It’s not going to be 40 days and nights of rain, but it now feels like it’s been raining for a week without letup, save for short reprieves. The early riser that I am, I did feel the earthquake yesterday (Saturday) at 4:50 am, and immediately thought if it’s connected with the active Taal Volcano that is still exhaling. This shake at this dark early morning went on for a decent time while rain was pouring tirelessly.
I can’t help the sobering thought that with this resilient virus, we can easily have on any given day a disaster within a disaster simultaneously with other disasters. There’s no escaping its impact on all of us, especially those with lesser means. It makes us doubt even our best laid-out business plans on how relevant they will be if the landscape we planned for turns out to be more extreme.
That is why any businessman or woman worth their salt or values would focus on things they can contribute to or influence, although not necessarily control. Sustainable business models used to be an advocacy before it became best practice, before the pandemic accelerated it to an absolute must. Sustainable business practices are those that produce positive long-term impact by having an ESG (environment, social and governance) focus.
Almost all private funds or big investors now consider the impact of a target company’s ESG practice on its valuation. Maybe that is the subtle way to put it, because in making investment decisions now, the ESG practice of target companies can be a matter of “go or no-go”. Investors care and customers care.
One of the earlier examples and a popular one, in fact of consumer protest, is the one called by former president Cory Aquino in 1986, before the internet and social media. It was all new to many then, and I must admit, a bit scary. A government that lost all credibility and mandate because of its despotic rule and tyranny, tried to rubber stamp a Marcos-Tolentino victory. She called for civil disobedience against the Marcos government, and called on the people to boycott crony-owned corporations and to not patronize their products. It was a leap, to say the least, because those consumer goods were what we used everyday. But many were with her, and decided to look at the labels before buying (of course, the rest is history: the poll tabulators walked out, the Catholic Church issued a pastoral letter that preceded the multitudes of demonstrators flocking EDSA, but we digress.)
More relatable to all of us are the pockets of consumer protests that happen sporadically, and some collectively.
Take the case of the consumer protest initiated by animal rights activists that plagued a popular high-end cosmetic and skin care chain that tested their products on animals. This company lost some revenue, but moreso, its brand began sounding unwholesome. Since then, the company has transformed and its brand is considered by Naturewatch as among the cruelty-free cosmetic brands.
This popular fashion retail chain for the B market that shoppers generally frequented was punished by consumers when news came out that they were using a supplier from a Third World country that employed 14-year-olds, overworking them in making clothes on 12-hour shifts. (And here at home, how did you react when you watched and read the news that this sardines company employed little children because their fingers were small enough to fit sardines into cans more efficiently? Never mind if their fingers get cut or if they were made to sleep in matchbox-like spaces.) A sustainable initiative is one implemented by a leading sports apparel company that asks auditors (like us in PwC) to spot-audit their suppliers from the Philippines on the working conditions of the latter’s employees.
In this online sales boom, one customer complained to a popular e-commerce site about sending nine big boxes for the nine items of window films she ordered, when the nine items could have easily fit into one box. She took this on as an environmental issue, posting online pictures of almost empty boxes with only one item inside each box. You can bet that this social media campaign will make the online operator pivot urgently.
With the millennial population and their cause-oriented mindset taking over the consumer segment, joining similarly wired older generations, we are probably nearing a golden age of consumer activism. They can create public perception and opinion that can uplift or damage brand and enterprise value. Thus, it is not complex to understand investor behavior.
It’s about ESG, but it is also about the other E, which is economic. Businesses must now be sensitive to the intangibles of what is important to their consumers because it’s also important for good business to do so. It’s not just about buying cheap. For many it’s about buying with empathy. ESG or sustainability investing is certainly investing for value, and there is real value in companies that will last. But even more powerful is the notion that it is about investing in protest of all things harmful, inhuman, and unfair. The pandemic crisis is a great accelerator, but most of all, it can be a great teacher of lasting business models.
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Atty. Alexander B. Cabrera is the chairman emeritus at Isla Lipana & Co./PwC Philippines. He is the chairman of the Integrity Initiative, Inc. (II, Inc.), a non-profit organization that promotes common ethical and acceptable integrity standards. Email your comments and questions to ph_aseasyasABC@pwc.com.