Welcome back to the FIE Student Global Leadership podcast series. Today we’ll be hearing from three Drexel University students from the LeBow College of Business with a session from the conference titled ‘Exploring the Power of Consumers Greater Purpose’. Drexel University has been a valued partner of FIE since 1998 so we were thrilled to welcome this student-led presentation from Nicholas, Sophia, and Tram.
These students have participated in Global Classroom programs as well as Drexel’s annual Student Conference on Global Challenges, which showcases their interest in global leadership and research. Hopefully, you found some new ways to think about leadership from their presentation. That’s all from us for today - tune in next time for the next episode in FIE’s Student Global Leadership Conference podcast series.
Welcome back to the FIE Student Global Leadership podcast series. Today we’ll be hearing from three Drexel University students from the LeBow College of Business with a session from the conference titled ‘Exploring the Power of Consumers Greater Purpose’. Drexel University has been a valued partner of FIE since 1998 so we were thrilled to welcome this student-led presentation from Nicholas, Sophia, and Tram.
These students have participated in Global Classroom programs as well as Drexel’s annual Student Conference on Global Challenges, which showcases their interest in global leadership and research. Hopefully, you found some new ways to think about leadership from their presentation. That’s all from us for today - tune in next time for the next episode in FIE’s Student Global Leadership Conference podcast series.
Victor:
Welcome back to the FIE Student Global Leadership podcast series. I’m your host Victor Mellors and today we’ll be hearing from three Drexel University students with a session from the conference titled ‘Exploring the Power of Consumers Greater Purpose’. Drexel University has been a valued partner of FIE since 1998 so we were thrilled to welcome this student-led presentation from Nicholas, Sophia, and Tram. Take it away guys!
Drexel University Students:
Nick Constantino
Hi, everyone. Thank you so much for tuning in. We are students from Drexel University's Lebeau College of Business located in Philadelphia, Pennsylvania in the United States. Our presentation is entitled exploring the power of consumers greater purpose in shaping businesses Corporate Social Responsibility strategies. My name is Nick Costantino, you know, and I'm an international business and legal studies major student, and I have the pleasure of working with Sophia Desco.
Sophia Desko
Hi I'm Sofia, I'm a marketing and business analytics student at Drexel.
Tram Le
Hello, my name is Tram Le and I'm a marketing and business analytics student address a university.
So, what is corporate social responsibility or CSR? Corporate Social Responsibility is a company sense of responsibility toward the company and the environment of both ecological and social in which it operates. Company expresses citizenship through their waste and pollution reduction processes by contributing contributing to educational and social programme or by earning adequate returns on the employee resources. In today world CSR are is a crucial factor in the brand image is almost expected of a company to have a CSR programme. If you go to any big brand website, you can easily find a section dedicated to CSR. So why CSR so important that almost is almost universal for all companies to have. Many companies view CSR as an integral part of their brand image, believing that customer will be more likely to do business to to do business with brands that they perceive to be more ethical. In the sense CSR activities can be an important component of corporate public relations. According to a research by Mintel Press Office 56% of US consumers stop buying from companies they believe are unethical. On the other hand, 34% of consumer will tell other when they perceive a brand to be making ethical actions or actions that are honest, fair and responsible, while another 29% of consumer takes to social media to share their support for ethical companies. By this reasoning, CSR is not only encouraging customer to choose their brand over competitors, but it's also creating a free market of free marketing via word of mouth and social media.
So, there are four main business influencers, consumer competitor, government and investors, consumer competitors and governments are external factors while investors are internal. Today we will look at how these four factors influence a company's CSR programme and specific example of how companies have taken actions due to these influences. First, I will start off with consumers influence on businesses. So, consumer influence on business this also is known as ethical consumerism. Ethical consumerism is a form of political activism based on the premise that purchaser in market consume not only goods, but also implicitly the process used to produce them. So I will be using the example of Ben and Jerry's. Ben and Jerry's is the popular American ice cream company. They are known to be an ethical producer of ice cream in the US. However, they weren't always known for being an ethical company since the start. In 2006, and eight supplier of Ben and Jerry was accused of mistreating their chicken. Due to that Ben and Jerry consumer pressure them to drop this supplier and respond to consumer pressure and demand. Ben and Jerry respond by committing to a total phase in a certificate of certified humane cage free eggs for the US ice cream production. Since then, Ben and Jerry have also dropped the accused supplier and promise to always source the eggs from ethical suppliers and make their products with cage free eggs.
