Protecting corporate reputation in the age of the conscientious consumer

Consumer activism is nothing new; one of the most famous and long-lasting consumer boycotts, against food manufacturer Nestle due to ethical concerns about its baby formula campaigns, has been ongoing for almost 50 years.

But in today’s world of viral social media campaigns and peer-to-peer influencing over consumer choices, it no longer takes a well-resourced campaign with significant media traction for consumer activism to have a huge impact on a company’s reputation.

The rising tide of consumer activism

In a digitally connected world, consumers are making purchasing decisions, engaging in social activism, consuming news and communicating directly with companies all in the same place: online. The result is that consumers have far more awareness about and interest in corporate behaviour and ethics than ever before. 

Conscientious consumers have the power – alongside the motivation – to challenge businesses on their ESG values, ethics and conduct. Increasingly, this is done in a public forum, which adds pressure on companies to be able to respond in a way that effectively answers questions while protecting their corporate reputation.

Emphasis is often on transparency; consumers expect companies they spend their money with to be open about how they operate. This includes providing clear information about supply chains, manufacturing processes, funding sources and the provenance of products, such as whether the food on their plate has been grown and sourced ethically.

Empowered consumers and stakeholders

Digital connectivity has empowered consumers and stakeholders not only by facilitating campaigns and activism, but also by making it easier for the public to access information about company policies, practices and priorities.

For general counsels, this means every aspect of a company’s operations is scrutinised – from their net zero strategy to their employee reviews. And there’s a particular focus on supply chain, since procurement decisions can often reflect a company’s values. 

Information has long been available on public registers and from regulatory bodies for anybody to find. But now it’s second nature for people to access information online, consumers and stakeholders are more inclined to conduct their own digital investigations.

The cultural shift in which companies are held to account for ESG practices has also led to more companies choosing to publish data and commentary on corporate values and priorities in annual reports, blogs, social media and other forums. 

An early example of supply chain scrutiny saw shoe brand Nike boycotted when it claimed in 2000 that poor working conditions at suppliers’ factories were not its responsibility. The boycott caused a 16% revenue drop and a 57% share price drop, resulting in Nike then agreeing to publish independent audits of its supply chain. 

In 2005 it became the first company of its kind to publish a full list of suppliers.

AI for reputation management

Automating the due diligence process on suppliers and clients is the most effective way to get ahead of what may become triggers for consumer activism. It allows companies to discover ESG risks before consumers do it themselves, at which point it’s too late.

Traditional due diligence tools rely on structured data from sanctions lists or corporate disclosures. But ESG risks depend upon themes and patterns of behaviour. While existing tools can give ‘yes or no’ answers, they’re unable to provide the full, textured understanding of a supplier or partner, including its historical conduct and associations.

Xapien’s AI-powered solution can perform comprehensive research on partners or suppliers, generating a summarised report in minutes. It works as an automated research analyst, running searches on both compliance data sets and the internet for news articles, press releases, corporate records and wider media content.

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