The following is an excerpt of a conversation featured on the latest episode of History Factory Plugged In between host Jason Dressel and Betsy Hoag of Greentarget’s research and market intelligence team. The pair discuss the impact of past historical practices that might be incongruent with today’s ethical standards.
Jason Dressel: Well, let’s jump into it, Betsy. And first, give us just a quick overview of what was the purpose of the survey?
Betsy Hoag: History Factory wanted to look at awareness of companies in terms of their past practices, involving people, products or processes. In order to look at something like this and really drill down on what the attitudes might be, get the full picture of what these things could entail, and what the longer-term repercussions could be, we wanted to make sure we had a good idea of the C-suite perspective, the investor perspective and the consumer perspective.
And so, some of the sub-objectives of this then were to look at the preparedness of companies to address such practices—some of them may be known or unknown. We wanted to explore the impact that discovery of these practices might have on brand reputation from the three perspectives, and also to understand whether there might be any recourse that companies could take in order to restore brand equity that was lost. To our knowledge, we didn’t see any other such study out there, so we felt like this is ripe for insight mining.
JD: So, the survey was extensively focused on understanding how executives, consumers and investors perceived potential risk to reputation through a disconnect of corporate practices between now and what might’ve been done in the past?
BH: That’s a fair summary, Jason. By the past, these could be things that happened 15, 20 years ago. These could be things that happened 100 years ago. We weren’t giving a timeline on it, but we have noticed that over time when such practices have emerged, they’ve of course made news, and there have been reactions.
JD: When you say practices, what do we mean by that? And how explicit were we in the survey of explaining what these potential practices might be?
BH: It’s a great question because this was where our own definition came into play. We had some flexibility here. Within these practices, the categories were racial injustice, sex or gender discrimination, financial improprieties. We deliberately took out such examples there, like insider trading and such. Environmental negligence was another one, and then supporting potentially divisive political or social causes, which was perhaps the most open to interpretation of our five practice areas. But we felt that was something really important—and really current.
JD: So, what did we find out? What were some of the key takeaways from each of those three audiences of the C-suite, consumers and investors?
BH: What was really interesting was that we found that they were actually, the three segments—executives, investors and consumers—were pretty aligned on some of the issues, but these were more of the table stakes issues.
We found things like investors were aligned with C-suites on several topics, including the extent to which reputation is going to impact investment considerations behind an organization. But the bottom line was that, in terms of what would affect that brand reputation, we have all of these issues that C-suites might not even know are there. That’s great that they’re understanding the severity of the issues and how they might impact the brand—should they emerge—but how much do they really know about these issues?
The most exciting finding is that 76 percent of the C-suites are saying that they know about practices in their company’s past—that might conflict with the ethics or standards that we would hold them to today. But of that group, only 26 percent of the C-suites said that they would be very prepared to confront those. So, the fact that we have three-fourths or more saying, we know about these practices, but then one-fourth saying we’re very prepared to deal with it. I think that tells us that there’s a little bit of a disconnect here.
A major takeaway for us was the C-suites are potentially in some trouble, should these things emerge. The companies are not necessarily as prepared as maybe they want to be, and investors and consumers, we’re going to hold them to it.
Outside of the fact that investors were aligned with C-suites on the severity of these things, investors weren’t giving the C-suites a free pass to any degree. They were telling us that, a big percentage of them—actually 29 percent—would dismiss investment opportunities outright if they found that these practices were in a company’s past and they weren’t on board with how a company had mitigated. And furthermore, 60 percent said that they would place specific contingencies on the deal.
At the end of the day, consumers were telling us that they would basically dismiss a product or a service if they’re not happy with how the practices have been mitigated. C-suites thought that this would only apply to a select group of consumers, and in fact 60-plus percent were telling us, “No, you’ve lost me forever.”
There are serious ramifications, not only on the investment side but also on the consumer side, on the purchasing of such brands and services.
To hear more about the impact of consumer boycotts and environmental, social, and corporate governance (ESG) on the actions of C-suite, investors and consumers, listen to the rest of the conversation in the latest episode of History Factory Plugged In. Download the full report, “Perils of the Past,” for even more insights.