CSR during Covid-19: The sincerity and brand loyalty factors

31 May 2020

CSR during Covid-19: The sincerity and brand loyalty factors

Companies around the world have been eager to step up to help their communities during the Covid-19 pandemic. But doing so can be fraught with risk for their brands. Espie Angelica A. de Leon reports.

Along with pandemic and lockdown, the phrase ‘social distancing’ is a catchphrase nowadays, and for good reason. It is one of the measures being enforced globally to address the Covid-19 health crisis.

To help make the phrase ring out louder and force more people to comply, some companies are doing their part by modifying their logos.

McDonald’s Brazil separated its golden arches to emphasize social distancing.

Coca Cola did something similar with its logo in its Times Square billboard ad. Normally placed tightly together, the letters in the logo showed more space in between each letter. Under it are the words “Staying apart is the best way to stay connected.”

“It is a special market activity during the pandemic that companies call on the public to pay attention to the virus and keep social distancing through the redesigned logo,” says Xia Zheng, founder of AFD China Intellectual Property in Beijing. “This not only increases the public awareness amid the pandemic but can also help the company establish a positive image of social responsibility while continuing to reinforce its brand by providing goods and services to consumers.”

Sheena Jacob, a partner at CMS Holborn Asia in Singapore, agrees and believes such CSR activities do not trivialize the branding message at all.

“If anything, the higher the visibility of any social distancing messaging to communities, the greater the benefits to the community at large. These brands have strong traction with consumers and can arguably bring the social distancing message across in a way that public health authorities may not be able to,” Jacob says.

Deanna Wong, owner of DeLab Consulting in Hong Kong, says there may be a trace of self-promotion in these activities. However, she still believes these are good ways to raise awareness during this pandemic.

According to Wong, it all depends on the company’s intentions whether these are genuine or not.

 

“If the company is obviously only surfing on the wave of attention for social distancing while not actually taking any protection measures for their own employees or for the public, then these measures indeed risk trivializing social distancing, and would amount to simple and insincere attention grabbing,” explains Wong. “However, if such companies are honest about their intentions, and do follow through with fitting measures for employees and the public such as strict social distancing policy for employees, donation of protective materials, putting in man hours in creating masks or producing alcohol gel, etc., then I do not see anything very wrong with this approach. The advertising value or attention for the brand is, in that case, not undeserved.”

For Safir Anand, senior partner and head of trademarks, contractual and commercial IP at Anand and Anand in Noida, in times like this when only essential goods and services are made available, it is understandable that some brands are hurting. Yet, he believes the public is smart enough to know that a quick logo edit is not the only solution.

“In this process, brands need to take care of their social distancing messages to be authentic, genuine, and generous enough, not to mention creative, and not just a media stunt to risk its importance in the long run,” says Anand.

He cites the initiative of Audi, whose logo shows the original four rings now separate from each other. This conveys the message clearly, he says.

Anand also cites Tech Mahindra as an example. For a few weeks, the Mahindra Group subsidiary located in Pune, India had the letter ‘e’ in the logo placed inside a house. This indicates how Tech Mahindra’s over 130,800 associates have adjusted to the situation.

“Whereas McDonald’s separating the brand’s golden arches depicting a spaced-out ‘M’ attracted backlash in Brazil for the same reason, as it was distancing something that was not exactly separable,” Anand explains.

Other enterprises have gone beyond redoing their logos. Instead, they engage in more direct contributions to help their communities during the pandemic.

 

Gap is making face masks. LVMH, which owns Christian Dior and Givenchy, is making hand sanitizers. The same is true with Anheuser-Busch InBev. Based in Belgium, the global drink and brewing firm is providing health workers in over 20 countries with hand sanitizers and disinfectant alcohol liquid. Ditto with the Estée Lauder Companies which, aside from donating surgical masks and sanitizers, is giving grants to various groups and organizations to help step up relief efforts. Meanwhile, Mastercard has committed US$250 million to aid small businesses in the US and other countries where it operates.

Companies in Asia are also doing their part. These are just a few of countless business enterprises around the world embarking on CSR initiatives during the current crisis. Indeed, a quick logo edit is not the only solution.

According to the Edelman Trust Barometer Special Report into Brand Trust and the Coronavirus released on the last week of March 2020, brands’ responses to the crisis may not only affect consumer trust. These will also impact future purchasing outcomes considerably.

Socially responsible enterprises also promote positive brand recognition, attract topnotch people to its employ, boost their morale and stimulate greater productivity and efficiency among the staff.

As stated in the Edelman report: “Brands that act in the interest of their employees, stakeholders and society at large will reinforce their expertise, leadership and trust and immeasurably strengthen the bond they have with consumers.”

