London 09:00am Wednesday 1 December 2021: Less than a half of consumers (49%) trust brands that say they’re sustainably and ethically driven in their marketing and branding, or that they are aiming to achieve net zero by a certain date (47%). Similarly, only 15% of business decision makers in business to consumer businesses are completely confident that all the materials their organisations use are responsibly sourced. What’s more concerning is the motivation behind the distrust. According to research released today by NAVEX Global®, the leader in integrated risk and compliance management software with over 13,000 customers worldwide, only a quarter (25%) of consumers believe businesses are primarily motivated to undertake environmental, social and governance (ESG) initiatives to make a positive difference to the world and over half (55%) of businesses agree it’s more about that bottom line.
The research conducted with Sapio Research of 500 business decision makers and 2,000 consumers in the UK launches following COP26, which emphasised the global urgency to tackle climate change for the future of the planet.
The divide in consumer and business perception: is enough being done in ethical and sustainable efforts?
While talk of ESG issues might be dominating the headlines, it’s widely believed more can be done. 74% of consumers and 85% of consumer businesses agree that most businesses could do significantly more on their efforts to be ethical and sustainable.
However, only a quarter (25%) of consumers think making a positive difference in the world is one of businesses’ top two motivations for undertaking ESG efforts. Equally, just 27% of businesses say ESG investment is one of their top three priorities for the next financial year, despite the fact that over half (55%) of consumers think it should a top three priority and a further 17% that it should be the number one focus.
However, when it comes to who they believe is responsible for enacting change, businesses and their own organisations come out top. Half of businesses (50%) think that their own organisations are responsible for ensuring ethical and sustainable practices are upheld within their organisation and throughout their supply chain. Consumers agree; 38% also felt this was the business’ responsibility. At the same time, 32% feel the government should be taking responsibility for this too.
Consumers are concerned but businesses don’t expect them to leave – especially in consumer facing businesses – but they should be
While there may be a contrast in perceptions around how much a business is or should be doing towards sustainable and ethical issues, there could be a significant impact on business, nonetheless. Almost three in five (59%) consumers say they would stop doing business with a company if there were negative news stories about their ethical and sustainable practices, and over half (54%) believe that only businesses that uphold standards in these areas will continue to be successful in the future. Furthermore, 37% of consumers overall and 57% of those aged 18-25 say they’ve stopped buying from a brand because they did not consider it sustainable or ethical.
Consumers are making active decisions on where they purchase based on sustainability and ethics, much to the surprise of businesses decision makers amongst whom only 18% think that consumers consider whether something is ethically or responsibly sourced when making a purchase. Despite this, 60% of B2B businesses say they agree their customers will leave them if they fail to demonstrate ethical and sustainable practices in the future, but less than half (45%) of consumer businesses agree with this.
Lacking confidence and trust in ethical and sustainable practices – from both consumers and businesses
The current perceptions on business and the reality that consumers are willing to leave a brand because of ethical and sustainable practice is a concern. At the core, confidence and trust are lacking. A third (34%) of consumers say they don’t think any industry is tackling climate change well. Similarly, only 17% of all businesses surveyed were completely confident that the businesses they partner with or outsource to operate ethically and sustainably, despite 45% saying they personally research companies they work with. Not only do consumers lack trust in the brands they buy from, but businesses themselves do, too.
Fathia Murphy, ESG Product Specialist, NAVEX Global, says: “It is clear from the research there is a lack of trust and confidence from consumers - businesses need to be confident in their efforts and consumers need to trust that businesses are playing their part in saving the planet.
“To give credit where it’s due, a lot more organisations are playing their part, arguably it’s not enough, but we have to start somewhere to see the ripple effects in the coming years. What’s important is that it is for the right reasons. Ethics and sustainability are major issues in our fight to save the planet and businesses that are driven by that, rather than the bottom line, will engage with customers more authentically and build trust where it’s lacking.
“Businesses should be educating themselves so that they fully understand the E, S and G, their interdependencies, and how to implement tailored solutions that help make progress. To achieve this, technology will play an important role in centralising and automating processes, as well as reporting to illustrate to consumers that businesses are indeed making strides.”
About the research
Two surveys were conducted:
The business survey was conducted among 502 business decision makers in the UK
- At an overall level results are accurate to ± 4.4% at 95% confidence limits assuming a result of 50%.
The consumer survey was conducted among 2002 UK consumers
- At an overall level results are accurate to ± 2.2% at 95% confidence limits assuming a result of 50%.
- The interviews were conducted online by Sapio Research in October and November 2021 using an email invitation and an online survey.
For these surveys, ESG was defined in this way:
- ‘ESG’ stands for Environmental, Social and Governance, and refers to a business’s sustainability and ethical impact (e.g. a business’s pollution, waste, and energy usage, their working conditions and community outreach, and the diversity of their workforce) and will be referred to as ESG from here on out.
- Sustainability was defined in this way:
- By sustainability, we are referring to: sustainable, or green, business practices implemented to minimise the negative impact, or have a positive effect, on the global or local environment, when undertaking business activities. This may include but is not limited to; reducing or off-setting company carbon emissions, reducing overall energy usage and / or using renewable energy sources, using recyclable materials where possible etc.
- And ethical impact was defined in this way:
- By ethical impact, we are referring to: businesses striving to create good and fostering a positive culture. It means honestly adhering to management strategies (rules, principals, policies and standards) that minimise the negative impact they have on, or positively contribute to society (people (customers and workers) and animals) across all business activities (production, distribution, consumption of good and services etc.). This may include but is not limited to; ensuring workers are paid fairly, there is diversity within the workforce, good working conditions within and across the supply chain, fostering a good relationship with the communities they serve and giving back where possible etc.
About NAVEX Global
NAVEX Global is the worldwide leader in integrated risk and compliance management software and services. Our solutions are trusted by thousands of customers around the globe to help them manage risk, address complex regulatory requirements, build corporate ESG programs and foster ethical workplace cultures. For more information, visit NAVEX Global’s website and our Risk & Compliance Matters blog. Follow us on Twitter and LinkedIn.
Lucy Figiel/Elen-Tay Alcock/Abi Beaton