In the recent McKinsey Quarterly, there is an interesting report on a global survey that shows corporations need to account for consumer concerns about climate change. In it, consumers say that a corporation’s performance in addressing the problems of the environment and climate change affects not only how much they trust the company but also whether they would buy its products.
Consumers also expect companies to promote the public good by providing healthier and safer products, retirement and health care benefits for its employees, and much else besides. Their expectations vary by industry and geography. As such, the study concludes, "every business should think about the role environmental issues can and should play in strategy so that they can build trust among consumers and offer products and services that address their concerns."
To read the whole article, sign up for a free account on the McKinsey Quarterly site. This is a useful newsletter for anyone interested in strategic management. McKinsey & Company is a global management consulting firm, the top, if you will amongst the big strategic management firms. They provide advising services to the world’s leading businesses, governments, and institutions. These reports are on-par with the Harvard Business Review in terms of quality, and covers a broad range of business management topics.
The survey focused on the petroleum, food and beverage, retailing, and high-tech industries. They have a common need to tackle environmental issues but otherwise face different societal challenges and opportunities. The study shows that there is a gap between how well company executives perceive they are doing -- in terms of protecting public goods and serving a positive role in society, and how consumers perceive the companies are doing. This gap is wider in Europe and North America, than in developing markets. Environmental responsibility is cited as a key differentiator for companies, as it increases consumers trust of the corporation. However, the survey explores many social issues and is not limited to the environment.
When it comes to desirable corporate behaviors, the top four consumer concerns of those polled are:
- environmental issues including climate change
- healthier and safer products
- pension and retirement benefits
- affordable products for poorer customers
Executives however, do not have the same priorities. The top two items remain the same, but the next highest were privacy/data security, and job loss related to outsourcing overseas.
McKinsey suggests that as companies focus on their reputation, they cannot ignore the environmental aspect, which would also bring new cost savings and strategic advantage. However, other issues should not be ignored. The report goes on to say that since consumer and corporate concerns about social issues vary by region, it is a complex picture. As such companies still consider these as risks rather than opportunities, even though the market share for environmentally friendly goods and services continue to grow.
Survey methodology: The McKinsey Quarterly conducted a survey of executives in September 2007 and received responses from 2,687 of them around the world (36 percent of them CEOs or other C-level executives). During the same month, McKinsey conducted a survey of 7,751 consumers in eight countries: Brazil, Canada, China, France, Germany, India, the United Kingdom, and the United States. The latter survey explored consumer perceptions of the role business plays in society, the way large global companies deal with sociopolitical questions, and the issues facing four industries—food and beverages, high tech, petroleum, and retailing.
As originally published on AskPatty.com.