The New Alternatives

How The Purpose/Action Gap Is Keeping Execs Up At Night

Companies aren’t prepared to discuss ESG commitments with key stakeholders, despite increasing demand from consumers and investors

New research from Barkley and Jefferies finds the purpose action gap keeps CMOs up at night. Access complete report here.

KANSAS CITY, Mo.–(BUSINESS WIRE)–The importance of economic, environmental, racial and social justice has grown significantly in the last year and there has been a verifiable surge in consumer and investor interest in brands that take purpose and ESG—environmental, social, and governance—seriously. As a result, companies must be more agile and prepared to act and report on their values and ESG commitments with key stakeholders, including employees, customers and investors.

“Consumers have never been more concerned about the state of the world. They are voting with their wallets to support brands that lead with value and are sustainable,” said Lindsey DeWitte, Barkley EVP of Purpose + Sustainability. “However, we also know there is a trust gap and consumers are looking at what brands are doing to prove their ESG efforts. Engaging in these issues is now a part of every CEO’s job description.”

Purpose Is No Longer Optional

The principle behind purpose is easy to understand and without controversy: brands should stand for something greater than just making money. Who’s against that? (new research suggests that 5% of consumers might be, or at least don’t care. Everyone else loves the idea.)

The drive for purpose as a guiding force has become so pervasive that measurement of its outcomes has become institutionalized with a corporate acronym: ESG, standing for Environmental, Social and Governance. It’s about reporting non-financial metrics across these ESG factors as a guide for making the world a healthier, safer and more equal place. Research suggests that companies that do so are more successful in the long term.

No longer is corporate responsibility confined to sponsoring a good cause like breast cancer research. It’s become embedded in company cultures — from how you treat your employees, to the products and services you make, to how you tell your story to consumers.

The Purpose Action Gap

The Business Imperative of ESG, a new joint research effort between Barkley and Jefferies, reveals the majority of today’s brands are not prepared to meet these expectations.

  • 98% of businesses say acting on ESG-related issues is more or much more important than it was 12 months ago.
  • However, only 20% of companies say they are very ready to talk to Investors and only 10% are very ready to speak to consumers about ESG-related topics.

In contrast, stakeholder demand and expectations continue to rise.

  • More than two-thirds of consumers are more committed to supporting socially and environmentally responsible companies than before the pandemic started.
  • 60% of consumers are willing to pay more for products and services offered by socially and environmentally responsible brands.
  • 75% of consumers are more likely to recommend socially and environmentally responsible brands to friends and family.
  • More than 50% of consumers actively research brands and 66% are more likely to support brands if they provide proof of their socially and environmentally responsible behavior.
  • More than half of respondents said it’s important to work at a company that aligns with their values, but less than half felt that their companies’ performance was very good.

The ESG-Action Gap Is Narrowing

Consumers have never been more concerned about the state of the world. They are voting with their wallets to support brands that lead with value and are sustainable...

Consumers say ESG is important and it can influence their behavior and self-identity, but there is sometimes a gap between what they believe and how they behave.

Consumers don’t always choose the more sustainable brand. Sustainability alone can’t make up for a poor customer experience, poor quality or a lack of availability. But sustainability has the most impact when consumers are choosing between two or more products or services that are not well- differentiated on other issues.

While 77% say that having purpose and a positive impact on the world is important, only 48% say that they chose a brand over a competitor in the past 30 days because the brand was more sustainable. Now, we say “only” 48% because it’s less than 80%, but it’s still a significant number.

Almost half of consumers say they are choosing brands because of sustainability issues, and the number seems to be growing. In 2019, only 33% said they chose a brand over a competitor because of ESG, so 48% is not only a decent number of consumers in its own right, it also represents a significant increase in ESG importance post pandemic.

Consumers and investors are ahead of companies in how they value and act on ESG issues. The research is clear: it’s imperative modern brands share ESG commitments and actions with key stakeholders or they’ll be left behind.

“We are living through a sea change in consumer preferences regarding sustainability, and we are just at the beginning,” said Aniket Shah, PhD and Jefferies Global Head of Environmental, Social and Governance (ESG) and Sustainable Finance Research. “The winners of tomorrow will be the ones that embrace sustainability deeply and authentically today. The results of this report should help guide the decisions of CEOs for the next several years.”




About The Survey
This consumer research (n=2473) was completed by Barkley, the largest Certified B corp ad agency in North America. The 125 C-suite interviews were completed by Jefferies.
About Jefferies
Jefferies Group LLC is the largest independent, global, full-service investment banking firm headquartered in the U.S. Focused on serving clients for nearly 60 years, Jefferies is a leader in providing insight, expertise and execution to investors, companies and governments. Our firm provides a full range of investment banking, advisory, sales and trading, research and wealth management services across all products in the Americas, Europe and Asia. Jefferies’ Leucadia Asset Management division is a growing alternative asset management platform. Jefferies Group LLC is a wholly owned subsidiary of Jefferies Financial Group Inc. (NYSE: JEF), a diversified financial services company.
About Barkley®
Barkley is an independent, creative idea company committed to knowing the modern consumer better than anyone because that’s the only way to build a whole brand. We do this through three idea centers: strategy, design and activation. Barkley is the largest certified B Corporation ad agency in North America.