A study by PR firm Edelman shows that nine out of 10 Singaporeans believe it is important for companies to address societal issues, yet only three in 10 think they are doing enough in this area.
By BOB GROVE
Since the global financial crisis in 2008, the topic of corporate behaviour continues to make headline news around the world for the wrong reasons. Trust in business has declined rapidly, and Singapore and Asia have not been immune despite continued business growth. While pockets of businesses around the world understand that there is a need to do good and give back to the society to increase trust and credibility, conventional business leaders in Singapore have not grasped this concept of shared value.
A decline in trust
To be successful today, leading brands have demonstrated that shareholders, customers and other stakeholders are taking far more seriously the issue of “how you do it”, over “what you do”. In short, it is about generating profits with purpose. Edelman’s 2012 Trust Barometer, the world’s most regarded study on trust in institutions, that has been carried out for the last 12 years, found that tomorrow’s trust is built on today’s societal performance through the treatment of employees, putting customers ahead of profits, and investments in the environment, society and local communities.
A second study, the 2012 Edelman goodpurpose Study, the firm’s fifth annual global consumer study, explores consumer attitudes around social purpose, including their commitment to specific societal issues and their expectations of brands and corporations. The local findings were launched at the first-year anniversary event of the Asia Centre for Social Entrepreneurship and Philanthropy, National University of Singapore Business School.
So why is trust in business declining? Business, under more pressure and more visible than ever, has tried to adopt a formulaic approach to social purpose, without taking the lessons from the early pioneers to heart.
Over the last couple of decades, we have experienced a few phases of true social purpose, as opposed to the current common practice of CSR. There were the pioneers which were corporations designed to fulfil a social purpose. Next came the early adopters consisting of large, global corporations who figured out how to generate profits and do good for the environment or their communities at the same time.
As markets mature, we now enter the vast middle part of the bell curve, where the majority of companies touch upon this business strategy by creating CSR or citizenship reports, carrying out cause marketing and employee volunteerism or even advertising initiatives. However, they rarely see results similar to those experienced by early adopters and even the early majority.
Top management needs to be supportive
There are three reasons why that became apparent by looking at the 2012 Edelman goodpurpose Study.
First, institutional will. Simply put, purpose or sustainability initiatives must be driven from the top of the organisation, with a firm commitment to authenticity, investments, innovations, focus and outcomes. Without institutional will, candidly, “the dog won’t hunt!” Consumers are calling for business leaders to genuinely embed “purpose” into their everyday operations. Consumers in Singapore are asking top leadership to take visible ownership of Purpose.
In 2007, Purpose rested largely on the periphery of the four Ps of marketing – price, product, place and promotion. It was an add-on to a pre-existing campaign or programme idea, often considered later in the planning cycle. Yet, it is clear that today’s consumers have pushed Purpose into a more central role in the marketing mix. According to the 2012 Edelman goodpurpose Study, when quality and price are equal, the most important factor influencing brand choice is Purpose. In fact, the prominence of Purpose as a purchase trigger has risen 26 percent since 2008. Purpose has fully arrived at the 5th P.
Profit & purpose can mix
There has also been a perception that profit and purpose do not mix well. This is changing: 75 percent of global consumers believe it is acceptable for brands to support good causes and make money at the same time – up 33 percent from 2008. Let me give you some examples where consumers in Singapore are actually pleading for companies to put Purpose at the heart of their purchasing decisions.
If costs were not a factor:
- 84 percent of Singaporeans would prefer to live in an environmentally-friendly house or apartment than a large house or apartment.
- 81 percent would rather have a brand that supports the livelihood of local producers than a designer brand.
- 79 percent would rather drive a hybrid car than a luxury car.
In a market where recruitment of talent is probably the most significant barrier to growth for most companies, 56 percent of Singaporeans want a job that allows them to give back to society.
In fact, Purpose is the most influential factor in purchasing decisions when cost and quality are equal – more so than design or brand loyalty.
The third principle of committing to social purpose is that business has to prioritise its stakeholders differently. It is no longer a shareholder-only world, but a stakeholder world. Business has to invert the traditional power pyramid and let the voices of the “regular people” be properly heard.
With that said, it is important to finally put one thing to bed forever. Social purpose, CSR, philanthropy and social enterprises are not a thing of the West alone. We talk often in this part of the world about leap-frogging the West in terms of technology and process adoption. However, consumers in rapidly growing markets have higher expectations of business’ true commitment to social purpose than in the developed markets in the West. Leap-frogging, yet again.
Businesses need to do more
Take a look at Singapore Inc however – Singaporeans clearly think that business here hasn’t got it.
Rather than driving the car next to the guard rail, businesses in our small island needs to operate in the centre of the lane – to tune-out the high-priced lawyers or brilliant financiers who advise hugging the guard rail to make a bit more money. There is more to gain from a motivated workforce and confident customer base that far outweighs any benefit derived from operating at the edge. Our consumers want purpose; they are setting the agenda with their wallets and attitudes. It just makes plain business sense for business to listen and act. And I think it is time that Singapore took a lead. There is no easier place to do it than here. The Government is on board, but seriously this is a business agenda. My request is to act now. Some businesses are already doing so and they may well become the new darlings of the shareholder and stakeholder world.
Bob Grove is the managing director of Edelman Southeast Asia.