Tuesday January 1, 2019
Modern-day consumers are significantly more concerned with how businesses conduct themselves than ever before. So much so that it is now a major factor in how people choose what brands to buy products or services from.
Those businesses that fail to operate ethically or play a positive role in the wider community can suffer from poor perceptions as a result, and this can be financially detrimental and hard to bounce back from. In fact, a study by MediaCom last year revealed half of Brits would choose not to buy from a business on the grounds of bad corporate behaviour.
If your business isn’t proactively doing anything to support causes that your staff and customers genuinely care about, it can send a firm into choppy waters. For example, many large fast-fashion companies, such as River Island and New Look, have been criticised in the past for paying workers low wages and being exposed to poor working conditions. The public votes with its feet and this created negative social media comment and a downturn in profit.
Often, it doesn’t take a massive financial or time commitment to win over your consumers or clients. It can be something as small as supporting a local organisation that plays a vital role in the community or embedding ethical practises into a firm’s culture. It is not just about paying lip service to it, but living and breathing the values you hold in high regard. This can help boost people’s perceptions of a firm and provide customer loyalty.
If you think your business is trailing behind in its sustainability credentials, seek advice from trusted advisers on how to embed this type of behaviour into your business strategy.
Good corporate governance can play a big part in a company’s success. Implementing a code of conduct, endorsing a healthy culture and deploying mindful policies and practices all play an important part in attracting and retaining staff and customers.
When it comes down to it, effective corporate governance is determined by internal and external communication. Make sure you listen to your employees and provide an open forum for feedback so they can share their thoughts on the business – proactively ask what they would wish to improve and allow them to suggest alternate ways of working.
Being transparent in all you do will also enable you to keep staff on side, win over stakeholder support and attract customers. Effective corporate governance has an important part to play in establishing customer retention and loyalty, which is one of the ultimate goals for all businesses.
A code of conduct that transcends from the top to the bottom should be established to ensure these behaviours are a common thread throughout all levels of the business.
It’s also important to remember that individual actions can be detrimental to the reputation of a business. For example, if someone commits an act of fraud, taking disciplinary action where appropriate is essential to demonstrate the firm doesn’t condone these acts.
There is a growing pressure on businesses to take ownership of their environmental impact and to operate sustainably. We have already seen several household names pledge to deploy more environmentally friendly practices. This includes Coca-Cola’s commitment to recycling every bottle by 2030, Kelloggs, which has committed to make all packaging recyclable by 2020, and Iceland, which has committed to being plastic free by 2023.
Alongside this, creating an ethical workplace culture has proven to attract and retain best-in-class talent. Almost half (42%) of the British workforce actively seek employers that embody ethical values and deploy green practices, according to consultancy firm, Global Tolerance. So giving back to the local community, reducing your carbon footprint in addition to offering colleagues attractive benefit packages, all help to get the right people on board from the outset.
On the surface, devising a vision that has ethics at its core will help to attract customers. It pays for brands to stand for something. For millennials, who will represent half of the UK workforce by 2025, ethical integrity in the workplace is essential. This behaviour translates into an identity, which will put a firm in good stead for the future.
It also brings financial benefits to a business and operating in an environmentally friendly manner can significantly boost trust in a brand. So much so that three-quarters of UK consumers would choose to buy goods from companies they know use renewable energy sources, according to Danish energy company Orsted.
Ultimately, the commitment to going green isn’t just an environmental one, but a commercial one, too.
Workplace perks can help drive employee engagement and offering flexible working is a great practical starting point. Giving colleagues some responsibility of their own work timetable and being able to fit activities in, such as visiting the dentist or getting a boiler fixed, are vital for establishing a good work life balance. Other perks such as brand discounts, bonus holiday days and rewards for company contributions are all simple ways to keep staff happy.
As much as going green is driven from the top down, it’s important to implement incentive schemes, such as bike to work or public transport discounts, to encourage employees to do more to help the environment. Doing so will help you attract those that genuinely care about their personal social impact.
Promoting inclusion in the workplace will also benefit both clients and employees. LinkedIn recently revealed that almost half (49%) of employers prioritise diversity to better represent their customers, whereas more than three quarters (78%) also said it improves company culture, making your business a better place to work.
A significant investment in a sustainability strategy is not taken lightly, but it will benefit your reputation. In response to the influx of companies expanding their green credentials, a number of banks have launched tailored funding packages that offer discounted rates to unleash the burden of drawing down substantial loans.
There are numerous reasons a business may have to draw down such substantial loans and bonds to make an impactful investment. This could be because of changing regulatory requirements, such as the Ultra Low Emission Zone coming into fruition in London, meaning a number of private hire cars, such as Uber, will have to invest in its fleet to ensure it’s more environmentally friendly. It could also be to boost a business’ credibility and reputation if archaic practices are starting to be frowned upon by the public.
There are several green bonds and loans that firms can use to contribute towards projects that are going to have a positive impact on the environment. For example, Sainsbury’s agreed to a £2m corporate green loan to invest in on-going carbon reduction and sustainability projects.
But, as with any business loan, finance directors should consider the feasibility of making a repayment commitment of this scale. Ensuring you factor realistic repayment terms into your monthly budgets is vital to ensure you don’t fall behind on payments, as any cashflow difficulties could well be the catalyst for an insolvency situation.
First published in the Essex Chronicle in January 2019.