Consumers can positively influence business behaviour
IMAGE CREDIT: Oakland.edu
How to release the untapped potential power of consumers to motivate business behavior change
With all the energy around the climate conference, and many people taking to the streets around the UK to demand more from our leaders, we could also be thinking about other ways to influence upwards once the dust settles.
Here are some thoughts on why consumers are so powerful, the difficulty in finding solutions to mobilising them, and some helpful frames when thinking about doing so.
Why consumers are so powerful
Consumers are one of the biggest levers that can affect and influence business behaviour. In a market economy, businesses provide products and services where there is demand. To put it over-simplistically - if more consumers demand more ethical and sustainable products, businesses will meet that demand.
When consumers are mobilised en masse towards purpose-driven businesses, the revenues for those businesses will flow. Similarly, consumers can also exercise their choice over what their pensions and investments are targeted towards. This can create greater demand for businesses that are set up specifically to do good.
The consumer lever within the economic system can act as a massive catalyst and mobiliser of other actors such as investors, policy makers and business leaders themselves.
This is not about consumer activism, it is about what happens when people understand that every pound spent will have an impact somewhere. So why not get those pounds directed towards creating positive impacts?
There is untapped demand
From polling that we conducted in partnership with B Lab UK last year, over half of those surveyed (53%) said that they favored brands doing good in the world, but even more (55%) said they cannot tell the difference. Only 10% said they found it easy to identify purpose-driven brands.
We found that respondents wanted to buy from businesses that care for the environment, and that invest in their local community and employees. The demand is out there and it is growing.
However, they struggle to identify them so find it hard to follow through on this desire. The results from the polling also showed that identification is a big issue for consumers. While people want to buy from purpose-driven companies, they can find it hard to identify them due to confusing marketing and labelling from businesses who are not genuine in their intent for positive impact. The promotion of misleading information about social or environmental impacts is widely known as “purpose-washing” or “green-washing”.
Solutions are not easy to come by
Despite my claim that “Consumers are one of the biggest levers that can affect and influence business behaviour”, this is actually too simplistic. There is no single thing that can be done to direct consumers towards purpose-driven businesses.
We, the public, are a fragmented, non-homogenous group. We are differentiated socioeconomically, geographically and culturally. We hold different beliefs and values and we have vastly different levels of disposable income. We are not all the same.
And so, for many reasons, much of the potential power of consumers to demonstrate demand for more responsible business remains untapped.
As an example, “awareness” is just one of the key drivers. Among the population there are differing levels of knowledge and interest about the big intractable social and environmental issues. Many people are not aware of how businesses can positively contribute to solutions alongside the government and financial institutions. People do not always realise that the combined power of an individual’s spending habits can hold enormous influence, and of how they can effectively communicate their wants, and needs preferences with businesses.
Two key lenses through which to view consumers
A one-size-fits-all campaign will not work to solve this problem. By the nature of the diversity of the population, a number of differing approaches will be needed if we are to unlock the power of consumers. There will also need to be a consideration of consumers (and the public in general) from multiple perspectives, e.g: from the inside outwards, and from the outside inwards.
From the inside outwards: At an individual level, how can the power of consumer demand be leveraged to bring about changes in business behaviour? As a rhetorical point, even those that care about ethical issues may find it hard to say, hand on heart, that the mobile phones in our pockets or the clothes that we wear were not produced without any negative social or environmental impacts. We need to empower consumers with the information they need to make conscious and informed choices about what they buy and where from.
From the outside inwards: At a country or society level, how can the big challenges that we face, such as achieving net zero, creating a more equal society and tackling modern slavery, be delivered in a way that is fair and equitable to all? There is an implication that policies or initiatives designed to tackle these issues must have the end-consumer and the public in mind. Examples of what the ‘system’ can do include setting cultural norms (such as those seen around plastic bags) and making ‘buying ethically’ affordable.
Let’s take reducing emissions and achieving net zero as an example. How can policies that are being put in place not push some consumer groups further into poverty or ensure that poorer consumers are not getting left behind? If insulating homes or transitioning energy sources from gas to heat pumps is a national requirement and yet is not affordable to low income households, how do you mitigate the risks of creating a two-tier society between those that can afford to heat their homes and those that can’t?
There is already a two-tier system in effect where those on gas meters pay a “poverty premium” for their energy, paying a higher tariff or cost per unit than those who are not metered. Tackling environmental issues should not come at the expense of social ones and vice versa.
What are we going to do about it?
We are developing a workstream to deliberately target the challenges mentioned above, as well as a raft of others. This is an extraordinary opportunity and we are excited about bringing together some of the best minds around to think about how to tackle these issues.
If you are interested in this idea and have something to contribute then please comment below or drop me an email at harry.brown@re-generate.org.
