Importance Of Ethical Standards For Business

During the recent years, companies across the globe increased their commitment towards sustainability. According to a recent study by research firm Nielsen, this strategy seems to bear fruit. Sales of brands which demonstrate a commitment to sustainability, were able to grow more than 4%, compared to less than 1% for non-sustainable brands. Interestingly, consumers in Southeast Asia were most willing to pay more for sustainable products and services. Compared to 75% of consumers in this region, only 44% of consumers in North America showed a similar attitude to sustainability. Vietnamese consumers are with 86% most engaged towards the subject.

Despite the still somewhat tame attitude of North American and European consumers, sentiment did improve significantly in both continents. Across the globe, 66% of respondents said they are willing to pay more, compared to 55% in 2014 and 2013 in 2013. Remarkably, higher incomes are less likely to spend additional money on sustainable products. Consumers earning less than USD 20,000 per year are 5% more willing than those who earn a yearly USD 50,000 (68% vs. 63%). Younger generations are also more inspired by products for a better planet. 72% of consumers under 20 are willing to pay for it, up significantly from 55% in 2014.

However,

in general sustainability is less important than price and quality. Germans are especially sensitive for these two components , 79% considers quality and 78% price as the most important attributes when purchasing a product or service. 52% of Germans is inclined to pay more for sustainable items. But only 36% of consumers weigh in whether a company is known for its social activities.

All fascinating stuff, but can companies learn a lesson from above and adapt? This will especially be important for Volkswagen which brand is hard hit by ‘Dieselgate’. The company is known for its quality products, but cheating with emission software may smear its name. It will interesting to see whether it can turn around its image. The Nielsen study mentions that TV ads may help. 34% of global respondents were influenced by commercials that highlighted a company’s sustainability commitment.

A frontrunner in sustainable strategies is British-Dutch consumer goods company Unilever. 52% of total sales can be marked as ‘green’ products and 55% of the company’s energy usage comes from renewable sources. British Lloyds banking group takes another approach and is aiming for social wellbeing. A remarkable strategy in a time where banks and financial institutions are seen by the public as greedy, selfish organizations which take taxpayers money and hardly give something in return. Dutch technology company Philips aims at a more healthy population. It has set as target to improve three billion lives by 2025. Car manufacturer Volvo seeks that nobody is serious injuries or killed in an accident with one of its new cars by 2020.

By reading all targets, slogans and developments one gets almost a warm feeling inside. However the hard reality is that companies exist to make money. Fortunately, it seems that having ethical standards pays off. Sometimes the good guys win!