Supermarket and retail giants are good; banks and energy firms are bad; and a company’s ability to regain trust has as much to do with historic reputation as with how it reacts in a crisis.
Those are three broad, rather simplified, findings of an exclusive online survey of 2,083 UK adults commissioned by PRWeek and undertaken by YouGov for our corporate reputation edition. It aims to expose which brands, companies and industries the public views as being the most ethical, and what matters most when deciding if they are more saint than sinner.
PRWeek handpicked 23 prominent companies or brands, particularly those involved in scandals either recently or in the past couple of years, and YouGov asked the public to rate them according to how ethical and responsible they viewed them to be.
Strikingly, three supermarket operators topped the list, with The Co-operative Group and John Lewis at the top; 59 and 58 per cent respectively viewed them as very or fairly ethical and responsible, with Sainsbury’s at 52 per cent. In fact, when asked without being prompted to name an ethical company, The Co-op, John Lewis and Marks & Spencer were among the more popular responses.
"These are the firms that have a special place at the heart of the high street in many respects," says Michael Hayman, co-founder of comms agency Seven Hills. "Because the public likes them, and has liked them for a long time, you see that reputation endures."
The high ranking of The Co-op (which is more than just a supermarket, of course) arguably runs counter to its recent turbulent history. Its banking arm came close to collapse in 2014, a year after former banking chairman Paul Flowers was filmed trying to buy drugs. Group CEO Euan Sutherland resigned last year, branding The Co-op "ungovernable".
Not a good look for an organisation whose image is built around acting in a responsible way. Russ Brady, head of group PR at The Co-operative Group, points to its long-held reputation for ethical practices. "The fact that we, over the past 160-odd years, have looked to do the right thing more often than not, does give you some currency in the bank."
Gavin Davis, MD, financial and corporate, at Bell Pottinger, agrees, saying that the historic strength of the brand has "helped insulate the business from some of the challenges it has faced".
Hayman compares The Co-op and John Lewis to the so-called ‘firms of endearment’ in the US; companies and brands that maintain a special connection with the public despite their large size. The flip side is the public expects high standards from such organisations, so moral hiccups can prove to be costly.
One supermarket giant that perhaps carries less reputational ‘currency’ is Tesco, which the survey suggests is viewed far less favourably than its peers in the list (33 per cent) after recent crises including plunging profits and huge accounting irregularities. Hayman suggests a more fundamental problem: "In terms of the reputation Tesco has with the public at large, it has suffered in recent years. I think that’s partly in the realms of being seen as too big, too out of touch, not being the sort of brand that I can relate to."
The same could be said for Starbucks, which appears to still be suffering from the reputational hit that followed the high-profile tax avoidance scandal of 2012. Just 20 per cent of respondents viewed Starbucks as very or fairly ethical, placing it below even traditional corporate bogeymen like energy giants BP (22 per cent) and Shell (21 per cent).
Tax link to public trust
The survey suggests payment of tax is crucial for the public when judging whether a company is ethical. Eighty five per cent thought it was a very or fairly important factor; that is only slightly fewer than felt the same about a firm’s treatment of staff and suppliers (89 per cent; see box, right) and customers (88 per cent). It is likely that Amazon’s ranking was also dented by tax avoidance stories last year (24 per cent viewed Amazon as very or fairly ethical).
For Hayman, the tax scandal is a "part of the erosion of reputation" for Starbucks. But again, more fundamental issues are at play.
"A few years ago [Starbucks] was very much on the rise. Some of the sheen has definitely worn off. I think part of the danger for many retail brands is the biggest moment of threat: when they begin to look a lot like a commodity."
The YouGov survey suggests banks still have an uphill reputational struggle seven years after the banking crisis (see banking feature, p32). Barclays and HSBC were both on 23 per cent with RBS on 18 per cent. More recent revelations of tax evasion, interest rate fixing and miss-selling of PPI policies among some banks have clearly not helped.
Elsewhere, British Gas (26 per cent) scored better than NPower (18 per cent). This could be partly explained by the timing; British Gas announced a five per cent price cut a few weeks before our survey took place. NPower has had a tough time of late, and has admitted it is struggling with billing problems.
Interestingly, despite the contrasting ways in which they handled recent PR crises, Thomas Cook and Alton Towers ranked very closely in our poll. The former, strongly criticised in the aftermath of the high-profile deaths of two children in Corfu, was a single percentage point ahead of the Merlin-owned leisure attraction (on 24 per cent), whose CEO Nick Varneywas praised for his handling of the crash on its Smiler rollercoaster in June.
However, sentiment in favour of Alton Towers was far weaker in London (18 per cent) than its Midlands heartland (30 per cent), suggesting a greater willingness for the brand to succeed among those who are more likely to have experienced it.
Among the tech and digital giants, Apple (35 per cent) and Google (34 per cent) were ranked ahead of Facebook (24 per cent). Along with ongoing debates around privacy and cyber-bullying, perhaps there is a perception that the social media brand has lost some of its original friendly appeal as it grows.
Hayman goes further: "Facebook is suffering from being seen as an old has-been, while Google and Apple have been hugely successful in reinventing themselves in the mind of the public. You can see the reputation dividends they’ve had."
The company viewed as least ethical on the list is Ryanair (13 per cent), despite the recent turnaround in its performance after it took steps to appear more customer-friendly. "Until recently, Ryanair revelled in its reputation for a lack of customer compassion, which seems to show through in this poll," Davis surmises.
The company could be said to suffer from the opposite problem to The Co-op, with its historically poor reputation with customers proving difficult to shake off.
"It’s trying to do what it thinks it needs to do to have some form of endearment with the public," says Hayman. "You have to ask is it too little too late? This is a business trying to change course, whereas it has built a reputation for being as hard as nails, and it’ll take time to shift that – if it can be done at all."