If your brand sits in an industry that has ethical challenges - such as oil, tobacco, alcohol or payday lending - finding your brand purpose can be difficult. We look at four case studies to review the risks and rewards of a purpose-driven approach for companies in these industries.
Does your company make a positive contribution to the world? Or does it perhaps contribute to some of its problems, such as climate change, cancer or mounting debt?
If the answer is yes, it can make finding your brand purpose a challenge. How do you position your brand as one that stands for something admirable when your products cause environmental or societal problems?
And while it’s only right to minimise your negative impacts through CSR activities, you don’t want to risk being called out as hypocrites. It’s a conundrum and one that begs the question; Can ‘bad’ companies do good things?
To explore this topic, we’re going to take a look at brand purpose examples from four companies in industries with ethical challenges to see whether their attempts to make a positive impact have succeeded or backfired.
The alcoholic drinks manufacturer
Diageo is one of the world’s biggest alcoholic drinks manufacturers, with over 200 brands. This means it plays a larger role than others in the toll drinking takes on our health – more than 3.3 million deaths each year are attributable to alcohol consumption.
Despite this, Diageo describes itself as a company with a “deep sense of purpose”. Its purpose is “celebrating life every day, everywhere – in the community and for the community” and it comes from the idea that alcohol (in western cultures at least) is an integral part of celebrations.
Senior Brand Manager Arjun Lokar says: “Our brands have given consumers some of the best memories of their lives” (he doesn’t mention they might also have given us some of our worst hangovers, but anyway…).
Diageo aims to live its brand purpose model by consistently celebrating the achievements of its employees – both large and small. And for eight consecutive years, it’s been ranked as one of the best companies to work for (recognised by Great Place to Work Institute).
Diageo has also been named as one of the most sustainable large companies in the Dow Jones World Sustainability Index. The company has the bold ambition of “ensuring alcohol plays a positive role in society” and it’s making that happen through a huge range of initiatives, from providing access to clean water and sanitation, to women’s empowerment and skills programmes.
It’s also joined forces with 16 other global companies to form a new coalition called the Business Avengers, highlighting the crucial role businesses have to play in hitting the targets of the 17 sustainable development goals by 2030.
What’s clear is that Diageo is truly committed to doing good and isn’t just paying lip service to sustainability. Meanwhile, it doesn’t shy away from the issue of harmful drinking, aiming to tackle it directly with work in schools. Because the company lives its values, it gives it a sense of authenticity that employees and consumers alike can believe in. Finding your brand purpose can be as simple as identifying one core idea that connects you all together.
The tobacco company
Tobacco giant Philip Morris International says its brand vision is “to one day stop selling cigarettes” and “deliver a smoke-free future”. Smoke-free products now make up almost a fifth of PMI’s business and last year it devoted 71% of commercial spend to these products.
PMI says it wants adult smokers to switch but doesn’t want to promote nicotine to non-users. “Our strong belief – if you don’t smoke, don’t start – begins with a continued and robust focus on preventing youth from beginning to smoke or use nicotine products,” says PMI’s Chief Sustainability Officer, Huub Savelkouls.
While the company is making all the right noises, it’s hard to buy. If PMI does a good job at preventing young people from starting to use nicotine products, once its legacy users have died off, it’ll have no customer base.
On top of that, PMI’s actions don’t always seem to align with its stated mission. It recently proposed a plan to the UK government pledging to set up a £1bn tobacco transition fund in exchange for the loosening of laws curbing the advertising of e-cigarettes post-Brexit. Local authorities would use the money to encourage smokers to move from cigarettes to heated tobacco products (as opposed to giving up altogether).
The bill also stipulated that European directives on the size and strength of nicotine liquids in e-cigarettes would be abolished. In the US, 5.3 million kids now use e-cigarettes. The US Surgeon General has called it an “epidemic” – one that’s been fuelled by the Juul. The Juul (a pen-drive-like device, which is ubiquitous in American high schools) got students hooked with strong doses of nicotine that would not be allowed in the EU.
