StartArticlesReputation from the outside in

Reputation from the outside in

No company or organization is alone. That is obvious. But the impacts of these relationships are not always well established when it comes to reputation and its impact on sales and business.

Imagine a large company. She needs to rely on a supply chain that can include thousands of other companies, which in turn purchase products, services, inputs, and raw materials from many others. In a world where ESG issues are on the agenda, this entire universe will weigh in favor (or against) the hiring company.

For those who still imagine that this agenda is philosophical, ideological, or distant, some facts show otherwise. Regarding the environmental aspect (the E of ESG), the European Council approved last year a kind of tax on the carbon emissions of exporting companies to European Union countries (Carbon Border Adjustment Mechanism, or CBAM). The mechanism will target imports of carbon-intensive products, such as iron ore, fertilizers, and cement.

By the end of next year, traders must report on emissions, with implementation expected to begin in 2026.

Furthermore, in April the European Parliament approved the Corporate Sustainability Due Diligence Directive (CS3D), which requires European companies with more than a thousand employees to verify their value chains, from the extraction of raw materials to the distribution of the final product, which even involves suppliers that initially do not even have a commercial relationship with Europe, such as a seller of meat or cotton to companies that – these, in fact – export to European companies.

The 2008 financial crisis triggered more stringent commitments from financial institutions regarding their clients' risk, as defined in the so-called Basel Agreement. Even so, situations like the recent collapse of Americanas raised suspicions of collaboration by financial institutions in the balance sheet manipulation.

In other words, whether you believe it or not, whether you like it or not, many companies will be involved in the game under threat of commercial impact. The grandes are already preparing themselves, with greater or lesser depth. Natura began measuring ESG indicators across its entire value chain in 2021 and identified that 96% of its climate impact is related to this chain, both before and after manufacturing, including consumption and disposal. It also created theEmbrace programto involve the chain in positive impact initiatives. One of the awardees was Wheaton, whose carbon footprint plummeted with the adoption of biomethane in furnaces. This year, Natura also announced its Regenerative Alliance to empower partners in adopting sustainable solutions.

Vivoalso announced the acceleration of its net zero target from 2040 to 2035, aiming to reduce scope 3 emissions (supply chain and customer emissions). A huge challenge for those with 1,200 suppliers and over 110 million customers. First, it committed to a program with 125 carbon-intensive suppliers, responsible for 85% of the total supply chain emissions, to help them develop action plans – 61% of them have already joined the initiative (the difficulty is greater with small and medium-sized companies). GPA also requires its suppliers to adhere to aletter with ethical principles. But this was not enough to create barriers against wine producers whose suppliers, in turn, included employers of labor in situations analogous to slavery, such as Salton and Aurora (which may demonstrate the complexity in addressing the issue of the value chain and its impacts).

Meanwhile, Banco ABC, which targets corporate clients, recently announced measures to encourage its clients towards the green economy – the idea is to show how many tons of carbon, for example, a financing or loan can generate and guide them in adopting best practices.

Contrary to the giants, the French brand Vert manufactures its coveted sneakers in Brazil for personalities like Kate Middleton and Emma Watson. The company was founded to manufacture footwear with respect for the environment and fair compensation for its carefully selected supply chain. Sustainability and transparency allow the company to charge prices similar to global leaders and have led its revenue to 250 million euros (around R$ 1.3 billion), primarily due to its reputation, passed by word of mouth.

The example shows that genuine commitment (not just good intentions or greenwashing) builds reputation and sales with support coming from outside (in this case, from suppliers). In other words, more and more companies will be impacted, sooner or later, by those outside the company, from suppliers to customers. Understanding this equation will help keep sales in peace.

Claudia Bouman
Claudia Boumanhttps://www.linkedin.com/in/claudiabouman/
Claudia Bouman is a brand reputation specialist and partner at Percepta Business Reputation. Master's in Communication, postgraduate in Marketing from ESPM and Florida International University, with over 25 years of experience in the market, mainly working in Planning, Marketing, and Communication across various types of companies. Professor and Lecturer for undergraduate and graduate courses. She is a co-author of the book: A Professional for 2020 – B4 Publishing.
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