Sophia Desko
So when it comes to governmental influence on businesses, we can see that the government influences them through legislation. So in the UK, the government introduced a payroll giving scheme for companies to encourage their employees to get back to charitable, charitable companies or on their website, they describe it as a way to give money without paying taxes on it. However, businesses and corporations can also influence the government through their own political actions, whether that's through lobbying or campaign funding, for example, in part a company's political actions can connect to CSR. In some cases, this is ascribed to CPR, which is corporate corporate political responsibility. The key component of this is the disclosure of their political activities, whether it's through the individual causes they support or the individual politicians that they support. An example of this would be the we are still in business. This where US businesses and other private institutions came together to support the Paris agreement on climate change when the US government stepped out from it. Companies like Amazon, apple, Facebook, Google, etc. all decided that said it to speak out and be a part of that agreement, even though the government didn't support it. And that way, they showed that even though their government didn't support that involvement, they had their own ability to take action.
So when we explore I got to go sorry. Okay, cool. When you explore CSR through the lens of competitors, it means finding a way to make it a competitive advantage. And that sense, CSR means providing greater differentiation and greater value through differentiation. So looking at TOMS shoes and all birds, we can see how they provide that greater value to the consumer. TOMS Shoes focuses on supporting crap, crap, grassroots organisations, they actually commit to donating 1/3 of their profit to different organisations that support promoting mental health, ending gun violence and creating access to different opportunities. They also have within their internal company sustainability goals. An example of that would be their dedication to their earthwise brand, which involves expanding that to include more products, or friendly materials, like TOMS Shoes, allbirds has a mission of sustainability. On their website, they highlight each like product line that uses different resources like wool, tree sugar, etc. They also focus on using recyclable items like cardboard materials, or recyclable water bottles, etc. And they even when when they didn't have access to those materials, they took it a step further and created their own materials out of a variety of resources. They called them trino and trino XO. So yeah, that's when my competitors influence.
Nick Constantino
This is the last influencer on business that we're gonna be discussing in terms of how it influences the idea of corporate social responsibility on firms is the idea of investors. So one, one topic to bring up is the idea that when an investment is made, it's made under the premise that the return on the investment will be profitable for the investor. Um, however, most commonly, people think of profits of money as being that return on there's another side of investment called impact investing, which focuses on environmental, social and governance investing ESG, as it's referred to throughout the slide, this, these ESG investments or impact investments are made into companies, organisations and funds with the intention to generate a measurable beneficial social or environmental impact alongside a financial return. So for example, one firm might invest in one company that doesn't yield as much profit. However, it does support the idea of supporting climate change, for example, and this slide kind of discusses the idea of the true impact that the ESG investments do have on firms. So we can see the first statistic here ESG investing is estimated at over 20 trillion in assets under management. So that's about a quarter of all professionally managed assets worldwide. ESG investing is about 20% or 20 trillion of them. The second the statistic up there, so the UN backed institution, the principles for responsible investing So just a little disclosure on that. So we're rather not disclosure but information. So the PRI the principles for responsible investment is an unbiased third party backed by the UN, which ultimately tries to increase the awareness of impact investment by creating annual reports that go through different in various elements of environmental, social and governance investing.
So for example, some elements that might be under the environmental aspect would discuss the idea of climate change, social would be human, humanitarian, or philanthropic issues, and governance would be income inequality, or voting rights, for example, for various countries, various companies worldwide, signed by over 1600 members internationally, and they represent about 70 trillion of assets under management. So we can see most large to mid cap size public companies now release and your reports on ESG. And ESG, allows individuals to vote with their money. And businesses are adapting these to meet their demands these meaning the individuals. So to sum, basically, all of that information up. The purpose of this slide is to demonstrate how investing is starting to shift due to the idea of impact investing. So the idea of this pri report is very, very impactful as now individuals can look at what companies are doing what funds are doing organisations are doing with their money with their resources, and ultimately determine whether that investing in that firm will promote environmental social changes and how one can physically vote by investing in one company over another and incite change. As as every business is based off of the idea of money, maximising shareholder wealth, creating a profit every business needs to create a profit to be sustainable in the long run. How do you do that you have to make sales or you have to get clients I mean, it differs on the brand, the industry, the company, but at the end of the day, you need support from individuals from from investors from venture capitalists, and this is the wave of the future. A lot of companies are now tailoring their ideas, guess their methods, their methods of production, their values, their mission towards these principles that the PRI So, clearly an annually reports on. That was the first half of our presentation where we discuss the four influencers on businesses.
