As part of the 2022 IPA Excellence Diploma in Brands, Mark Gibbs explains how a climate of crises and mistrust has provided brands with the opportunity to use ethics as a tool for differentiation, and why he believes that ethics shouldn’t be used for competitive advantage.
There is far too much witchery and sugar in the sentiments "for others" and "NOT for myself," for one not needing to be doubly distrustful here, and for one asking promptly: "Are they not perhaps—DECEPTIONS?"
A belief is a choice between what we think is right and wrong.
Blur vs. Oasis. Free Market vs. Regulation. Pro-Life vs. Pro-Choice. Whatever level the debate, thoughts become beliefs when we land on one side of the fence or the other. Guiding that choice is our own individual sense of ethics – the moral principles that systematise what we judge to be good and evil. Societies are built based on shared ethical beliefs, and we’ll chew anyone’s ear off down the pub or even go to war to convince those who oppose us that we’re in the right and why they should hop over the fence and join us.
Yet brands seem to do things differently. Brands want to be seen as ethical, but don’t want others to share in the benefits of their ethical innovations. They’d rather keep them to themselves, locked up in ivory towers and flaunted as virtues to signal superiority over the competition.
I believe that ethics shouldn’t be used for competitive advantage.
In this essay, I discuss how a climate of crises and mistrust has provided brands with the opportunity to use ethics as a tool for differentiation. I argue that this shouldn’t be the case on three accounts: ethical differentiation encourages marketers to associate their brands with populist social issues, rather than enabling change within their own organisation; the cost of ethical business practices tickles down to only those consumers who can afford it; and finally, that it is fundamentally unethical to keep ethical innovations to yourself. Instead, I suggest businesses pursue Open Ethics - an open-source approach to ethical brand-building focused on collaborating with peers openly and transparently to develop ethical innovations faster, cheaper, and better than could ever be achieved alone.
Marketers’ infatuation with ethical brand-building stems from a deep-held belief in Differentiation as the strongest path to growth. As economist Theodore Levitt puts it, “all goods and services are differentiable,” you just need to find the right axes to dissect the market into a perfect 2x2 grid, neatly identifying the white space your brand alone can leverage to influence choice (1980). The industry thrived on this principle for decades, with Rosser Reeves introducing the concept of the ‘Unique Sales Promise’ in 1940 as the silver bullet to success so long as it was truly unique, relevant to your audience’s needs, and could be backed up with proof (Smith, 2021).
Yet as Accenture notes in its “Rise of the Purpose-led Brand” report, the opportunities for a truly differentiated proposition are drying up. The ease of market entry enabled by access to technology and internationalisation mean that “price, product, quality and customer experience are… now table stakes.
Expected, but no bonus points awarded” (Accenture, 2019). Brands seeking a competitive edge need to go beyond whatever utility they provide, and instead look to the wider context in which they do it to find a point of difference.
Luckily for brand builders, this market commoditisation has coincided with two key factors that make ethical differentiation such an appealing opportunity:
The latest Trust Barometer report from Edelman found that 63% of people are worried business leaders are purposefully trying to mislead them, up 7 points year on year, while 52% believe business isn’t doing enough to address Climate Change (2022). Meanwhile, the Institute of Business Ethics found ‘Corporate Tax Avoidance’ to be the British public’s top ethical concern (2022). When the competition is knee-deep in misconduct, why wouldn’t you seek to differentiate by keeping your shirt clean and doing your bit toward societal stability?
Strengthening the case for ethical brand-building, consumers and businesses alike claim it’s both desirable and delivers to the bottom line. Countless studies identify ethics as a key driver of consumer choice: two thirds (62%) of respondents to Accenture’s study claim they want companies to stand up for issues they are passionate about (2022), while Initials CX found that “nearly half of shoppers (46%) ‘only shop with brands that have a wider societal purpose’” (Callender, 2021). Meanwhile Unilever famously proclaims that its 28 ‘Sustainable Living Brands’, those which deliver its ethical commitments, are growing 69% faster than the rest of the business, contributing 75% of the company’s growth (Jefferson, 2022). Certainly, the concept of ethical brand- building has done an excellent job of PR-ing its way into modern marketing, and with Forrester predicting its ‘Active Green’ segment of European consumers to increase 50% by the end of 2023, we can only expect to see more brands jumping on the ethical bandwagon (2022). However, as I’ll go on to demonstrate, what people and brands say can be a far cry from what they do.
