The Relationship Between Brand Value and Ethics

Brand value and company reputation can really take a beating when a company is faced with accusations of ethical misconduct in the workplace.

Posted by Joe Gerard in Ethics, Ethics & Compliance on March 12th, 2010

Brand value and company reputation can really take a beating when a company is faced with accusations of ethical misconduct in the workplace. Information is faster and more accessible now than ever before, which makes “laying low” virtually impossible – just ask Tiger Woods. In the article “Ethics Branding” by Steve Brock, he focuses in on why workplace ethics are heavily connected to the power of your brand:

“Your brand is more than just a logo or tagline. It involves everything you do. Every touch point with customers affects their perspective of you, and thus your brand. Ethics matter because they are at the heart of your values. Values matter because they are at the heart of your brand.”

BrandZ Top 100 Valuable Global Brands for 2009 and Ethisphere’s 2009 World’s Most Ethical Brands- Overlapping Brands

I took some time to compare the BrandZ Top 100 Valuable Global Brands for 2009 released by Millward Brown Optimor and the 2009 World’s Most Ethical Brands by Ethisphere. Below, we have put together a list of overlapping companies that have secured a spot on each of the lists:

*2009 Brand Value reported in $M, all values come from BrandZ Top 100 Valuable Global Brands for 2009

The BrandZ list contains 100 companies, and the Ethisphere list for 2009 contains 99.  This means that roughly 25% of the businesses on each of the lists happen to be found on both lists for 2009. The companies in the chart have proven that acting ethically pays off. Continuously being recognized for their CSR and ethical business practices, all of these companies have managed to remain industry leaders and are recognized for their high value brands.

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Listen, Act and Communicate

Millward Brown Optimor created a list of “take outs” at the end of their report. Take out number eight is below- it discusses the importance of turning problems into opportunities to better your brand:

“Among the ascendant brands today are Wal-Mart and McDonald’s. Yes, both brands are in the right place (low price) at the right time (recession). But their positioning is only part of the story. Several years ago, consumers objected loudly about Wal-Mart’s labor practices and the company’s negative impact on the environment. They criticized McDonald’s menu as unhealthy. Both brands listened, made changes, communicated effectively, and turned problems into opportunities.”

The same methods apply when looking at response times for ethical violations in the workplace. Companies must act quickly, respond to the needs of their stakeholders through their policies and communicate their mistakes and commitment to ethics to the public. Companies that react quickly to these allegations, have a reporting system in place and conduct thorough investigations into the claims are the ones that manage to uphold their brand value during tough times.

The Effects of Ethical Spending

Consumers are applying greater thought to the purchases they are making. The Co-operative Bank in the UK releases an annual report called the Ethical Consumerism Report, “which acts as a barometer of ethical spending in the UK. The overall ethical market in the UK was worth £35.5 billion in 2007, up 15% from £31 billion in the previous year.” Even though this is still only a portion of consumer spending, the amount spent each year has been significantly increasing. If your brand is communicated and understood as being an “ethical brand”, your brand value will continue to increase as the focus on ethics continues to grab attention. Think of the level of transparency companies need to demonstrate today to meet consumer demands.  Consumers have easy access to company information and breaking news that can persuade their purchase habits in a matter of seconds. Consumers want to know where your suppliers and manufacturers are, contractor policies, workplace conditions for overseas employees and other important information, in order to make sure that the ethics of the company they plan to purchase from match their personal interests. If your company is constantly being recognized for commitment to ethics and prompt reaction to company mistakes, you can assume that your brand value will remain strong, as you will avoid consumer backlash and purchase boycotts.

What Does This All Mean?

Companies are faced with growing numbers of laws and legislation surrounding ethical workplace practices. In terms of companies that manufacture and sell consumer goods and services, “in the past decade, the concept of shoppers exercising an ethical choice has become part of the mainstream. Supermarket aisles are devoted to organic products, energy companies promise greener power, banks advertise their ethical investment policies.” The Ethical Consumerism Report also points out that “consumers’ emotional attachment to many ethical products is now well embedded, and we would argue that these areas will have an advantage over other markets in a downturn.” Companies are experiencing record numbers of ethics and compliance violations being reported and making the headlines. Compliance and ethics officers are being recognized daily as “hot job positions” to hold during the coming years as companies continue to work to comply to laws and ethics policies. Yes, being ethical in the workplace does require a lot of work- but not as much work as lengthy court cases and gaining back public trust. There are products available to help you manage human resource and ethics complaints. For example, i-Sight Investigation Software sends you a notification when a complaint is made, allows you to establish timelines for case investigations and makes reporting and team communication easier during the investigation- you can forget having to ask for someone to e-mail you a document, with i-Sight, all documents are attached to the case and are readily available for all team members to use. These systems exist to help save you time and money, ensure that no case falls through the cracks and give you the investigation tools necessary to react immediately to incidents in order to avoid negative press, a decrease in your brand value and a date at the court room.

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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