By Linda Fisher Thornton
Ethics Impacts Brand Value
In the article Brand Promise: What’s Your Ethical Brand Value, Ethisphere.com highlights a shift in corporation value from predominately tangible value to intangible value:
The way in which corporations conduct business has changed dramatically in recent decades. The industrial complex, traditionally based on hard assets, has evolved. Three decades ago, according to a report published by Thomson Reuters and Interbrand, 95 percent of the average corporation’s value was composed of tangible assets. Today, 75 percent of the average corporation’s value is now intangible. Accordingly, the most valuable asset for most corporations is their good name, or their brand and reputation.
The report “Brandz™ Top 100: Most Valuable Global Brands 2011″ at MillwardBrown.com describes consumer trends and how ethical behavior impacts a company’s brand value. Customers now shop globally, and when they buy, they compare products more and more often based on ethics. In addition to shopping cautiously during the recession when money is tight, there is also a trend toward thinking about how each purchase impacts the global community and the planet.
“The new ethos frowned on flaunting and encouraged awareness of how one’s purchases, whether diamonds from African mines or apparel stitched in Asian factories, impacted the environment and people all along the supply chain.”
“Brandz™ Top 100: Most Valuable Global Brands 2011″ MillwardBrown.com
Millward Brown uses the term ‘considered consumption’ to describe the current trend in consumer behavior.
Frugality eased last year, but consumers didn’t spend frivolously, suggesting that brands will continue to feel the impact of the recession-accelerated shift to considered – rather than conspicuous – consumption. “Brandz™ Top 100: Most Valuable Global Brands 2011″ MillwardBrown.com
7 Practical Reasons Why Ethics Impacts Brand Value
- Customers are thinking more before buying
- They are evaluating the ethics of companies and products
- They are making responsible consumption a priority
- They place their “vote” for ethical business by purchasing from ethical companies
- They value trust
- They expect ethical behavior
- They spread the word when companies are responsible and offer quality and value
In a recent survey released jointly by the World Economic Forum and the Fleishman-Hillard public relations firm, three-fifths of chief executives said they believed corporate brand and reputation represented more than 40% of their company’s market capitalization. That value is the organization’s brand reputational value.
About The Author: Linda Fisher Thornton is CEO/Owner of Leading in Context, a leadership development firm providing leadership consulting and learning publications in an ethical context. She publishes compelling workshop materials that help leaders understand complex ethical issues. For more information and sample content, see “Ethical Implications of How Leaders Perceive ‘Different’.”