Increased public activism and expectations from brands

Corporate activism or the willingness of companies to take a proactive stand on social, political, economic, and environmental issues, in many cases controversial, is a dynamic phenomenon globally. We have seen many examples of corporate and brand activism related to gender equality, LGBTQI rights, race, immigration, climate change, income inequality and other issues. Corporate activism is a relatively new phenomenon in Latvia, with increased demand due to Russia’s war in Ukraine. We can see this as part of the research "Business and Public Expectations - USG 2023", conducted by VA Communications, VA Government and VA Purpose Rud Pedersen Group for the third time.

We don't have to look far when it comes to global examples of corporate activism. Patagonia's support in the fight against climate change is well-known and ongoing (Start Small, Go Big, Give Back). This was reinforced by the founder's announcement to give away his company and ensure its profits are used to combat climate change and protect undeveloped land around the globe. Oatly, a Swedish company, has grown from a small start-up to a multinational company with a capitalisation of over €1 billion by creating plant (oat) milk in direct opposition to the dairy industry. A successful and fast-growing business was created when corporate activism was the foundation of the brand.

Corporate activism is also about rejecting collaboration if it becomes toxic, even though it creates considerable short-term financial loss. When the musician Kanye West made explicit anti-Semitic statements in 2022, Adidas terminated its contract with him for the Yeezy collaborative product line. As a result, Adidas said it would most likely lose €1.2 billion in revenue this year. If Adidas were to find a reason to continue the cooperation, the loss is difficult to calculate, even hypothetically.

There are some positive examples in Latvia as well like Printful who was one of the first companies in our country to stand up for an inclusive society, articulating this during Pride. But often the loudest ones are those that seem to be against positive change. Take farmers’ organisations, for their part, who should reflect on the zeitgeist in attitudes and consumption before attacking the Riga City Council’s participation in the “Don’t Eat the Globe” friendly eating challenge as detrimental to the industry. Is tackling pro-climate initiatives really the most beneficial modus operandi for these sectors and will it bring growth in the long-term? Hardly. The same applies to companies that see Latvia only as an exporter of natural raw materials with low added value. These are just a few cases worth looking at.

WHAT DOES LATVIAN SOCIETY EXPECT FROM COMPANIES?

Although Latvian companies are lagging in addressing controversial issues, public demand for companies to engage and take a stand on important social, economic, and political issues is growing year by year. And is a trend that is becoming more persistent. Around four out of five or 78% of Latvians today expect companies to think not only about profits, but also about issues important to society. This is a 15% increase since 2020, when only 63% of respondents considered so. In addition, 59% expect companies to take a stand on issues that matter to society.

The measurement on businesses and public expectations also shows that people are encouraging companies to address energy and energy resources related issues. This is the primary issue on the agenda for over a half, or 59%, of respondents. 43% highlight it as the primary area where they expect companies to take more action and expect them to support with their profits.

The importance of ESG (Environmental, Social, and Governance) topics also continue to grow when choosing products and services. It is important for most respondents that companies are as honest and transparent as possible. In contrast to previous years, already 78% highlight it. Similarly, 76% of respondents (+15% since 2020) want companies to have an ethical attitude towards employees. Environmental issues should also be high on the agenda of companies – it is important to 70% of the public. Environmental protection and climate change are also the third most important issue for companies to support with their profits, after energy and unemployment.

SHOULD BUSINESSES IN LATVIA BE CORPORATE CITIZENS?

It is important to note in this context that 51% of the public increasingly value the ability of Latvian companies to address issues of public concern. Perhaps, Russia’s invasion of Ukraine has increased this assessment and expectations. A very large part of the society, both in their corporate and private lives, have been active in the last year in opposing the war and providing various forms of support to Ukraine. In addition, unlike previous years, a company or brand's stance on issues of public importance has also had a significant impact on the public's purchasing habits. People are more active in boycotting companies and brands or, on the contrary, in supporting their actions.

26% of people indicated that they had refused to buy a brand's products or services in 2022 because of the company's stance. This is a significant change since 2019, when only 3% of respondents mentioned this. Similarly, 16% (+11% since 2019) said they have started buying a brand's products because its point of view matched with their own.

While analysing the data, we see that the increase in activism has been driven by the war in Ukraine that Russia has started. For example, the public has boycotted companies that did not leave the Russian market in time and has started to buy more locally-produced goods. Of course, Russia's invasion of Ukraine is a very strong, reaction-provoking event, and the question remains: when the war is over, will any issue be able to compete with it? It is therefore difficult to say now whether this is a one-off precedent or whether it will have a lasting impact on other social, political and economic issues.

At the same time, it is a significant step forward since 2019 and means that people keep a close eye on the actions of brands and companies. Therefore, a smart response to public expectations would be corporate activism as part of a business strategy. But this cannot be achieved in a few weeks. So, if we want to make a visible difference a year from now, we need to act now. Ignoring the signals sent by public opinion can have a negative effect at an unexpected moment in the near future, as companies' attitudes are already starting to influence purchasing habits. Public activism will increase, and this will require an increasingly active citizenship from businesses too - it pays not to remain in the last rows!

Read the full report in English here.