By lobbying to be able to make its products more addictive, PMI is trying to prevent people from quitting nicotine. Its “smoke-free future” appears to involve more people becoming dependent on e-cigarettes. And if the US is anything to go by, that will inevitably include young people. You can’t blame critics for thinking this stinks.
The oil corporation
Since successfully battling claims that #ExxonKnew about the link between fossil fuel and climate change back in the 70s, ExxonMobil has gone to some lengths to portray itself as transparent and sustainable.
The oil company has established an External Sustainability Advisory Panel to publicly review its sustainability activities and publishes an annual Sustainability Report. But its efforts have seemingly failed to improve its reputation – especially among the younger generation.
Students from top law schools in America have been protesting at Paul Weiss recruiting events, urging the law firm to stop representing ExxonMobil in climate change litigation. “If you want to work with us, then drop Exxon,” they told the employer.
Meanwhile, negative sentiment towards ExxonMobil has seen its stock plunge to a nine-year low with $184 billion wiped off its value. Analysts say investors want to put their money behind companies they see as clean energy solutions – not companies viewed as part of the problem.
The reason ExxonMobil is viewed as part of the problem – even though it’s working hard to reduce emissions – is that it’s still firmly focused on fossil fuel. Every other large international oil company has invested in renewables but ExxonMobil is committed to oil and gas. Even its own Advisory Panel recognises the corporation is not doing enough.
“Assessing whether the level of such R&D investments in lower-carbon technologies is at an adequate scale, given the magnitude of the societal risk and the size of the company, requires additional context and data in ExxonMobil’s disclosures,” reported the panel.
By failing to move away from fossil fuel – a finite resource – it’s hard to view ExxonMobil as a forward-thinking company. And while the corporation talks loudly about its commitment to protecting the communities it operates in, it’s low-key getting US lawmakers to repeal restrictions around the supply of arms to Cyprus so it can set up a controversial gas pipeline there.
It’s fair to say, if you make a commitment to transparency, you’d better expect to be looked at closely.
The payday lender
Payday loans have a bad reputation for getting financially vulnerable people into a debt spiral. In America, failure to pay this type of short term, high-interest loan is increasingly landing people in prison.
One company trying to turn this image around is Elevate Credit International; the parent company of payday loans providers Sunny and RISE Credit. Elevate’s vision statement is: “working to create a fairer financial future for all.”
Elevate serves sub-prime customers with poor credit and acknowledges this makes default more likely but pledges never to charge fees or use aggressive collections practices that “create even more hardship for consumers”.
The company has set up the Elevate Center for the New Middle Class to conduct research and engage in dialogue with people who have credit scores below 700 (America’s so-called “New Middle Class”). It hopes to increase understanding and promote awareness of the challenges these people face.
Another initiative sees Elevate promote financial literacy through a scholarship program for university students. It comes after company-led research revealed that people who have credit scores below 700 were significantly less likely to have received instruction in financial management from parents or in school.
Elevate also puts a lot of emphasis on being a good employer, having established a multicultural network to promote diversity in the workplace and being four-times certified as a ‘best workplace’ by Great Place to Work.
As a result of its efforts, Elevate doesn’t suffer the same bad press that many other payday loan lenders do. In the UK, its Sunny brand has a “great” Trustpilot rating of 8.3/10, while in the US, RISE Credit achieves an “excellent” 4.6/5. And while money guru Martin Lewis refrains from actively recommending any payday loan provider, he does list Sunny as the “least worst”.
Companies in industries with ethical issues can absolutely operate in ways that have a positive impact, but they have to come at it from a place of authenticity. This means passionately believing it’s the right thing to do, and not making changes just because they’ve been told to do so.
Finding your brand purpose and becoming a truly purpose-driven company takes bravery and commitment; you might need to pivot your entire business model. But leading the way in your sector is better than waiting until legislation forces change. The brands that do are the ones that will secure a sustainable future – for their consumers as well as themselves.