How can consumer-facing companies weave social justice into their DNA?
ESG metrics influence buying decisions
Consumer-facing companies are entering an altered business landscape as the US gradually eases restrictions triggered by the pandemic. How many of the recent changes in employee and customer behavior will endure remains to be seen.
This uncertainty is particularly relevant to changes associated with public health concerns. However, environmental, social and governance (ESG) criteria have long predated the pandemic. And all signs point to their endurance well beyond this past year of economic, political and social change.
Diversity and inclusion (D&I) are integral to ESG and they are stated priorities at 77% of consumer markets (CM) companies. CM leaders are making strides: 51% told PwC they will create new opportunities for conversations about social issues while 57% will increase diversity and inclusion training.
Market pressures converging
Increased emphasis on social justice may be particularly important for consumer-facing companies. Consider these data points:
- 42% of CM CFOs are concerned about lower consumer confidence dragging down consumption, compared with 29% of their counterparts in all sectors.
- During the past year, 50% of consumers report trying new brands, and 63% say they are likely to stick to them.
- Younger consumers (17-38 years) are almost twice as likely to consider ESG issues when making purchasing decisions than consumers over 38 years old.
The data suggest that CM brands may face greater competitive pressure for fewer discretionary dollars. So how can they succeed in attracting customers and building loyalty?
Identifying and communicating purpose and values offer an important pathway to success. Well over half of all consumers (59%) say a company’s purpose and values play an important role in their purchasing decisions.
CM companies have a head start
Business leaders acknowledge that the pandemic has hit women and minorities harder than the population at large. And they are ramping up existing D&I efforts:
Depending on how insurers adapt in 2023 and the rest of the decade, we see four different scenarios unfolding:
- Transparency is essential
- Empowered leadership drives effective D&I
- Change requires accountability
- Prioritize D&I by measuring it
Transparency is essential
The Clorox Company created resource groups more than a decade ago to help inspire product innovations, accelerate product placement plans and deepen management’s understanding of multicultural consumers. The company is tracking D&I metrics, consistent with the belief that transparency about progress is essential.
Empowered leadership drives effective D&I
One female CEO at a beauty products company told PwC that “gender balance is not a matter of excluding men. It’s a matter of including more women.” She said, “I don’t want them to go to 48%. I just want it to be 50-50.”
Change requires accountability
Procter & Gamble, Inc., has been recognized over the years for its longstanding commitment to diversity. P&G has made progress against its goal to have a 50-50 male-female balance at all management levels, including board membership. The company also has committed to public reporting of D&I progress across other dimensions on its website.
Prioritize D&I by measuring it
Starbucks is tying executive pay to D&I targets as part of its initiative to make the company more inclusive. D&I can work only when it’s integrated into all facets of business operations and organized around intentional goals. Only then is it measurable, making it a priority.
Weave D&I into your DNA
At its core, D&I represents an evolution in the DNA of an organization. Brands and corporate entities start by identifying their values and principles. Then, they add data-driven stories to motivate purpose-led behavior. Here are five key steps your business can take to embed D&I:
- Embrace an intersectional culture of belonging
- Establish organization-wide accountability
- Understand root causes and barriers to change
- Champion curiosity, humility and empathy
- Benchmark and analyze your data
A data-driven approach can offer clear evidence for D&I change where needed, highlighting barriers that might impede social progress. Real-time dialogues with your entire range of stakeholders can inform strategic decisions to help shape the future.
Diverse voices bring clarity
The opportunity exists: More than 70% of employees place more trust in their employers than in government to respond to racial inequity. And business is responding. The Business Roundtable, whose members are CEOs of companies that represent more than $7 trillion in annual revenues, has made a public commitment to advance racial equity.
Working collectively, organizations can do more to address these societal challenges. By joining CEO Action for Diversity & Inclusion, almost 2,000 CEOs, including an array of CM CEOs, have made a public pledge to advance D&I in the workplace.
Not only are diverse voices speaking with more clarity—and being heard—within CM companies, they are also current and future customers. And they represent the workforce that will develop and deliver the kind of innovative products and experiences that future markets demand. CM companies are well-positioned to benefit by heeding these diverse voices.
