be suicidal for business.
Likewise, as the balance between markets and governments shifts back to the state, companies in sectors that have not failed as catastrophically as finance will have to show they can be trusted to create a fair deal for society. If not, they risk being gripped by the firm hand of regulation, with further costs to business.
In the current climate, brands know that these two traditional arguments for responsible business – protecting your reputation and avoiding over-regulation – are now just as relevant as they were a decade ago, the last time anti-corporate feeling was so widespread.
Yet this time round, the opportunity side for brands with strong records of sustainability performance is greater than it has ever been before. Companies such as Timberland that have built up deep reserves of social capital in the past decade now have a chance to ram home the message that they are brands consumers can trust. If the public buys this message, these ethically minded brands deserve all they get.
Online activism – Tweet, tweet
The headache for brands wanting to keep tabs on what critics are saying about them has grown ever more severe with the rise of new media. From media-savvy activists using Twitter to coordinate demonstrations to the lonely but influential blogger, web 2.0 offers multiple fronts on which corporate reputations can be questioned and attacked.
No company can police the web. Even with the latest search technology, the amount of good and bad information published about a brand online will be too much for any company to monitor or respond to effectively.
As our cover story shows, companies are seeing that they cannot contest everything that is said about them on the web.
But many still fail to engage effectively with stakeholders online. Some brands have started blogs or social networks. But these efforts, with the corporate hand very much visible behind them, have tended to project about as much personality as an annual corporate responsibility report.
Brands must learn to lighten up when it comes to dealing with critics online. And they must do their best to ensure whatever they say about sustainability online is spontaneous, genuine and – dare we say it – controversial. Only then will the world’s netizens bother to pay attention.