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Oriol Iglesias

Humanity faces significant challenges, such as climate change, increasing inequalities among countries and within societies, and the potential impact of new technologies, including robotisation in the labour market. The Covid-19 crisis has exacerbated these challenges and increased the pressure on corporate brands to embrace a more conscientious approach to management and acknowledge their broader responsibilities.

Against this backdrop, consumers are becoming more conscious of this new reality and are increasingly considering the impact of their consumption choices upon society and the environment.

Aware of this rise in ethical consumerism, many brands have implemented corporate social responsibility (CSR) programmes. There is no doubt that CSR has helped brands to develop a more conscientious approach to business while also generating competitive benefits.

But it’s also true that many organisations have adopted CSR as a passive reaction to external stakeholder pressure to behave in a socially responsible manner. This reactive approach has raised questions about the real corporate motivations behind CSR practices.

Most corporate brands still need to figure out how to embed CSR at the core of their brand strategy

In most cases CSR has failed to deal properly with three key challenges:

  1. Most of humanity’s key challenges are a combination of social, economic, governance and health issues. These challenges can only be tackled by leaving behind the traditional shareholder mentality (focused on maximising the value of shareholders) and addressing issues that matter to a broad range of stakeholders and people in general, and which have the potential to change their daily lives.
  2. Most organisations have still not developed adequate measures to understand the value that their CSR activities provide to their different stakeholders. To serve their diverse stakeholders, corporate brands need to rethink how they measure value, beyond purely financial results.
  3. CSR is often tangential to the business, rather than embedded in its core. This disconnection between corporate social responsibility activities and strategic goals leads to stakeholders seeing CSR activities as less authentic. Most corporate brands still need to figure out how to embed CSR at the core of their brand strategy and to serve authentically their different stakeholders with a balanced perspective.
     
How Covid-19 is fostering conscientious companies
Related content: How Covid-19 is fostering conscientious companies

Beyond CSR: conscientious corporate brands

Failings in the practice of CSR and growing stakeholder expectations of business to tackle pressing existential problems suggest going beyond CSR. This is the rationale behind conscientious brands and the idea that “conscience” should be at the core of the corporate brand identity.

A brand with a conscience is true to itself, commits to social responsibility and fairness, is open to dialogue and is willing to submit decisions to public scrutiny. Conscientious corporate brands go beyond serving their clients and shareholders and take into consideration the needs and expectations of their employees, their partners and society. Additionally, conscientious corporate brands also consider the Earth as another key stakeholder that they need to serve and protect.

Conscientious corporate brands go beyond serving their clients and shareholders and take into consideration the needs and expectations of their employees, their partners and society

When a corporate brand has a solid purpose and guiding principles, decisions can be taken with agility, which is a key advantage in the current VUCA environment. Take, for example, Patagonia, the American outdoor sports clothing company, which has long been lauded for its commitment to its environmentally focused purpose and its principles, such as quality and integrity. At the onset of the Covid-19 crisis, Patagonia moved quickly to close all of its 39 stores in the USA and its ecommerce business, while taking actions to meet the needs of employees, communities and citizens.

Another notable attribute of many conscientious corporate brands is their long-term vision. For instance, when Paul Polman took over the helm of Unilever, he established a strategy known as the Sustainable Living Plan, which had a ten-year time perspective and set out to double sales while halving environmental impacts. To tackle short-termism, he told investors they would no longer get quarterly reports nor earnings guidance. With a very specific commitment to a stakeholder view, he informed would-be investors that if they didn’t buy into the brand’s long-term and sustainable model, Unilever didn’t want their money. For Unilever, this commitment to sustainability was not an add-on, but core to the strategy and to its operations.

Patagonia store
At the onset of the Covid-19 crisis, Patagonia moved quickly to close all of its 39 stores in the USA and its ecommerce business, while taking actions to meet the needs of employees, communities and citizens (Photo: Althom/Getty)

Co-creating conscientious brands

Conscientious corporate brands are not only committed to listening to stakeholders – they engage them in their strategic decision-making processes. They see their stakeholders as key strategic partners with whom they need to build long-term, trustworthy collaborations. An example of this is Danone’s “One person, one voice,” an initiative to co-create – with its 100,000 employees – the company’s 2030 strategic goals, which are grounded in the belief that the health of people and the planet are interconnected.

The Danone case illustrates how strategic co-creation can help a corporate brand to get relevant inputs from its diverse stakeholders, and to develop together with them more relevant responses to pressing societal and environmental challenges. Additionally, by embracing co-creation, conscientious corporate brands can also generate more trustworthy relationships with their stakeholders.

Conscientious companies need leaders who aim to balance profits and purpose and are committed to using business to foster positive social change

But to co-create a conscientious corporate brand, organisations face four key challenges:

1. Finding and promoting conscientious executives

Companies that want to be conscientious need to recruit, promote and foster executives that are capable of embracing a transformative, responsible, empathetic and participatory leadership style.

In other words, conscientious companies need leaders who aim to balance profits and purpose and are committed to using business to foster positive social change, who understand that they need to balance short-term and long-term objectives, who are sensible to the expectations and demands of their diverse stakeholders, and who embrace a participatory leadership style that recognises the value of co-creating strategies together with stakeholders.

2. Building an open corporate culture

A resistant corporate culture is one of the key barriers that need to be overcome when attempting to embrace strategic co-creation. Unfortunately, too many organisations believe that making strategic decisions is only the task of internal experts, rather than a process that can benefit from the involvement of customers and other stakeholders.

Conscientious corporate brands understand that they need to open up and embrace the perspectives of their stakeholders, whose contributions can be extremely valuable. According to this philosophy, co-creation is a strategic asset that allows brands to orchestrate a collaborative innovation network capable of developing a competitive advantage. This requires building and nurturing long-term relationships with the corporate brand’s diverse stakeholders.

3. Establishing new governance models

To co-create a conscientious brand, companies will need to establish new governance models, capable of integrating key internal and external stakeholders in strategic decision-making processes.

This change in governance is extremely relevant: unfortunately, there is too often a disconnection of stakeholders from company decisions on CSR, as strategic decisions are taken by the board of directors, which serves to safeguard the interests of key beneficiaries, most of whom are the shareholders of the organisation.

4. Defining key performance indicators

Conscientious corporate brands will also need to define specific key performance indicators, which measure the performance of the corporate brand purpose and its outcomes from the perspective of diverse stakeholders.

A very promising managerial practice is the Sustainable Balanced Scorecard, which aims at balancing financial and non-financial performance measures, explicitly defining environmental, social and ethical performance metrics.

Conscientious brands can have a transformative impact on the world, while building a profitable business. Taking care of our planet is everyone’s responsibility. Hopefully, in the coming years, we will see the emergence of many more ethical consumers and companies around the world embracing a more conscientious approach and putting the planet first.


Article based on research published in The Journal of Brand Management.

Original publication: Iglesias, O. & Ind, N. Towards a theory of conscientious corporate brand co-creation: the next key challenge in brand management. Journal of Brand Management.

All written content is licensed under a Creative Commons Attribution 4.0 International license.