The Purpose-Action Gap: The Business Imperative of ESG – Sustainable Brands

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In a recent study, we discovered shifts in thinking from both brand and consumer values: The gap between what they believe and how they are acting on such
beliefs is narrowing, particularly when brands make sustainability accessible and affordable.

For the last few years, purpose has dominated marketing conversations and become
an important aspiration for thousands of brands. In a rapidly changing
post-COVID world, where so much has shifted in the last 12 months, it is one of
those ideals that is at a critical and increasingly important moment.

It’s time for brands to ally their ideals with pragmatism. Purpose is no longer
optional, and simply sponsoring a good cause is no longer enough.
Research
suggests that companies that embed purpose at their core and actively live it —
from business transformation to advertising and PR — are more successful in the
long run.

In a recent study conducted by Barkley, both pre-
and post-COVID, 2500 consumers provided valuable hints on what modern consumers
are looking for. We also partnered with Jefferies in
2021 to survey 150 C-suite level business leaders to hear what they thought
about the role of ESG (Environmental, Social and Governance) reporting and
action within their companies and sector.

What we discovered were shifts in thinking from both brand and consumer values:
The gap between what they believe and how they are acting on such beliefs is
narrowing, particularly when brands make sustainability accessible and
affordable.

The consumer response

Helping purpose to permeate …

Hear more from Tetra Pak’s Larine Urbina and VF Corp’s Ricardo Caceres on how to drive purpose, growth and impact at enterprise-level scale at SB’21 San Diego — October 18-21.

We found that brands acting sustainably are even more important to consumers now
than before the pandemic — and they are willing to pay more for sustainable
products and services. However, what they say and what they do are very
different things. While sustainability is important, it can’t be the only
selling point. Poor quality or a bad experience will drive them to different
products. This is crucial to remember, as we found minimalism — buying fewer
things or longer lasting products — is on the rise. Brands will need to further
justify value and/or quality to stay in shoppers’ baskets.

This goes across generations and races, as well: We have consistently seen that
living sustainably matters more for younger
generations
,
but it is growing amongst older generations. While only a quarter of Boomers
said they chose a more sustainable product over another in 2019, it rises to
almost one-third by 2021.

Race also plays a part in sustainable beliefs and behaviors, which are stronger
among non-white communities. While the pandemic shone a light on pre-existing
racial inequalities across housing, workplace and healthcare, the murders of
George Floyd, Breonna Taylor and countless others thrust those
inequalities into the public
consciousness
.
By standing on the wrong
side

of some of these issues, brands stand to lose business from ethnic groups in the
future.

Overall, we found that ESG is growing in importance to all US consumers —
irrespective of their color, who they vote for or how much money they make.
There are disagreements on how to solve the social and environmental problems
and who should pay for it, but everyone agrees that change for good is needed.

The business response

Across business sectors, almost all business leaders (98 percent) surveyed
agreed that ESG-related issues are more important or much more
important

than they were 12 months ago. While consumers’ biggest issues were economic
instability and inequality, businesses’ top issue was to focus on diversity and
inclusion
.
Interestingly, 85 percent of respondents stated it was important; but only 20
percent thought they were doing an excellent job on this today.

While the internal gaps are present among businesses, there are also gaps
between consumer expectations and business performance — primarily regarding
environmental issues.

When asked, businesses claimed the key reasons motivating business action on ESG
responses reflect tangible business performance. However, two of the top five
reasons were around people management: attracting and retaining key
talent
,
and engaging
employees
.

We consistently saw across the two data sets that the majority of today’s
consumers, especially younger consumers, say working for a company that shares
their values is important to them. It is also important to note that there is a
gap between how important this is to the consumer and how good a job they think
their current employer is doing.

Closing the gap

Consumers want brands to prove it. Brands need to behave like a whole brand
across their value chain — from how employees are treated to how the products
and services are made to how the brand story is told and everything in between.
Consumers will do research before they buy, so brands must put in the work.
Successful brands are already looking closely at how their businesses affect
people and the planet; they are taking action today and looking to the future.
If you wait for consumers to tell you what matters, it will be too late. A
brand’s financial success — as well as the betterment of the people, planet and
the communities it serves — depend on its business changing now.

ESG is a business imperative. Is your business ready to close the gap between
purpose and action?

To read the full research report, click here.