Building Consumer Trust

New Models to Protect Your Freedom to Operate

Charlie ArnotCharlie.Arnot@Foodintegrity.org

www.foodintegrity.orgCharlie_Arnot

Earning and Maintaining the Social License (Sapp/CMA)

Freedom to Operate

Freedom to Operate

Earning and Maintaining the Social License (Sapp/CMA)

Social License

Definition: The privilege of operating with minimal formalized restrictions (legislation, regulation, or market requirements) based on maintaining public trust by doing what’s right.

Public Trust: A belief that activities are consistent with social expectations and the values of the community and other stakeholders.

Social License

Tipping Point

Flexible Responsive Lower Cost

Rigid Bureaucratic Higher Cost

Social License

• Ethics

• Values

• Expectations

• Self regulation

Social Control

• Regulation

• Legislation

• Litigation

• Compliance

Single triggering event Cumulative impact

The Social License To Operate

Activists Protest Mulesing

Mulesed Wool Bans

• 2004 – Abercrombie & Fitch boycotts Australian merino wool

• 2005 – American Eagle Outfitters ban announced• 2008 – Liz Claiborne (PETA is a shareholder)

announced Australian wool ban• 2008 – Adidas & Perry Ellis ban wool from mulesed

sheep• 2009 – John Lewis (UK department store) joins boycott

Social License

Freedom to Operate

Earning and Maintaining the Social License (Sapp/CMA)

Earning and Maintaining the Social License (Sapp/CMA)

Social License

Trust

Freedom to Operate

Trust

Earning and Maintaining the Social License (Sapp/CMA)

Confidence

Influential Others

Competence

Value Similarity Social License

Trust

Freedom to Operate

Trust research was published in December, 2009 – Journal of Rural Sociology

Shared values are 3-5X more important in building trust than demonstrating competence

What Drives Consumer Trust?

Shared

Values

Skills

What Does It Mean?

“They don’t care how much you know until they know how

much you care”

Polarizing Perceptions

Values and Ethics in Our Science Based Culture

Why we struggle building trust even though we care and are committed to doing the right thing

Three Levels – Six Stages1. Pre- Conventional

• Direct impact on me

2. Conventional• Societal expectations

3. Post-Conventional• Principle driven

Questions of Values and Ethics Kohlberg’s Moral Hierarchy

Lawrence Kohlberg, 1927 - 1987

Punishment-Obedience

The “law & order” orientation

Universal ethical principle orientation

The “good boy / nice girl” orientation

Personal rewards orientation

Social contract orientation

We have an ethical obligation to our employees, our animals, the environment, our customers and our communities

We comply with all environmental and employment laws and regulations

We take care of our land and animals because that’s when we get the best ROI

Questions of Values and Ethics Kohlberg’s Moral Hierarchy

Pre-Conventional Direct impact on me

Conventional Societal expectations

Post Conventional Principle driven

Pre-Conventional Direct impact on me

Conventional Societal expectations

Post Conventional Principle driven

Punishment-Obedience

The “law & order” orientation

Universal ethical principle orientation

The “good boy / nice girl” orientation

Personal rewards orientation

Social contract orientation

NGOs

Business

Questions of Values and Ethics Kohlberg’s Moral Hierarchy

Sustainable Systems

Ethically Grounded

Econ

omica

lly V

iable Scientifically Verified

Ethically Grounded• Compassion • Responsibility• Respect• Fairness• Truth

Value Similarity

Scientifically Verified• Data Driven• Repeatable• Measurable• Specific

Objectivity

Economically Viable• ROI• Demand• Cost Control• Productivity• Efficiency

Profitability

KnowledgeKnowledge

FeelingsBelief

Sustainable Balance

Brands as Agents of Social Change

NGOs have discovered that global brands can do what government cannot

Regulation vs. Market Pressure

“We attack the weakest link in the company’s value chain,” Kert Davies, Director of Research, Greenpeace

“We can dance with you or dance on you”

“Discovering brands was like discovering gunpowder.” -

Coles and Woolworth Control 80%

Market Action Works

"This announcement is another indication that Coles is acknowledging that consumers do not accept the cruelty that is routinely inflicted on animals in factory farms. Coles has recently shown important ethical leadership and we challenge other supermarkets to demonstrate that they too care about the welfare of animals."

There is no doubt that there is a growing concern for the welfare of farmed animals in Australia and over the past couple of years, Coles have made some considerable commitments regarding our sourcing policies. By 2014 Coles will no longer sell any fresh pork products that have been farmed using sow stalls and by 2013 we will no longer source caged eggs for our Coles brand range.

We have also changed our store egg layouts, with free range and RSPCA certified eggs now being displayed in a more prominent position than caged eggs. Additionally, to help make the transition from caged to free range eggs easier for our customers, we have significantly reduced the price of our Coles brand free range eggs.

Coles invests a lot of effort into ensuring we meet our customers' expectations and we will continue to review our policies and work with our suppliers in this regard.

Yours Sincerely

Melany SinclairColes Customer Care

Transparency No Longer Optional

Someone is watching everything you do all the time

• Today, roughly two billion people are connected to the internet • 2015 – 80 percent of the global population will have a personal

mobile device that can be both a receiver and transmitter • We send 2.9 million emails every second • Upload 20 hours of video to YouTube every minute• Send 50 million Tweets a day• Spend 700 billion minutes on Facebook every month • If Facebook were a country, its 845 million users would make it

the third largest on the planet behind China and India • Social media now accounts for nearly 25% of time spent online

Social Media Explosion

• Today, everyone with a cell phone is a cinematographer

• Employees, consumers, customers, bloggers, social media food communities, activists, NGOs and others can all directly influence the public conversation about your company at the speed of Twitter.

• The question is no longer, “will you be transparent?” but “how will you manage your reputation in an age of radical transparency?”

An Age of Radical Transparency

Today’s Integrated System

Today’s Integrated System

Today’s Integrated System

Today’s Integrated System

Times Have Changed

“It is not the strongest species that

survive, nor the most intelligent, but the ones

who are most responsive to change.”

- Charles Darwin

The Future of Food Issues Management

“There is a thin line between public, private and NGO management of the food system. Consolidation creates huge opportunity but also huge responsibility. We need to create managers where and how the public, private and NGO communities work together to manage the food system.”

- Ray Goldberg, founder of the Harvard Agri-Business Program, at IAMA, June, 2010

Integrated System Demands an Integrated Strategy

A Brand New Game

Integrated Trust Building Model

Building Consumer Trust

New Models to Protect Your Freedom to Operate

Charlie ArnotCharlie.Arnot@Foodintegrity.org

www.foodintegrity.orgCharlie_Arnot