I’m not here to argue that brands shouldn’t be ethical - or whether differentiation is or isn’t the secret to success - but rather that using ethics as a point of difference is a problem.
By putting the onus on Marketing rather than Operations to define how an organisation presents and delivers on its ethical agenda, brands inevitably favour choices that affect perception over impact. This encourages a race for ‘ownership’ of issues people claim to care about, often focusing on lower-priority social needs that the business has no power to affect, ultimately using others’ problems for commercial benefit.
More importantly, this fails to address ethical challenges within organisations themselves. As Lund University’s Jon Bertilsson comments, “it is often impossible to reconcile the creation of an ethical brand image with complete ethical conduct,” as Marketers neither have the power nor the mandate to enact real change within their organisation (2014). Bertilsson presents Swedish furniture giant, IKEA, as a case in point. Named the 3rd most Sustainable Retail Brand in a poll by OC&C Strategy Consultants (Consulting.uk, 2022), the brand’s claims regarding accessible products and sustainably sourced materials are clearly paying off in the minds of consumers, despite the company’s alleged illegal logging in Romania (Sammon, 2022) and high-profile settlements for dangerously designed furniture (BBC, 2020).
For businesses that recognise ethics are more about what you DO than what you SAY, the costs are often prohibitive. Like it or not, the reality of a capitalist economy puts strain on businesses’ desire to act in the immediate interest of society vs. profit maximisation. Indeed, it’s a question of political ethics as to whether the pursuit of growth is in fact the most positive choice for the greater good. As Nobel Prize-winning economist Milton Friedman puts it, “an entity's greatest responsibility lies in the satisfaction of the shareholders” (1970). Many have debated the continued relevance of his position and the extent to which today’s social and environmental concerns mean businesses should be restricted in their actions, but the need remains to incentivise investment into companies providing goods, services, and stable jobs by generating returns for those investors, including the £1.5trn in assets held by British pension funds (Schrager, 2022). I don’t intend to weigh in on the politics of the market – or whom should be held responsible for social issues – but providing equitable pay for suppliers or reducing environmental impact comes with a cost that trickles down to the consumer either through increased prices today, or reduced savings for tomorrow.
Unfortunately, consumers have already shown they’re unwilling to bear that cost. Around 86% of people in the United Kingdom shop at Amazon (Mintel, 2019), despite widespread criticism over its treatment of staff (Kelly, 2021) and monopolisation of the eCommerce market (Laughlin, 2022). Why? Because the cost of going elsewhere isn’t worth it. 57% of consumers say sustainable choices are too expensive (Deloitte, 2022), and with record-breaking inflation squeezing wallets more than ever, that doesn’t look to change any time soon. So, while academics like Noreena Hertz might claim “people are exercising political choices not at the ballot box but by means of consumer activism,” only those that can afford it are given a vote (2008).
Organisations that manage to operationalise and find room in the budget for ethical changes risk falling at the last hurdle on two accounts:
Imagine finding an innovative way to drastically reduce carbon emissions or remove exploitation from your supply chain and keeping those discoveries to yourself. No doubt these things provide excellent opportunities to differentiate. But is it ethical to put pressure on consumers to either choose your brand or else knowingly fund the problem? Brands hoping to generate competitive advantage by treating ethics as intellectual property are simply guilt-tripping their customers, losing the moral high ground in the process.