So we have consumers, governments, investors and competitors, we could see how each one of them so hand in hand ties into the idea of CSR. But our presentation is not a report, rather, a way of thinking how the individual can then power and drive and control firms to initiate CSR, if not already, or increase the investments in more sustainable long term, and socially just production. So this, this video is by john Mackey, the CEO of Whole Foods, and it discusses the idea of greater purpose. So we'll go ahead and watch the video. And then take a few minutes and just reflect on it and talk about what can be extracted from the video. And then finally, the second half of the presentation will go into the idea of the individual, the consumer and what it means to truly be purpose driven and how one can affect the idea of CSR. Tram video, please.
John Mackey, CEO of Whole Foods
I think business should have a higher purpose than only making money. Be Think about it. What's the higher purpose of a doctor to heal people, doctors are well compensated. The higher purpose of teachers they educate architects design buildings, engineers construct things, every one of the professions refers back to some type of value they're creating in the world besides money. Only business, usually by the intellectual enemies of business puts it in this narrow category. It's just about money. I think that diminishes business and lowers and social legitimacy, when in fact business is the greatest value creator in the world. So yes, I do think in answer your question, that business should have a more a purpose beyond just making money although of course it needs to make money too or it can't exist.
Nick Constantino
We can see that people's greater purposes. act as a catalyst for them to go into some career, some path, act in one way or another and Ultimately businesses, new ones, especially, are founded in rooted with these individual ideas. For example, Whole Foods Whole Foods started with a greater purpose, Tram, what can you tell us about that?
Tram Le
So Whole Foods actually, was started with the greater purpose as to serve people, especially their co consumer with healthier lifestyle, a healthier option to this chip and snack in other stores like Walmart, or target. And so Whole Foods offer a range of organic produce and products with ethical produce production line, so that consumer can have the choice of having an ethical and healthy lifestyle. Now, Whole Foods not only care about their consumer, but they also care about their employees. Because employees can also be a potential customer for all their products as well. So I know from personal experience that, at the beginning of the pandemic WholeFoods, pays their employee above minimum wage to work at the store. WholeFoods do so because they believe that everybody was struggling at the beginning of the pandemic. And it's because they're struggling, so they can't really afford a healthier lifestyle. So due to that whole food, pays their employee above the minimum wage, usually, for minimum wage, people who worked at the grocery store will get around $10 per hour. But if you work at Whole Foods, you will get at least $15 per hour. And in doing so Whole Foods, improve the quality of employees, work experience in the store, but also improve the quality of the store as a whole. So Whole Foods not only care about their customer, but they also care about their employees. And that's how Whole Foods is purpose driven, and consumer and employees driven as well.
Nick Constantino
Awesome. So like we said, corporations are purpose driven corporations are started because our not just Corporation business really is rooted in the idea of let's say, not to sound cliche, but the entrepreneurial spirit and individual right, we see a necessity. People need something people want something. And a business comes in and supplies that needs simple economics supply and demand, right? Well, what is that demand is not a product? How can you supply that? If you already have a business? What can you do to increase that demand? There's obviously very, very, very little amount there a little amount of firms who are operating at pure profit maximisation. And they're not getting the entire demand unless you have imperfect market structures, which is another another topic for another time. But one thing that's really really interesting that we can see is that the statistics below show that companies will respond to these ideas of purpose driven firms and and ventures so we can see 88% of consumers Oh, by the way, these statistics are from Cohn, which is a communications and research based company who specialised in consumers, or corporate social responsibility rather. So this is their 2018 study. And they surveyed consumers in a variety of industries, I forget exactly the number of consumers. But we can see that 88% of consumers would buy a product from that company that does support a greater purpose of corporate, the corporate socially responsible venture. 75% of consumers would try an entirely new product line from a company they already support. So basically, let's say, um, just to put that in perspective, you use Colgate toothpaste right? Colgate toothpaste has a great CSR initiative for the toothpaste, you support their brand. And now they venture into let's say, the laundry detergent market, right? That's a new product line. So you know, you trust this brand, you'd like what they do socially for their toothpaste. So you would go ahead and try that new product line. 66% of consumers would switch from a product they typically buy to a new product from that company. So like, so to say, let's say you use tide detergent, which doesn't have CSR, you would then switch to the new product from a company that, you know, does contribute greatly to the idea of CSR promotion. And then 50% would pay more for a product from that company. So we can see in these statistics that over half for all of them are all in support of these corporately, socially, corporate socially responsible Sorry, I'm tongue twister, corporate social responsibility for Responsible firms. Well, um, which is a really, really interesting fact. Because a lot of people don't necessarily consider that when looking at it from an individual standpoint. I mean, I know personally, for my experience, if I'm in a grocery store, I'm not necessarily always thinking about, okay, well, what does this company do? What do they stand for? What are their mission? What are their values, you know? But if you take a step back and look at it from an analytical standpoint, and say, Okay, well, what do I value? What is my purpose? Well, let's say personally, I am really big advocate for the idea of climate change, for eradicating world hunger, you know, how can I take my purpose and look for firms that are able to match that? And at what cost? Well, we can see that clearly cost, whether it be socially, fiscally or economically isn't necessarily a big worry for consumers. And that's what we can see with these statistics, the idea that corporations are purpose driven, is is really a key here because corporations are purpose driven purpose, being to make money, you know, and how do you do that through the consumer. So the next slide will discuss the idea of how consumers drive corporations.
