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March 30, 2022

Balancing Modern Social Responsibility and the Risks That Come With It

In today’s hyper-connected world, advanced social communication technologies (e.g., social media) have unequivocally made brands more culturally influential and at a greater speed than ever before. This fast-paced influence came with increased scrutiny and an ongoing debate about the positive and negative social impact of today’s leading brands. 

In response to how society has evolved to view and value brands as well as their internal culture, the Business Roundtable two years ago announced its new statement of purpose that set a modern tone to corporate responsibility by committing to lead with the benefits of all stakeholders—including employees, customers, operating communities and shareholders—in mind. This move ignited both applause and criticism across business audiences. 

But, whether or not you agree that brands assume some level of social responsibility, it appears that many of them have already taken heed to the cultural shift of expectationsmostly accelerated by the COVID-19 pandemicand absorbed a variety of social responsibilities (e.g., paternal leave, corporate policies that benefit the environment).

Public data’s increasing influence on brand response

An organization’s reputation is both its most priceless and vulnerable asset. In a recent Willis Towers Watson survey of 500 senior executives at leading global companies, 83 percent said they take reputational risk seriously and placed it in the top five risks in their risk registers.

Against this backdrop, brands are now making significant efforts to publicly respond to headlining social issues with either company-issued statements, new policy announcements and/or social campaigns. When backed with money, these efforts go beyond the more traditional company responses. We’re seeing this more and more as widespread public outcries have become more visible and impactful with global social media platforms. 

This is a direct result of the growing public information landscape and the fact that 72 percent of those in white-collar occupations are remote and likely more active on social media. In fact, about half of Americans (48 percent) get their news from social media “often,” according to a 2021 Pew Research Center report. As such, brands are now more willing to take a stand on social issues that they may have previously ignored under the assumption that the issue held no bearing on their bottom line or influence. 

Read More: How Dataminr Helps Businesses Mitigate Reputational Risk

To that end, real-time updates on what’s happening locally, regionally and globally are proving to be critical, not just from an operational or internal communications standpoint, but from a brand management perspective. 

Managing a brand—whether it be that of a multinational organization or a small company—now requires tapping into deeper, on-the-ground real-time data from a variety of public sources (e.g., TikTok) on the evolving preferences of current and prospective customers and other stakeholders. And, recognizing their purchasing power and influence. 

As a result, businesses face even greater pressure to be more responsible and transparent. Customers no longer only care about getting the sausage. They want to know how the sausage is made, whether it's ethically sourced, and if the people making it are diverse and treated fairly. The more socially responsible the company, the more supportive and invested all of its stakeholders become. 

This pivotal shift over the course of the last decade in how we learn, share and consume news and participate in trends has become an undeniable resource for brand leadership.

Inaction is action

Although brands are not obligated to have a stance on social issues, changing consumer sentiment and the rise of activist investors have forced businesses to respond to or participate in national conversations. When a brand opts out and chooses to remain silent amid a major social controversy, that can be viewed as being complicit or as a reflection of their values. 

However, one could argue that with the abundance of social issues and controversies, it’s unrealistic to expect companies to react every single time. The key is to strike a balance. Leaders need to understand what’s relevant to their market, business and stakeholders, while also being aware of potential impacts of critical national conversations. Most importantly, brands need to be authentic and genuine in their approach. 

Should your company speak up about social issues? If so, which ones? Most marketing leaders will probably agree it’s a tough call to make. Companies large and small are cautious of what to say and whether what they say will have a positive, neutral or negative effect on their brand. It’s even more complicated when stakeholders (shareholders, customers, employees, advocacy groups) have differing opinions. 

The solution is simple: be authentic and steep your decisions in the beliefs and values of your brand. The risk of being seen as disingenuous can, at times, significantly outweigh the consequences of doing nothing. Additionally, whether your brand responds to an issue or not, make sure your teams have a real-time birds-eye-view of potential far-reaching risks to the brands during key unfolding cultural and social crises. 

Business leaders need to remember that most employees want to work for and commit to a brand they believe in, particularly the more environmentally and socially conscious Gen-Z and millennials—and that customers will tend to choose brands that share their same values.

Topic(s): Corporate Risk

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