Brand purpose is a complex and ever-evolving concept, and no business leader would deny that consumer expectations about the role of business in society are changing dramatically. Causational issues like corporate impact on the environment are clearly important to both businesses and consumers, but many more purely social concerns have found their way into these expectations—and new research from global business consultancy Bain & Company confirms that CEOs are paying close attention.
The firm’s new Making Business Do Better for Everyone report, based on its survey of nearly 300 global CEOs reveals that a commanding majority (85 percent) of business leaders view social issues as “urgent” concerns for their companies. When asked about the primary role of their business, 60 percent said either creating “positive outcomes for society” or “balancing the needs of all stakeholders.”
“The companies that lead on social issues, such as DEI and socially responsible supply chain practices, don’t view these efforts solely as risk mitigation—it’s the opposite, in fact,” said Karthik Venkataraman, a partner in Bain’s Diversity, Equity, & Inclusion practice, in a news release. “The leaders in this space have found ways to directly tie their social efforts to the commercial logic of their businesses, opening new opportunities for value creation by better serving all of their stakeholders. They see a symbiotic relationship between the concepts of ‘doing well’ and ‘doing good.'”
One of the most influential stakeholder groups in the charge for change: customers
Customers have made it clear that they care about the social ramifications of their brand and product choices. Another Bain survey found that half of consumers globally say they are more likely to buy from a brand that commits to combating racism, and more than half are more likely to buy from a brand that commits to human rights. Regionally, 82 percent of consumers in Europe, the Middle East, and Africa are more likely to recommend a brand after learning it supports a social cause, and 86 percent of consumers in Latin America say it is very important that companies contribute to improving society. In the US, a third of Gen Z consumers say they would boycott a brand with bad labor practices.
The executives surveyed said social performance drives business outcomes in several ways
A self-assessment of executives at companies who lead on social issues perceive their companies to have higher revenue growth and EBIT growth than their peers who lag on social issues. They also perceived their companies to have better results in attracting customers and talent as well as raising capital.
“When it comes to engaging in social issues, the challenge for many executives lies in figuring out how exactly to transform action on these issues into economically sustainable business performance,” said Jenny Davis-Peccoud, a partner at Bain and global head of the firm’s Sustainability & Responsibility practice, in the release. “The ‘S’ in ESG comprises a wide range of issues, which vary by organization. We recommend starting with a focus on four critical groups of stakeholders—local communities, customers, employees, and suppliers—and identifying actions that both address social issues for these groups and deliver results for the business.”
Bain’s study explores four areas of opportunity to translate action on social issues into economically sustainable business performance:
#1 Improving social and economic conditions in local communities
Communities where companies operate are increasingly critical stakeholders for business. Some companies are looking at these stakeholders through a social lens and discovering how to materially improve conditions in their communities in ways that boost business performance.
#2 Identifying new sources of customer value
Applying a social lens to customers and markets can reveal opportunities to create value for whole new customer segments, including in underserved markets.
#3 Investing in current and future workforces
Given the challenges companies now face in attracting and retaining the right talent, businesses can shift from being “talent takers” to “talent makers” by investing in employee learning and development.
#4 Enhancing supply chain resilience by building socially responsible supplier relationships
By examining their supply chains through a social lens, companies can work effectively with suppliers to ensure fair and equitable practices while also making their end-to-end supply chains more resilient.