So we can see these statistics again, the lowest statistic here is 67%, which is more than two thirds about two thirds, let's say 69.6. Repeat, let's say about two thirds, or 66 rather, um, so 79% of consumers say they would be loyal to purpose driven company. 77% say they feel a stronger emotional connection to purpose driven companies 73% say they would be likely to defend a purpose driven company, if people spoke badly about it. 67% say they would be more willing to forgive a purpose driven company if that company makes a misstep than a traditional company. And then finally, again, 67% say they believe purpose driven companies care more about them and their families than traditional companies. These are all key key key important. A are key components and important factors that go into the idea of consumption. consumption is a huge aspect. And it has so many elements in it, whether it be marketing, whether it be advertising, whether it be personal finance, there's so many ideas of consumption. But at the root of it, it's how the consumer feels when making a purchase that will differentiate whether they buy with one company or another, what makes them feel good, no one's going to buy something that they're not passionate about, that they're not in support with. That's just ludicrous to think. So. Corporations need to tailor their products to the consumer, correct? Well, just to tie in the first half of this presentation, the first half talked about business influencers. Again, they were consumers, which obviously we're talking about now is a really, really vital aspect of it. But there were three others so governments competitors, as well as investors, and although they all influence businesses, the root and the common element of all of these is the individual it's you. It's how you can take your values, your personal sentiments, your greater purpose and translate that through your actions, your advocacy, your awareness and information, how you can translate all of that into pressure that acts on businesses to whether it be initiate a CSR programme if not already, or invest more in it. diversify their CSR. The investment side discuss environmental, social and governance. Those are just three but there's so many various ways that consumers and corporations and individuals can get involved and go beyond simply transactional and operational day to day. What at the end of the day when the books are closed.
Bottom line is the bottom line. However, there are ways that companies can go beyond the bottom line. And that is through corporate social responsibility. So at the root of business, like I said earlier, business operates on the idea of necessity. And the one way we can change that is through the individual. If the individual starts to demand, more socially just programmes, more social welfare programmes, more ethically produced programmes, there are so many different aspects and avenues to take this down. But if the individuals start to demand and start to request, let's say, these programmes, corporations will follow. In the long run, corporations need consumers, they need individuals to support them. And one way to do that is to match the demand supply and demand. So that's, that's the idea of greater purpose and how an individual can have such a control a grip on corporations. I mean, when we look at a corporation we look at it's 10k, for example, and we see $167 billion, and you think I'm just one person, how is me going to a store, going to have me buy one hand sanitizer over another or one brand face mask over another? How is that going to impact anything, the company's massive, I can't even fathom that. But think of it as not just you, but another person and another person and another person, and how ultimately, the idea of an individualistic aspect can become a group aspect, and then can become a movement. And that's what we've seen, we've seen, the idea of CSR has increased so drastically, especially within the past 20-30 years, you know, in the 1920s, this was not a concept, this was not a thing. In the robber baron days, it was more about profit, we can see oil industries just skyrocketing, you know, during the Rockefeller days, and it's there was no idea or perception of the impact that corporations can have. However, now that technology is prevalent, media presence is prevalent. And we're finally starting to see the impact of that, we need to start making changes and that change starts at an individual level. So this next slide is kind of just a takeaway slide on this presentation was supposed to be given in the format of an interactive workshop. So we would have activities where we brainstorm we talked about companies give real life examples, obviously, due to the covid 19 pandemic, that is impossible. So this is all recorded. But we do think that this is not like I said earlier, this is not a lecture, this is more of a takeaway, like, this is something that you can now think about and take on into various aspects of your life, not just when you're in the grocery store. But when you are applying for a new job when you're looking for volunteer work to do you know, any humanitarian aid you want to give to any donations look, and really look at an individual aspect, and then find companies that align with your values.