Only by opening the doors and allowing competitors to share in the benefits of ethical innovation can brands claim to be doing the right thing. Not only does this reduce the burden on consumers; it ensures the impact of that innovation can be felt as strongly and widely as possible. Further, as ‘Ethical Entrepreneur of the Year’ Solitaire Townsend remarks, “attempting to become a sustainable business is futile in an unsustainable system” (2020). Whether businesses want to share with competitors or not, none are in complete control of their value chain. Building an ethical brand therefore relies on collaboration with others, and as Unilever admits after 10 years of the Sustainable Living Plan, to “play a role in advocating for even more systems change in other industries” (2021).
The danger is that businesses no longer able to use ethics for differentiation have less incentive to change. I don’t wish to plug that gap by campaigning for Research and Development Grants or Regulation that forces businesses into ethical choices.
Instead, I suggest that businesses stand to benefit much more by contributing toward a system that makes ethical brand-building Open Source.
Coined by the Foresight Institute in 1998 after Netscape released the source code for its internet browser, the term ‘Open Source’ has gone on to become one of the defining principles of today’s digital technology landscape (Open Source Initiative, 2018). More than just a descriptor for giving others access to legible lines of code that make up a digital product, Open Source is best described as “a mindset and a way to collaborate in the open” (Michels, 2021). Whereas previous technology giants like Microsoft and Apple were founded in the 1970s to capitalise on new laws making software copyrightable, Open Source invites contributors to use, adapt and reshare resources in the collective pursuit of making better products. There’s perhaps no better way to signify the impact of Open Source than through Microsoft’s acquisition of the world’s largest Open Source development platform, GitHub, showing how even the movements’ biggest detractors have come to value its benefits.
Of the numerous advantages Open Source brought to the world of technology, there are three that help resolve the tension between ethical brand-building and differentiation:
The pragmatic and immediate benefit to companies using Open Source technology is the ability to ‘plug in and play’ using pre-made components from extensive repositories of code. No more starting projects from scratch. New features or functionalities can be created quickly and easily by finding the appropriate source code and “forking” to create your own version before resubmitting for others to learn from in future. An Open Source repository for ethical practices would offer existing businesses an invaluable shortcut to remedying issues within their value chain, and ensure start-ups have the resources available to them from day one. By providing transparency and access to everything from exploitation-free factories and compliant logistics partners to industry pay scales, Open Ethics enables businesses to spend less time managing operational risk and more time bringing products to market. That means liberating marketers from the responsibility of finding an ethical niche, and instead putting their talents where they’re best suited: identifying market needs and building distinctive brands and products to meet them.
Software development is famously expensive. From the costs of hiring quality talent to infrastructural overheads, the complexity of taking a product from Business Analysis to Deployment goes through many phases and stakeholders. Worse still, fewer than one in ten (8%) large software projects are successful (Swords, 2020), leaving businesses and - in cases such as the NHS’s aborted patient record system (Syal, 2013) - the taxpayer with empty pockets and nothing to show for Open Source helps solve this issue by dramatically cutting up-front costs from licensing proprietary software and enabling businesses to start small and scale. Applied to the development of wider business practices, Open Ethics could provide organisations with freely available access to a validated and modular system of ethical operations. By reducing the upfront costs of research, partner negotiation and implementation of ethical initiatives, businesses no longer need to balance raising prices against taking a hit to their bottom line. Instead, they can offer their customers ethical and affordable products, helping people to adopt a sustainable lifestyle by removing the choice between what’s best for society and what you can afford.
Members of the Open Source community are united by the goal of creating fantastic software, opening themselves and their work up to scrutiny in order to achieve Much like in academia, peer review helps raise the overall standard of the community’s output, with all members invited to revise and build upon each other’s contributions. For brands seeking to enhance their ethical credentials, it’s imperative that they are willing to adopt this same level of vulnerability. By exposing its inner workings, businesses are motivated to be seen innovating in ethical ways and feeding new ideas into the repository for others to use. Where they fall short, they can receive direct feedback from their peers and take advantage of others’ good work by forking best practice into their own operations. Rather than spending big on advertising to take ownership of ethical innovations, the effort goes into openly enhancing the company’s ethical credentials, sharing learnings to maximising their impact, and collaborating with peers and partners to ensure the entire system progresses to become truly sustainable. That this transparency should lead consumers to perceive the brand as ethical is simply a biproduct of behaving ethically.
