25 Oct Can consumers really challenge corporate power?
Many of the world’s largest corporations employ more people than entire populations of some countries, and even nations like Norway, New Zealand and Thailand have smaller GDPs than some major US firms.
Corporate power gives big business influence over political parties and public policies, putting the short-term interests of shareholders and the bottom line above human rights, public health and the environment.
Political systems around the world are influenced by business concerns and financed by large corporations. Big businesses and wealthy individuals can fund political parties and essentially buy themselves a seat at the table to influence decisions in their favour. This presents a potential conflict of interest for consumers who, by purchasing from these corporations, may be unwittingly funding political parties that are opposed to their own views, as well as providing businesses with unfair influence over issues that affect their bottom line.
Andrew Rowell highlighted one such example in his book “Green Backlash: Global Subversion of the Environment Movement” in which he discusses how governments and industries are using their power to fight against environmentalism. He cites the example of United Biscuits, who own the McVitie’s brand, and two other companies that were all major donors of the Conservative Party, successfully lobbying to overturn a popular ban on heavy lorry movement in London.
Corporations have the financial resources available to fund think tanks and research studies that push their own agenda. Last year it was revealed that the Sugar Research Foundation (known today as the Sugar Association) funded influential research in the 1960s which downplayed the role of sugar in heart disease, leading to a spread of misinformation in the healthcare and nutrition industries and affecting the health and wellbeing of the public.
Consumers are showing an increasing demand for ethical products and businesses that act responsibly. A new CSR study has found that 91% of global consumers feel that companies ought to act responsibly and put ethics over profit.
However Accenture’s 2016 UK Financial Services Customer Survey found that there’s been a significant decline in consumer trust across industries, including high street and online retailers, supermarkets, technology companies and financial services providers.
This decline in trust is understandable considering the extent of information available to consumers online and the speed and ease at which they can now investigate a corporation’s background, investments and interests. Corporations work hard to keep their power and influence hidden, but scandals regularly hit the press and further damage consumer trust, such as the Volkswagen “Diesel Dupe” in 2015 where it was revealed that the German car giant was cheating emissions tests in the US.
As consumer demand for ethical products has grown in recent years, with Ethical Consumer finding that the value of all ethical spending in the UK grew by 8.5% to £38 billion in 2015, many brands have realised that it’s cheaper to claim they have ethical or environmental credentials (which are often unregulated) using clever marketing messages and PR spin rather than work to achieve these standards. A study in 2010 found misleading green claims (known as “greenwashing”) on 95% of home and family products.
With so much misleading information out there, unclear political motives and secretive connections between the corporate world and ‘trusted’ studies and policies, do consumers really have any power in taking action to create a more ethical economy?
Boycotts are one of the prefered tools for consumers to make their feelings about corporate power known, with 90% of consumers willing to boycott a company if they learned of irresponsible or deceptive business practices.
Nestlé is the world’s largest food companies, and also one of the most boycotted. In the 1970s they attracted global attention when there were calls to boycott the brand because their formula division was promoting bottle feeding and discouraging breastfeeding in developing countries using misleading advertising and marketing messages. This created a reliance on their expensive products in the world’s poorest communities and reportedly exposed babies to increased health risks. The boycott officially ran until 1984 when Nestlé agreed to reform their practices, but scandal still surrounds the brand and Baby Milk Action, a major campaigner in the dispute, is still pushing them for change.
Consumers couldn’t be blamed for cynically feeling powerless in the face of corporate giants, or wondering how successful boycotts and protests are in the long term. Complex supply chains and political or trade relationships often mean that unethical practices continue anyway outside of the public eye.
In 2010 Nestlé were one of the early movers on palm oil, after a Greenpeace-led campaign resulted in over 200,000 consumer emails sent to the brand calling for a review of their sourcing practices. The campaign put significant pressure on Nestlé, including a viral social media video and campaigners taking orangutans to Nestlé HQ. The brand quickly agreed to the demands, suspending supply from their unsustainable supplier and providing details of their supply chain to Greenpeace.
Although this may seem like a major consumer victory, Nestlé are still linked to unsustainable palm oil production through their partnership with Indofood. In a recent report by Rainforest Action Network, Indofood has also been exposed for child labour, poverty wages and destruction of orangutan habitat. Campaign group SumOfUs are now campaigning for Nestlé to end their partnership with Indofood and maintain their sustainability promises.
At a time when there is growing public concern about the impact of unethical business practices, consumers have the power to hold corporations to account and campaign for them to change.
Although boycotts often focus on taking ‘action through inaction’ and encouraging consumers to spend their money elsewhere, the true impact is not about affecting the bottom line, but rather influencing the brand reputation. A company’s brand is what connects with consumers and putting this at risk can encourage a much needed conversation about corporate ethics.
Once involved in an ethical scandal, it can be difficult for consumers to forget a brand’s association with the issue – and this can force the corporation to take action.
In the 1990s, multi-billion dollar sportswear brand Nike faced a consumer boycott over child labour practices. The immediate loss of sales had a significant short-term impact (in 1998 the company’s global earnings dropped by 69%), but it was the lasting damage to the brand that had the real consequences.
The public demanded greater responsibility from Nike and they were forced to respond to consumer outrage. Nike is now committed to sustainability and they’ve built it into their growth strategy, also taking a leading role in tackling societal problems like childhood obesity and using Corporate Social Responsibility as a key competitive advantage.
Given the power that big businesses hold, it may seem impossible for ordinary consumers to effect change, but when they send a strong enough message corporations can, and often do, change their ways – especially when brand reputation and profit is at stake.
There is rising pressure on all businesses to become more socially responsible and environmentally sustainable and the consumer voice is a driving force in this transformation. Social media has amplified this social voice and given consumers a direct line of communication to major brands. Together, campaigners and consumers can challenge corporate power, and if they do it in the right way, business leaders are forced to listen.