Treating Employees Well Can Have Positive Ripple Effects in Consumer Markets

06 November 2023 / Quick Take

Corporate sustainability initiatives, both social and environmental ones, can be a double-edged sword—they can increase brand appeal for consumers—or damage it. Our survey of 3,000 US consumers shows that initiatives that support employees and local communities are the most powerful enhancers of brand equity.

Insight for What’s Ahead: Offering employees decent workplace conditions and equitable pay and supporting local communities can pay off with consumers—but companies need to effectively communicate such efforts. In contrast, speaking out on social or political issues can be risky and is the most likely action to reduce brand appeal for consumers.

Treating employees and local communities well can increase popularity with consumers, while taking public stances on social/political issues risks reputational damage

How to elevate brand value through consumer-focused sustainability communications

The author thanks Allen Li (Associate Economist) and Malala Lin (Economic Research Associate) for all their data analyses for this project.

Treating employees and local communities well can increase popularity with consumers, while taking public stances on social/political issues risks reputational damage

How to elevate brand value through consumer-focused sustainability communications

Showcase initiatives that highlight your role as a good employer and good neighbor, restoring balance to an area that is currently dominated by environmental initiatives. This could be a competitive differentiator.
Show diversity in employer branding campaigns to both attract talent and appeal to consumers. Consumers appreciate diversity in the workforce but can be skeptical about an obvious—or even artificial—emphasis on diversity in ads.
Be cautious in acting on and speaking out publicly on social or political issues unless it’s a topic closely related to the brand’s business or operations. Instead of making public statements, companies can still act and talk internally about issues that affect employees; and in any event, companies should have strong governance frameworks to decide whether, when, and how to take a public stance. Highlighting economic benefits of their positions can help minimize backlash.

The author thanks Allen Li (Associate Economist) and Malala Lin (Economic Research Associate) for all their data analyses for this project.