With increasing attention from investors and other stakeholders on the ESG performance of companies, being validated by influential activist groups and NGOs is more important than ever.
NGO validation means not only being less criticised than your peers, but also earning more of their praise. Our monitoring of NGO campaigning shows that the most praised firms are the ones that try to align their sustainability policies and behaviours with key NGO priorities.
In other words, it is not enough to have strong ESG policies, these policies must reflect the goals and concerns of the activist groups dominating the debate. By ensuring this, companies are able to avoid the increased cost of tackling a crisis, a damaged reputation,
and ultimately a reduction of income and/or profits as a result of activists taking action. Activists wield significant power to make firms change their behaviour. By drawing attention to the force behind campaigning actions, companies are provided with opportunities to
align their activities with new and emerging issues of public sentiment. Also, while earning praise will not guarantee that NGOs will cease their criticism, activists do tend to go much more gently against firms with a track record for engagement, compromise, and leadership
on ESG concerns.
Those that choose not to heed activists can face serious repercussions. Nestle suffered significant reputational damage for years after development NGOs in the late 1980s accused the firm of aggressively marketing infant formula in poor countries. Even today it is
understood that the charity Save the Children refuses to invest in the company.
In 2006, Naturewatch declared a boycott of The Body Shop, after the famously ethical British cosmetics and toiletries retailer was purchased by L’Oreal which still tested cosmetics ingredients on animals. The boycott lasted eleven years, ending only once ownership was passed onto the Brazilian personal care brand Natura and their animal testing policy was clearly outlined. Meanwhile a decade-long boycott and protest campaign by the animal rights group PETA against foie gras, aimed at Fortnum & Mason, only came to an end
earlier this year once the upmarket British grocery retailer agreed to stop selling the product once existing stocks had been cleared.
NO MAGIC SAUCE NEEDED TO WIN NGO PRAISE
Our NGO campaign tracking not only captures when companies are praised, but why. There are five main things firms do that often earn NGO praise: pledging commitment to their policies, offering early and vocal support for their campaigns, taking concrete steps to achieving their goals, engaging constructively with campaigning groups, and being seen as a positive example. On the following page are some noteworthy examples from the last five years.
ACTIONS BY COMPANIES THAT WON THEM NGO PRAISE
1. Pledging commitment to policies pressed by activists
Insurance companies AXA, Zurich Insurance Group, Allianz, Munich Re, and Grupo Assicurazioni Generali praised by Insure Our Future, Reclaim Finance, Urgewald and Campax for their commitment to ensure GHG emissions of their clients met global climate commitments, the restriction of cover for oil sands, Arctic drilling, and shale oil. Walmart praised by Electronic Privacy Information Center (EPIC) and nearly 30 other public interest, digital privacy, and civil liberties groups, for its pledge not to use facial recognition technology over racial bias concerns. Shell and BP in the U.S. recognized by CERES, As You Sow, and Interfaith Center on Corporate Responsibility for supporting stronger U.S. EPA methane regulations (which many other U.S. producers opposed).
2. Early and vocal support for activist initiatives
Nestle and Unilever backed a joint appeal between leading European environmental groups including WWF, European Environmental Bureau, and BirdLife, as well as MEPs, to urge European states to commit to a “green recovery” post-Covid-19. Ahold Delhaize, Danone,
and Nestle among others, supported a call by European consumer watchdog BEUC and public health organizations to make Nutri-Score nutrition labels mandatory in the EU. Hennes & Mauritz (H&M) joined an initiative by the Swedish chemicals campaigner, ChemSec, to call for an end to the use of “harmful” per- and polyfluoroalkyl substances (PFAS) in consumer products.
3. Taking concrete steps to help achieve activist goals
Allianz, QBE Insurance Group and Suncorp Group agreed to stop supporting Adani’s Carmichael coal mine in Australia. Friends of the Earth U.S. praised Walmart for committing to eliminate pesticides linked to pollinator decline from its food and beverage supply chains.
Unilever recognised by Rainforest Action Network for requiring all commodity suppliers to end deforestation and land conversion, and respect Indigenous, community and workers’ rights.
4. Engaging constructively with activists
H&M and Gina Tricot joined WWF’s international water stewardship program, to identify water-related sustainability risks and implement sustainable water management in their supply chains. After being engaged on the issue by animal rights group PETA, Dutch grocery chain, Ahold Delhaize praised for ending sales of Aroy-D and Chaokoh coconut products linked to
abuse of monkeys in Thailand.
5. Being seen as a positive example
Following Green America’s video “Cool It For Climate”, which called out supermarket chains for continued use of hydrofluorocarbons (HFCs) in refrigeration, ALDI praised by the Environmental Investigation Agency as the retailer most advanced in the adoption of HFC-free refrigeration technology. AXA, Union Investment and Allianz praised by Friends of the Earth International and Sierra Club for leading the commitment to encourage portfolio companies to plan for decarbonization. Unilever named as “industry leading” by DanWatch for its pledge to ensure direct suppliers are paying their workers a “living wage” by 2030.
INDUSTRY SECTOR MAKES A DIFFERENCE
The list below of the 20 companies most praised by NGOs over the last three years is most revealing for the types of firms not present. While several of the world’s biggest food and fast moving consumer groups firms, retailers, banks and insurance companies make the list (leading the list is Unilever, which was praised 135 times), no chemical, mining, extractives or fossil fuel producers are present. This is not to say that firms in these sectors never win praise from activists (see the example of Shell and BP above), but it is rare. The reason is the big sticking point for activists of these sectors’ contribution to climate change and environmental damage, yet even here there are opportunities for firms to be at least recognised for breaking with their peers.
Companies most praised by NGOs in the last 3 years (2018-20)
Unilever: home & personal care, food
Capri Holdings (formerly Michael Kors): fashion
H&M Hennes & Mauritz: fashion
Ahold Delhaize: grocery retail
Aldi: grocery retail
Yum! Brands (KFC, Pizza Hut, Taco Bell): food
Swiss Re: insurance
Marks & Spencer: grocery retail, fashion
Munich Re: insurance
Lidl: grocery retail
LVMH Group: fashion
PVH Phillips-Van Heusen: fashion