Open Source doesn’t come without its challenges. As discussed by the Markkula Center for Applied Ethics (2005), the freedom to access and use others’ code invites its own ethical questions: Should individuals or businesses have the right to free software as they do free speech? How might we ensure Open Source engenders a spirit of sharing not theft? Even the Vatican has entered the debate, arguing that technology “needs to be informed and guided by a resolute commitment to the practice of solidarity in the service of the common good” (Foley, 2002). Unfortunately, even the best of intentions can have unintended consequences. This was highlighted in December 2021, when a critical vulnerability was discovered within open-source code that had been repurposed across hundreds of millions of devices and is expected to take years to clean up (Uchill, 2021).
For Open Ethics to be successful, we must be open to the reality that things might go wrong and put our trust in the community to identify gaps and collaboratively work toward solutions.
Perhaps the biggest issue facing Open Source is funding. Many developers volunteer their time to maintain or contribute to projects, either as an opportunity to gain experience, the thrill of the challenge or a desire to help others (Turner, 2021). But relying on the benevolence of others is a risky strategy, as contributors are free to drop out at any point and leave code without maintenance. To remedy this issue, Open Source is increasingly shifting away from donations or sponsorship through platforms such as GitHub or Open Collective, toward a cooperative model wherein companies invest time and resources rather than capital. This gives everyone a stake in how the codebase evolves to meet the group’s needs, and in some cases results in the formation of independent companies dedicated to specific projects. Open Ethics stands to benefit from a similar structure, inviting businesses to become collectively responsible for building and maintaining ethical practices and operational models that can be shared and used by all.
While we’re yet to see brands adopt Open Ethics, there are signs that the market is starting to shift in the right direction. Since 2006, non-profit network B Lab has campaigned for “a different kind of economy” by creating “standards, policies, tools, and programs that shift the behaviour, culture, and structural underpinnings of capitalism” (B Lab, n.d.). 16 years later, and at time of writing there are over 6000 businesses that have passed the rigorous assessments to achieve B Corp status – an ongoing commitment to ethical practices across the organisation. B Lab does an excellent job of identifying potential pitfalls and controversial issues, giving businesses a standardised way to assess their performance and opportunities to improve. Likewise, it encourages businesses to expose their inner workings to achieve accreditation. However, where B Lab differs from Open Ethics is in its position on ethical practices as intellectual property. Businesses achieve B Corp status by proving their adherence to ethical standards, but they’re under no obligation to provide access to the innovations helping meet those criteria. With Open Ethics, businesses will be judged not simply for becoming certified, but by how they use that certification to improve the performance of others.
Dutch confectionery brand, Tony’s Chocolonely, gives us the closest example of what Open Ethics might achieve. While much of the brand’s communications has focused on highlighting the endemic issues of modern slavery and illegal child labour in cocoa sourcing, often to the point of aggressively targeting competitors’ inaction to solve these problems, behind the scenes the business has created its own open-source cocoa sourcing initiative. Tony’s Open Chain is a call-to-arms to the category, inviting “other chocolate- making companies to change the sector and [make] sure [they] each take responsibility for [their] supply chains” (Tony’s Chocolonely, 2021). More than this, the brand transparently offers incumbent and newly founded competitors with five Sourcing Principles and freely available tools to put ethics firmly at the heart of the industry. But that’s just one issue, in one category. Imagine where an entirely open-source approach to ethics might take us.
Open Ethics has the potential to transform business, but it needs all of us if it’s to become a reality. That means operationalising business ethics, collaboratively innovating while exposing ourselves to critique.
If it’s successful, marketers can start thinking beyond good and evil, and start building brands that are genuinely different.Read all of the 2022 Excellence Diploma in Brands essays
The opinions expressed here are those of the author and were submitted in accordance with the IPA terms and conditions regarding the uploading and contribution of content to the IPA newsletters, IPA website, or other IPA media, and should not be interpreted as representing the opinion of the IPA.