ESG performance and the reputation of the Consumer sector

The correlation between a companies strong ESG credentials and the positive reflection of their reputation is something that holds true for almost every industry sector (consumer sector companies are denoted by the red dots in the chart below). It is important for businesses to understand which elements of ESG are most important to their key stakeholders, the priorities expected within the industries they sit in and where they should focus their ESG efforts.

73% of MPs and 51% of business journalists say that ‘improving society’ is the most important aspect of ESG for consumer companies to focus on. For MPs, other aspects of ESG do not come close (only 14% said protecting the environment is most important and 13% believe good governance is the most important element). The social aspect of ESG, and in particular ‘the treatment of employees’ and ‘addressing child labour’ are two of the most important issues for the consumer sector to address – for both MPs and business journalists (Labour MPs at 35% versus Conservative MPs at 25%). 

One business journalist said: “I am thinking of retailers, the way they deal with suppliers especially in other countries. I am thinking of the scandals in clothing factories, working conditions there. But even in this country, the scandal around Boohoo and the Leicester factories. Child labour as well is an issue in those factories.” 

Among business journalists, protecting the environment is also an important factor for the consumer sector to consider (38% say it’s the most important aspect of ESG). One journalist told us: “whether it's moving things around the world in terms of fuel or whether it's waste from manufacturing plants, plastic that's used to package up all the goods […] they should be taking [environmental issues] more seriously, and I would like to see more products from these companies which are waste free...”. Following COP26 in Glasgow last year, there is renewed focus on the UK’s net zero ambitions. With this renewed focus, there comes an increasing pressure on consumer companies to do more to protect the environment and communicate what they are doing to MPs and business journalists. 

Tangible examples of ESG activities and communicating their activities on ESG issues of concern (treatment of employees, addressing child labour and protecting the environment) to MPs and business journalists, is important for companies within the consumer sector to improve their reputations amongst regulators and public opinion to bolster their societal license to operate. Ipsos’ MPs and business journalists survey help some of the UK’s biggest organisations to unpick these finer details and track their organisation’s ESG performance relative to competitors, enabling them to pinpoint where their businesses should focus their attention to improve ESG and reputation performance. 

Our next article looks in more detail at the variation in how well different consumer sub-sectors’ across supermarkets, fashion and FMCGs perform to address ESG issues and how well perceived they are among these key stakeholders.

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