Research: Consumers keener to engage with 'kind' companies

Consumers are happier to spend their money with companies they perceived as ‘kind’ – or in other words, companies that met their expectations of positive environmental and social practices. Though economic turmoil might tempt companies to abandon ESG initiatives, staying on course is likely better for business.

A survey that polled over 6,000 consumers across several countries found that people prefer to spend their money with companies that are perceived to follow a general ethos of kindness. The new research was done by management consulting firm Baringa.

Among all the respondents in every countries, a remarkable 76% said that they “sometimes or always consider” the behaviour of a company or its leadership before making a purchase with them. This underscores the importance of ESG initiatives and shows that companies can easily be penalised if they act unethically.

Globally, 61% of respondents said that they would refuse to buy a product or service if the company was perceived to be unkind. In some cases, the research found that younger consumers in the “Gen Z” age group of between 16 and 24 were more likely to consider the ethics of a company than their older counterparts.

Among the European countries surveyed, Switzerland was the most adamant about refusing to spend money on companies that they perceived as ‘unkind’. 70% of Swiss respondents said they refused to buy a product or service in the past two years unless the company met their expectations of kindness. That is compared with 68% in Germany and 52% in the Netherlands.

The Netherlands was notably one of the countries where consumers were least likely to consider a firm’s kindness before making a purchase.

“Dutch consumer behaviours can be different from those of other nations. Our donations to charity barely dip in tough economic times. We top the charts in terms of unpaid volunteer work. But on the other hand, as regards the private sector, the Dutch quickly adjust spending, with price trumping everything else,” said Marcel Volkerts, expert in energy networks at Baringa.

“The assumption is that when times get tough, ‘ethical’ choices become a luxury and people make decisions based on price. But the increased awareness of unkind business practices might be changing this,” said Guy Dent, partner at Baringa.

“As we head into a possible recession, we are seeing more people prepared to take a financial hit to choose kind firms, often in an act of solidarity.”

In nearly all of the countries surveyed, consumers said that the way the company treats its employees was their top concern when considering making a purchase with the company. That was the response from 35% of those surveyed in Germany and 31% of those in the Netherlands.

“There is a school of thought – going back to economist Milton Freedman and beyond – that holds that the point of business is to make money and everything else is immaterial. But in a connected age where the consequences of business decisions are instantly transmitted worldwide, people are faster to make moral judgements about firms, and to act on those judgements,” said Dent.

“The smartest companies will respond by increasingly incorporating a review of the ethics of their actions into their planning.”