So the first takeaway question is, what does the company you buy from that exhibit CSR? If you know any, some people might not have known what corporate social responsibility was, or have heard of it, but don't really make purchasing decisions based on it. You know, some people, when they go to a store go directly to the green products, because they're globally. They're globally friendly. They,let's say they help support climate change, they reduce the ozone layer. And like, for example, some people don't buy aerosol cans, because they want to reduce their chlorofluorocarbons, CFCs in the ozone layer that are released when using them. Other people really aren't aware of that, or to them, it's not important. Um, but does that aspect of that company act as the main motivation for your patronage? Do you only buy from one company exclusively because of what they do? Um, another question is how do consumers translate their values in a purchase decisions? So ultimately, this idea comes from let's say, you're standing in a grocery store, what do you buy? And why? Is it because of the packaging? Is it because they advertise their CSR? Is it because they are placed higher on a shelf, the lower and you don't feel like bending down, you know, how do you translate your values into making these decisions? You know, how can you be a more educated consumer? And then lastly, how can you be a better leader for CSR through your consumption. And, and for me, and I mean, I will let Tram and Sophie obviously, please give their opinions on this. But in my personal opinion, the best way to become a better leader is through knowledge acquisition, being informed, you know, we talked about how in the individual can have, honestly a very drastic effect in the long run on all of these firms and what they can do in the long run. And the best way to do that is to be informed, understood, but I say informed. And I mean that in two senses, obviously, I mean, understanding what companies do, what they support, how they do it, but also be informed and in tune with yourself what your personal values are, what the individuals greater purposes, and that's kind of the point of this presentation, is to look at the individual look at yourself, what do you stand for? What do you support? What do you advocate for, and in the grand scheme of things, one person, the idea that one person can eradicate hunger, or poverty is is very, very idealistic. You know, it's, it's a problem that not one person can solve. However, you can support that cause, through your actions, through your decisions through your purchasing, and ultimately, through your consumption trends. What do you guys think about that?
Tram Le
Yeah, for sure, I think that for a product, say, when I consider buying a product, it could be as simple as just turn the product around and just look at their ingredient list or just like the about the company summary that they have there. And usually, for companies that truly care about what they do and truly is, like, are passionate about what they're doing, they would have, we would say that their product is ethically produced, or that somehow they would mention their CSR in a way. But also, on the side, sometimes I would do my own research online, or just stumble upon YouTube videos or something that talk about a company that's been outstanding in the CSR area. And when I, when I see that kind of, you know, mentioned on YouTube or in the news, kind of as a consumer, it would ingrain into my brain in a way and the next time that I see a product by that company, or Yeah, like anywhere I would be more likely to purchase from that company than a competitor. Yeah, so I think that definitely that if a company has CSR, it definitely is an advantage for them. And for sure, they should put that onto their product and show it off proudly.
Sophia Desko
Yeah, I'm just gonna echo both Nick and Tram kind of message and you're taking an active part in what you're purchasing, it's so easy to kind of just go in and grab whatever you see whenever you go shopping, but investigate what you're purchasing. Because you might find out you don't actually want to purchase that product anymore. So as active as you can be, it leads to better consumption patterns for yourself.
Nick Constantino
Yeah, I think that that Sophia, really kind of just hit it on the head. You know, like, nowadays, like I said, over the past 2030 years, CSR has become increasingly, I want to, I'm afraid to say exponentially increased, but it has increased drastically on the the prevalence of corporations that contribute to CSR. And most companies will advertise that on their websites. You know, if let's say you go to the grocery store, and you see two brands of ice cream, you're bored one day, Friday night, we're in a pandemic, it's not like you can really go anywhere and you just want to do a little bit of research, you know, like look them up, see what each company stands for, see how they produce their products, whether they use ethically produced materials, whether they use recycled materials, how their production plants are managed, whether they use solar panels or biofuels versus fossil fuels, renewables versus non renewables, you know, just little things like that. The idea of being informed is a super super powerful tool, you know, knowledge is power, and the individual has the capacity to make a change and understanding the individual's greater purpose can have drastic impact on sustainable measures and CSR in the future? Um, yeah, so we want to thank you so much from on behalf of Drexel University's the BOE College of Business. This next slide has our contact information. We know it's not a live presentation, unfortunately, and regrettably, however, and we do have a live q&a after this, so we were excited to hear any questions or comments that you guys have. However, this next slide has our contact information and emails. So please feel free to reach out to any of us and you're all on and we'd be really more than happy to go ahead and answer any questions. And just kind of get to hear any feedback if you guys have any. Once again, thank you so much for listening, and we hope you you enjoyed our presentation. Thank you.
Victor:
Thank you, Nick, Sophia, and Tram. These students have participated in Global Classroom programs as well as Drexel’s annual Student Conference on Global Challenges, which showcases their interest in global leadership and research. Hopefully, you found some new ways to think about leadership from their presentation. That’s all from us for today - tune in next time for the next episode in FIE’s Student Global Leadership Conference podcast series.