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Walking the Talk
The Purpose-Action Gap:
The Business Imperative of ESG

In a recent study, we discovered shifts in thinking from both brand and consumer values: The gap between what they believe and how they are acting on such beliefs is narrowing, particularly when brands make sustainability accessible and affordable.

For the last few years, purpose has dominated marketing conversations and become an important aspiration for thousands of brands. In a rapidly changing post-COVID world, where so much has shifted in the last 12 months, it is one of those ideals that is at a critical and increasingly important moment.

It’s time for brands to ally their ideals with pragmatism. Purpose is no longer optional, and simply sponsoring a good cause is no longer enough. Research suggests that companies that embed purpose at their core and actively live it — from business transformation to advertising and PR — are more successful in the long run.

In a recent study conducted by Barkley, both pre- and post-COVID, 2500 consumers provided valuable hints on what modern consumers are looking for. We also partnered with Jefferies in 2021 to survey 150 C-suite level business leaders to hear what they thought about the role of ESG (Environmental, Social and Governance) reporting and action within their companies and sector.

What we discovered were shifts in thinking from both brand and consumer values: The gap between what they believe and how they are acting on such beliefs is narrowing, particularly when brands make sustainability accessible and affordable.

The consumer response

We found that brands acting sustainably are even more important to consumers now than before the pandemic — and they are willing to pay more for sustainable products and services. However, what they say and what they do are very different things. While sustainability is important, it can’t be the only selling point. Poor quality or a bad experience will drive them to different products. This is crucial to remember, as we found minimalism — buying fewer things or longer lasting products — is on the rise. Brands will need to further justify value and/or quality to stay in shoppers’ baskets.

This goes across generations and races, as well: We have consistently seen that living sustainably matters more for younger generations, but it is growing amongst older generations. While only a quarter of Boomers said they chose a more sustainable product over another in 2019, it rises to almost one-third by 2021.

Race also plays a part in sustainable beliefs and behaviors, which are stronger among non-white communities. While the pandemic shone a light on pre-existing racial inequalities across housing, workplace and healthcare, the murders of George Floyd, Breonna Taylor and countless others thrust those inequalities into the public consciousness. By standing on the wrong side of some of these issues, brands stand to lose business from ethnic groups in the future.

Overall, we found that ESG is growing in importance to all US consumers — irrespective of their color, who they vote for or how much money they make. There are disagreements on how to solve the social and environmental problems and who should pay for it, but everyone agrees that change for good is needed.

The business response

Across business sectors, almost all business leaders (98 percent) surveyed agreed that ESG-related issues are more important or much more important than they were 12 months ago. While consumers' biggest issues were economic instability and inequality, businesses' top issue was to focus on diversity and inclusion. Interestingly, 85 percent of respondents stated it was important; but only 20 percent thought they were doing an excellent job on this today.

While the internal gaps are present among businesses, there are also gaps between consumer expectations and business performance — primarily regarding environmental issues.

When asked, businesses claimed the key reasons motivating business action on ESG responses reflect tangible business performance. However, two of the top five reasons were around people management: attracting and retaining key talent, and engaging employees.

We consistently saw across the two data sets that the majority of today’s consumers, especially younger consumers, say working for a company that shares their values is important to them. It is also important to note that there is a gap between how important this is to the consumer and how good a job they think their current employer is doing.

Closing the gap

Consumers want brands to prove it. Brands need to behave like a whole brand across their value chain — from how employees are treated to how the products and services are made to how the brand story is told and everything in between. Consumers will do research before they buy, so brands must put in the work. Successful brands are already looking closely at how their businesses affect people and the planet; they are taking action today and looking to the future. If you wait for consumers to tell you what matters, it will be too late. A brand's financial success — as well as the betterment of the people, planet and the communities it serves — depend on its business changing now.

ESG is a business imperative. Is your business ready to close the gap between purpose and action?

To read the full research report, click here.