The court of public opinion can be a harsh one. Numerous polls over the years have highlighted the fact that consumers, and the public at large, are very concerned about social and environmental issues- Gallup quotes an average of 55% of those questioned over the past 10 years. Failure to understand public opinion can be disastrous- rrecently, the Guardian newspaper reports that car sales at Volkswagen have dropped 10% since the 2015 emissions rigging scandal. Professor of Finance Hoje Jo of the Leavey School of Business, along with colleagues at Stanford and Pepperdine, analysed data from 3,000 companies during an eight-year period and set out the findings in a paper titled “The Economics and Politics of Corporate Social Performance”. Jo compared companies’ financial performance with their social performance, and took into account social pressures on firms from nongovernment organizations and activists.
“Social pressure could have a direct effect on the financial performance of a firm if it causes consumers, investors, or employees to shun the firm. Social pressure could also damage the reputation of the firm or a brand, and it could portend future problems arising from private or public politics.”
Organisations that effectively engage in tackling human rights abuse in extended supply chains are not practicing ‘philanthropy’- they’re practicing good business.
- Chris McCann