 

The intention behind the act

Yet, in certain people, some of these CSR responses could strike a different chord. After all, these are business entities dangling products and services in front of their customers. During a pandemic when most people are forced to stay home and only essential goods are available, what does the public make of these causes? Do they accept and embrace them? Or is there a tinge of disbelief, as there may be in the case of the altered logos?

“Surely, at a time such as this, these unsolicited efforts should be viewed by the majority in the best possible light,” says Jacob. “Brands, like everyone else, want to make a positive contribution in this time of crisis and brand loyalty, whilst important, would be a consequence rather than the aim of these campaigns.”

 

But detractors will always be around, says George Chan, a partner at Simmons & Simmons in Beijing.

“Even Mother Theresa and Nelson Mandela had detractors during their lifetimes,” Chan says,

Ayala Deutsch, INTA president and executive vice president and deputy general counsel at NBA Properties in New York, says that trust lies at the heart of this matter. Citing the 2019 Edelman Trust Barometer Special Report: In Brands We Trust?, Deutsch says that a mere one-third of the respondents said they trust most brands that they buy from. Meanwhile, half of the respondents in that study said too many brands are misusing social issues in their marketing.

“So, it is perhaps fair to say that consumers are dubious of how companies promote their CSR initiatives,” says Deutsch.

According to Chan, corporate social responsibility (CSR) activities must be genuinely aligned with the brand’s ethos.Wong agrees.

“If the company is only looking for a new way of advertising their brands and only engages in half-hearted image projects, it risks backlash from the public when this is later revealed,” she says. “The public now follows corporate CSR initiatives with a healthy dose of criticism, but, if the CSR initiatives are seen to be genuine, the public would be supportive and could connect with the brand on a new level,” she explains.

Reiterating her point about having genuine intentions, Wong adds that social responsibility should be embedded in the company’s culture instead of being a short-term trend or project. It should also be a corporate deliverable and its tone should come from the top. Then the ethos will trickle down to everyone in the organization and the initiative will not be just a PR exercise.

A company widely singing its own praises with its causes for social good but does not have appropriate measures for the health, safety and welfare of its own employees could backfire, internally and externally, she says.

 

“In most countries, CSR is classified as a designated activity to be undertaken for social benefits for the society at large and which cannot be an indirect way of brand promotion. CSR is like goodwill to a business. If done well and without any direct benefit, it can be seen as ethical too,” says Anand.

“Even the thought of adjusting CSR funds for payment of employee salaries during the lockdown period stands wrong on many levels as it should be the moral duty to do so regardless of what is contributed to the relief funds. In fact, this view has been clearly backed and emphasized by the government,” he says.

According to Anand, India’s Ministry of Home Affairs issued a directive on March 29 for state and union territories to make sure commercial establishments give wages to their workers on the due date. The wages should not have any deduction for the duration of the national lockdown.

The country’s Ministry of Corporate Affairs has also come up with a list of FAQs on the subject. Among others, the FAQs make it known that paying wages to employees is not an act of CSR. It also clarifies that payment of wages to temporary, casual or daily wage workers during the lockdown is part of the moral, humanitarian or contractual obligations of all companies.

 

Publicizing CSR: A balancing act

Wong also believes companies should strike a balance between genuine CSR projects and policies and being seen to do so by the public. For her, this is a good way to convince more companies to mount similar projects and is therefore a valid advantage. 

“Some good press about a company’s CSR projects is not wrong if the intentions are real,” says Wong. “The public will consider all efforts overall, including other issues such as climate warming and, its past records. It is also a question of how the public perceives a company’s CSR activities. Timely and adequate communication from the company is crucial.”

 

Deutsch adds that brands shouldn’t just talk about what they are doing. Rather, they should also show the positive results of what they are doing.

“Notably, on this point, a key finding of the 2019 Edelman Trust Barometer – In Brands We Trust is that 69 percent of consumers says a brands’ impact on society is a key reason for trusting a brand,” Deutsch says.

 

CSR with no publicity 

What if the public isn’t aware of a brand’s CSR efforts at all? What now for a brand who has a CSR programme but doesn’t bring it out into the open? Is this brand at the losing end?

According to INTA’s recently released Brands and CSR Survey Report, 84 percent of respondents said that implemented CSR activities as an operational priority deliver benefits to the brand. However, only about 60 percent admitted that their companies promote their CSR practices.

“Yet, the report found that these efforts – when made public – can contribute to brand value and brand loyalty. Given this, brands can benefit from strategically publicizing their CSR efforts, so long as they do it in a way that resonates with consumers,” says Deutsch.

