Do Consumers See Your Business as a Force for Good?

The public’s growing concerns about environmental issues, along with the U.S. Federal Trade Commission’s efforts to impose fines on businesses for greenwashing, point to the potential fallout when companies engage in environmentally damaging actions. Companies such as Burger King, KFC, and McDonald’s have all been recent targets of government and investor pressure to cut plastic waste. Last year, both Kohl’s and Walmart reached settlements of $2.5 million and $3 million, respectively, for falsely claiming that dozens of rayon textile products were actually made from environmentally friendly bamboo.

When such large, visible companies issue false claims or fail to act, it results in missed opportunities, a growing performance-expectation gap, and, eventually, reputational damage among consumers. So, what makes a business a force for good when it comes to the future of our environment? To find out, Bentley University and Gallup recently conducted a survey of 5,757 Americans to assess how they feel about business and its potential to have a positive impact on society and the environment. The results of the Force for Good survey highlight areas in which businesses, small and large, are failing to meet people’s expectations — and how they can do better.

The public’s expectations of large companies like Kohl’s, McDonald’s, or Walmart were made clear in our research. A slight majority of our respondents (53%) said that businesses overall have a negative environmental impact. Almost two-thirds (65%) said they feel this way about large businesses, whereas 16% said that small businesses have a negative impact on the planet/environment. Younger respondents in our study had higher expectations of businesses overall, with a whopping 81% of those age 18 to 29 saying that large businesses have a negative impact on the planet, compared with 54% of respondents age 70 or older.

Drilling down into the data, we found that more than 9 in 10 respondents rated four social and environmental concerns that businesses could act on as extremely or somewhat important: practicing sustainable manufacturing (92%); promoting increased access to education and training (92%); investing time and money into local communities (92%); and operating in a way that is sustainable for the environment (91%). Just 1 in 3 people surveyed said that businesses are currently doing an excellent or good job in any of these areas, and about 1 in 4 (26%) said that businesses are doing an excellent or good job of operating in an environmentally sustainable way.

The T-Shirt Experiment

One perspective on sustainability is that companies should practice environmental responsibility for the greater good — the “doing good to do good” perspective. Another approach focuses on the importance of “doing good to do well” so that both business and society benefit from leaders’ actions. But are these approaches in tension? Need they be?

One section of the Force for Good survey — what we called our T-shirt experiment — was aimed at getting a better read on how people think about this tension. Amid rising prices for almost everything, we asked whether respondents would be willing to pay extra for a T-shirt depending on a variety of company characteristics. Sixty-three percent of respondents said they would be willing to pay extra — 82% more — for a T-shirt if the company that made it was known for having a positive impact on the environment. The numbers are even higher for respondents age 18 to 29 and for women: Young people were most likely to say they would pay more — about 8 in 10 — and almost 7 in 10 women. (See “Results of the T-Shirt Experiment.”) Both of these consumer groups are key markets for many companies.

When people were asked how much they would pay for the T-shirt without being given any additional information, the median response was $10. This held true for those with personal incomes between $24,000 and $179,000. In other words, personal income had little effect on the value they assigned to the product.

Respondents were then asked how much more they would pay if the company were known for various attributes: having a positive environmental impact, making a positive impact on the local community, treating employees well, and contributing to charities. Among the four attributes, the premium was highest for companies known to have a positive environmental impact, with a median response of $7.

Our data indicates that Americans are, in fact, willing to reward companies for doing good. A company known for positive environmental performance can charge more for its products — evidence that “doing good to do well” works.

A False Dichotomy?

Most of the respondents didn’t see a trade-off between good environmental performance and good financial performance. In other words, they believe that both can happen concurrently, despite business leaders’ arguments that sustainable practices harm financial performance. About 7 in 10 respondents (69%) said businesses that prioritize making a positive impact on society are just as profitable (47%) or more profitable (22%) than their competitors. People who said they have expertise in owning, leading, or managing a business were no less likely than those without such expertise to say that businesses that prioritize making a positive impact are at least as profitable as their competitors.

