Why Ethical Practices are Crucial for Brand Trust

In business, ethical practices cannot be defined by one set of behavior. Business ethics include a broad set of moral standards and principles that guide organizations. In accordance with B Corp’s Impact Assessment, ethical practices span five areas: governance, workers, customers, environment, and community. The fundamentals of business ethics stipulate that businesses should be transparent, welcome feedback, consider the impact on all parties involved, those being employees, stakeholders, and society, and reflect on past experiences to improve.

According to a 2023 Edelman report, surveying 13,802 respondents across 14 countries, 58% of consumers are making fewer impulse purchases and 55% are more likely to consider a brand’s environmental impact. Consumers are now taking a more holistic approach to purchasing decisions, meaning ethical practices are more important than ever. The data shows that consumers are more likely to buy from brands that commit to taking actions like improving access to healthcare, addressing climate change, and ending racism. This is substantiated by Mintel’s 2024 Global Consumer Trends report, which reveals that more consumers are affiliating themselves with brands that reflect their values and subsequently abandoning those that don’t.

Transparency

Trust remains in the top three buying considerations for consumers, alongside value for money and the quality of a product, with 71% of consumers stating it is more important to trust the brands they buy or use today than it was in the past. However, consumers are trusting brands less, with almost half (49%), believing that brands are guilty of greenwashing. We all know that transparency is key to building brand trust, but just how transparent are we talking? Essentially, the more transparent you are with your audience, the better, and part of this comes down to increasing communication. This can take the form of annual impact reports, regular updates, and greater audience interaction across social channels. Sixty percent of consumers who directly engage with brands have stated that these interactions show them whether they can trust a brand to be ethical.

B Corporations are expected to make their impact reports publicly available; however, this is something that any brand in any industry can benefit from. According to Deloitte, 11% of consumers will make a purchase decision based on carbon footprint data availability; therefore, you’ll inevitably lose out on customers if that data isn’t publicly available. Communicating impact not only requires information on the steps taken to improve, but reflection on those that haven’t been taken yet. B Corp, Jubel Beer, demonstrates this brilliantly. Alongside its report, the brand states that hiding ‘the truth only leads to disappointment later, so [we] tell you where [we] went wrong and what we need to improve on in the hope that others can learn from what we do and [that] it benefits the planet as a whole.’ However, not all customers will go looking for this information, so the more readily available you can make it, the better. Sherry Frey of Nielsen IQ expands upon how a number of brands are doing a lot on the sustainability front but are neglecting to highlight these initiatives on their packaging. She notes, consumers are saying ‘I want it on the package; that’s where I learn about a brand. I don’t go to a company’s website and I don’t look at their ESG report. I want it to be easy. Or I want it in digital discovery when I’m searching on a retailer’s website.’

Environmental Responsibility and Supply Chain

Corporate Social Responsibility (CSR) pertains to a company’s environmental considerations, and at a base level, this comes down to creating a quality product or service. Deloitte’s 2023 report on the sustainable consumer reveals that when considering a purchase 58% of customers value durability, followed by repairability (39%) and biodiversity (37%) over recyclability or biodegradability.

When evaluating the supply chain, environmental responsibility is closely linked to fair labor standards. Jude’s, for example, demonstrates this in the outline of its Ethical Sourcing Programme. Jude’s ESP covers the brand’s own operations as well as its outsourcing partners and suppliers throughout the chain to ensure adherence to the internationally recognized ETI Base Code and Human Rights. Consumers care about fair labor, with 25% prepared to pay more for products or services of suppliers that respect human rights or commit to ethical working practices. Though the benefits are not limited to audience sentiment but apply to the overall effectiveness of operations. As a people and planet-first agency, team and culture are at the heart of what we do. Since implementing a four-day work week, we’ve not only seen a positive impact on team members as individuals but a 15% increase in productivity levels. Ensuring the wellbeing and satisfaction of workers can also result in greater employee advocacy. Research has shown company-branded messages to have a greater reach when shared by employees as opposed to on branded channels, with one study showing a 561% greater reach when shared by employees. What’s more, audiences are far more likely to trust these messages when shared by individuals as opposed to a brand. It goes without saying that the better the ethical practices and transparency in communicating these practices, the greater trust the audience, employees, and stakeholders will hold for the brand.