The business of holding companies to account

The business of holding companies to account

While social issues are important to customers, businesses that lack sincerity risk both credibility and profits.

Being ‘woke’ is a balancing act for businesses when it comes to satisfying customers on issues of social responsibility and justice.

Authenticity and being seen to take a credible stand on social issues have become important factors for businesses to manage. When customers are misled, or claims are not substantiated, profits can suffer.

While ‘woke’ was a term rarely heard until recent years, it’s now a key marketing concept. Companies are grappling with balancing customer loyalty without alienating some groups if being seen to do the right thing doesn’t align with a segment of their customer base, or their actions are not matched with deeds.

This fine line is one being studied extensively by Dr Abas Mirzaei, a senior lecturer from the Department of Marketing, whose book Woke Brand, examines this concept and how brands can navigate it.

“Where a company purports to hold views on sustainability or important social issues, they must walk the talk to maintain credibility,” Dr Mirzaei says.

“Where this is successful, it can be both profitable and valuable to their reputation while also being a positive force for social change.”

Where it fails, profits may fall and reputations are damaged. Greenwashing is one example where transparency into carbon reduction programs is opaque, or rainbow washing, where an organisation flies a rainbow flag without any underlying policies or programs to support the LBGTIQA community.

Dr Mirzaei says customers are increasingly holding businesses to account but if they also suspect there is a lack of sincerity or genuine commitment then it can backfire badly and impact on business with erosion of customer loyalty and alienation of potential new customers.

He says a business must show examples of how it’s engaging in real action to improve outcomes for society and the environment if it makes woke claims.

An example is AirBnB’s assistance in providing emergency accommodation around the world to Ukrainian refugees, demonstrating commitment through actions that were highly transparent.

Conversely, a business can suffer if it appears to be aligned with views its customers consider undesirable. Sports shoemaker Adidas lost $US750m for unsold Yeezy shoes, linked to Ye, formerly known as Kanye West, after racist and antisemitic comments at Paris Fashion Week in 2022.

‘Woke’ has its origins in African American English as a synonym for awake. While the term has been in use since the 1930s to refer to awareness of social and political issues impacting on African Americans, it has since become more widely used with the broader meaning of being aware of and actively attentive to important and sensitive social issues.