“Nowadays, with social media being what it is, it can be very difficult to ‘hide’ successful – as well as unsuccessful – CSR programs from the public,” says Chan. “As such, there is a very high likelihood that the good intentions and actions of a company will be found out in time. There are many companies which have donated money or medical supplies during the crisis without intentionally publicizing these contributions. Although these efforts may initially go unnoticed, when they are discovered, this can make an even greater impact on consumers.”

According to Anand, until the time CSR is justified with a business case, those in public relations should communicate about such initiatives. The reason for this is that the benefits of CSR require knowledge of action among the stakeholders, including employees, local communities, media and others.

 

“A company not communicating their CSR efforts at all in the fear of overdoing it may have implications over several stakeholders,” he says. “Moreover, the employees of the corporation will not experience the expected motivation from CSR activities that generally helps in improved morale and job satisfaction.”

In the end, public relations should be a mechanism for communicating CSR, and not the basis for any kind of CSR-related decision.

“We believe that large-scale promotion campaigns are not always necessary to gain benefits from CSR programs,” says Wong. “If CSR programs exist and the employees are on board with the goals and actions, the company already gains from employee trust, loyalty and bonding.”

 

Quality products will not be enough

Chan then mentioned a company which has recently fired some of its employees. The employees had criticized the way their employer responded to the pandemic as far as treatment of its workers is concerned. The company, however, has not seen any slowdown in sales.

“Orders continue at an unprecedented pace. It may be that their services trump the bad press they receive in relation to the treatment of their employees,” says Chan.

However, he says, it is hard to imagine any large brand without a CSR program in place.

For Deutsch, delivering quality products and services is just one part of the equation.

“The tide is shifting and as the next generations become mainstream consumers, their expectations of major brands increase. Gen Z is now the largest consumer group. According to INTA’s 2019 attitudinal study, Gen Z Insights: Brands and Counterfeit Products, 85 percent of Generation Z – the world’s largest group of consumers – believes that brands should aim to do good in the world,” says Deutsch.

“The Covid-19 pandemic may prove to be a watershed moment that will have a lasting impact on brands and consumer expectations long after this crisis is over. How brands respond is under intense public scrutiny,” she adds.

 

CSR in a pandemic – without indulging in self-promotion

Lawyers suggest the following ways for companies and institutions to handle corporate social responsibility without indulging in self-promotion, particularly during the Covid-19 pandemic:

  • Maintain employee numbers as opposed to downsizing.
  • Provide protection for employees who cannot work remotely.
  • Address cash fluidity issues with customers and clients.
  • Maintain essential services for clients, without risking employees.
  • Reduce prices of essential goods. “This will mean they will forego some of their profits and yet continue to command brand equity and patronage,” says Safir Anand, a senior partner at Anand and Anand in Noida. “And as profits are being sacrificed, the act could be authentic.”
  • Those in print media can make their publications available for free either directly or through banks and other networks. “They will lose revenues for free supply, but partly contribute to added services of any provider such as the bank that gives its clients free access to papers. When things normalize, it is likely that such banks will sign up for continuity,” says Anand.
  • Enhance education by making some course materials and online classes free.
  • Help poor artists, performers, singers and dancers by taking their shows digital at a sponsored cost. “Position this as a way to reach their customers with entertainment for a purpose,” explains Anand.

 

Should you protect a short-term logo change?

Covid-19 may hurt or kill people, but in the corporate world, it is acting as a catalyst for “trademark innovation.”

Renowned companies such as Audi and McDonald’s have changed their logos (separated rings and arches, respectively) to promote social distancing. While the moves might be seen as clever by some, it could also cheapen or change consumers’ perceptions toward the brands, albeit temporarily.

“Perception depends on both the brand and the way they handle their ‘social distancing’ logo. This is a time where strong and trusted brands can provide a real, compassionate and public awareness-focused response to the current pandemic and the need to take precautions. With careful messaging and integrity, brands could make a difference,” says Karen Taylor, general manager for Asia Pacific at intellectual property management software provider Anaqua. “The risk is that, in some cases, the approach could fall into the realm of a meme and seem self-serving or cute, diminishing the real suffering of their consumers. Also, any attempt to use such logos to sell a product or increase profits at this time could be seen as crass.”

Are tweaked logos still under IP protection or must brands file new applications for these short-term logos then? How liable are they for infringement of others?

This depends on the jurisdiction, but, generally, Taylor says, short-term use logos are likely not worth protecting. “Some altered logos may be protected in any case if they are close enough to the original logo, such that misuse of the ‘social distancing’ logo would be an infringement of the original brand. The only reason for seeking some form of protection would be to mitigate against potential infringement if that was felt necessary, and make enforcement easier.” 

 

Johnny Chan

 


Law firms

Please wait while the page is loading...

loader