Members of different political parties had notable differences of opinion regarding the importance of sustainability. For example, 84% of Democrats said it is extremely important for businesses to operate in an environmentally sustainable manner, compared with 31% of Republicans and 59% of independents. However, a large majority of Republicans (80%) said that sustainability is at least somewhat important. These perspectives might affect a host of company actions, such as choosing content and spending amounts for advertising in red versus blue states and the very design of their products.

Likewise, we found significant differences across ethnic identities. Seventy percent of Black respondents, 82% of Asian respondents, 65% of Hispanic respondents, and 59% of White respondents said they believe it is extremely important for businesses to operate in an environmentally sustainable manner. When asked how they feel about focusing on long-term benefits like those for the environment versus short-term benefits like profits, 77% of Asian respondents said they are likely to support that focus — compared with 56% of respondents overall. The figures for both Black and Hispanic respondents hovered around 60%.

Even when we asked the question in a slightly different way, respondents did not see it as a trade-off but as more of a “both and” situation. For example, when asked about meeting the financial goals of investors, 79% said they believe it is somewhat or extremely important. Eighty-eight percent of respondents also said that making the world a better place is somewhat or extremely important.

How Can Your Company Become a Force for Good?

Results from this deep dive into what a broad and varied set of Americans believe suggest several actions companies can take or plan for.

Pay attention to your local footprint. Small companies are perceived as better at most stakeholder-related activities. Respondents were twice as likely to say small businesses positively impact people’s lives than large businesses (82% and 41%, respectively). What’s more, respondents are more likely to think large businesses have a negative impact on Americans’ lives in general (38%) than they are to say the same about small businesses (4%). This data, combined with the results across age and gender in the figure below (see “Sustainability Is Important to Consumers — but Are Businesses Practicing It?”) on positive community impact, suggests that companies — particularly large ones — should improve their relationships with their surrounding communities.

Recognize that younger Americans expect more. Millennials (born between 1981 and 1996) and Gen Zers (born between 1997 and 2012) expect more from businesses in terms of both social and environmental responsibility than older respondents do. In our T-shirt experiment, 82% of respondents age 18 to 29 were willing to pay more for a T-shirt from a company known for having a positive impact on their local community. Again, young respondents (73%) agreed more than any other age group that businesses’ efforts to reduce their carbon footprints and/or emissions are important. Companies will need to account for their environmental stewardship among their customers and future employees.

Mind the performance-expectation gap. Environmental stakeholders and regulators are on the lookout for any discrepancy between expectations of a company’s responsible environmental management and what it is actually doing — the performance-expectation gap. The vast majority of respondents (89%) said businesses have “a great deal” or “some” power to make a positive impact on people’s lives, but just 57% said that businesses are very or somewhat effective at doing so. In terms of the environment, the findings revealed performance-expectation gaps of at least 30 percentage points between “the importance of” and “the performance of” several environmental goals. On questions about reducing businesses’ carbon footprints, engaging in sustainable manufacturing, and making the world a better place, we found considerable gaps: On those three points, 52% to 57% of respondents indicated that it is extremely important for businesses to do so, but only 24% to 28% thought they are excellent or good at it.

While having a dedicated sustainability leader, support from senior management, and education for employees and executives is necessary, it’s important to stay vigilant in addressing the widening performance-expectation gap. In what has become a hypercritical business environment, leaders must pay greater attention to how perceptions of what their company is doing compare with what they are actually doing.

Set sustainability goals. Think carefully about how to measure what you’re doing. This is a logical next step after gaining the support of senior management, and it can help your company determine the progress it has made and where it has soft or blind spots. In fact, regulators have proposed requiring companies to disclose how they set climate-related targets and measure their progress toward meeting them. Consider signing on to broadly recognized and accepted goals like the United Nations Global Compact’s (UNGC’s) Sustainable Development Goals, which can help your company publicly commit to a plan of action, step by step. The UNGC also requires annual statements on progress to help ward off greenwashing.

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With increasing attention on environmental sustainability, gaining an understanding of how various stakeholders perceive your statements and actions is vital. By identifying and understanding current perceptions and their implications, as the Bentley-Gallup study does, companies can amend their environmental commitments and processes to ensure that they invigorate their efforts to be a force for good, which will benefit the company, its stakeholders, and, most importantly, the environment.