What do citizens think about how business influences their behaviour and society?

Think... Insights for European growth What do citizens think about how business influences their behaviour and society? Business and society have evolved together. Major changes in society have often resulted in important developments for business: for example, increasing public concerns about consuming local products have changed the way mass distribution companies operate. But business also influences society and citizens lives: important social advances, such as health insurance and social housing, were first introduced by private companies, before being extended to the whole population by governments. And, of course, new products developed by business (like microwaves, mobile phones and touchpads) have changed the behaviour of citizens. So, do citizens today feel that business influences their lives? And, if so, how? Positively or negatively? And do companies try hard enough to act responsibly? Growth Insight Generally speaking, European public opinion has a positive image of business. In autumn 2009, 78% of European citizens said that the term company brought something positive to mind. However, when it comes to the influence of business on society, opinions are much more nuanced: just above half of Europeans believe that the overall influence of companies on society in their country is positive (52%), while 41% think that their influence is negative. A national analysis reveals a wide diversity of response in different EU Member States: large majorities say that businesses have a positive impact in their country in Denmark (85%) and Finland (83%), and also in the Netherlands, Sweden, Estonia, Luxembourg, Ireland and Austria - where more than two-thirds of respondents share this view. At the other end of the scale, outright majorities consider that businesses have a negative impact on their country in Slovenia, Italy, Greece, Hungary and the Czech Republic. Outside the EU, views about the impact of business on society also differ strongly from one country to another. In emerging countries, people seem enthusiastic: in Turkey (56%), China (59%), India (73%) and Brazil (79%), large majorities think that companies play a positive role in their society. This is also the case in the US (60%). In Israel, the population is much more divided: 46% think that business has a positive influence on society, while 43% hold the opposite view. Finally, the most negative country in the survey is Croatia, which is due to accede to the European Union in July 2013: a large majority thinks that business plays a negative role in society (69%). Are there any general trends we can use to describe these results? A geographical one, firstly: the more positive countries are all located in the north of the European Union. Conversely, those Member States where business is perceived as having a negative impact on society are mostly located in southern or eastern Europe. It is also tempting to draw a link between opinions about business and unemployment levels. There is a positive correlation between unemployment rates and negative perceptions of the influence of business (0.4): countries with the lowest unemployment rates tend to have a more positive image of the influence business has on their society. However, there is an even stronger link between perceived levels of public sector corruption and positive perceptions of the influence of business. The positive correlation of 0.77 between the two data series demonstrates that the less a country is perceived as corrupt, the more its citizens think that companies have a positive influence on their society. European citizens seem to believe that business is often implicated in the corruption which is rife in their country. TNS Europe Think... April 2013 TNS 2013 1

Growth Insight (continued) Think... lessons for business: European companies should take the following into account: being perceived as having a negative influence on society can be quite harmful to a business. Companies should try to change public perceptions in countries where their influence is seen as negative - for instance, by developing measures for and with civil society. They could also use the experience of companies located in Member States where public opinion is positive about the influence of business in society. Analysing best practice in other European companies could be useful. Companies should also bear in mind these results when defining their international strategy: a company that decides to set up in a country where business is seen as having a negative influence on society could improve its welcome by publicising measures it has taken to improve citizens lives. However, in countries where business is perceived as having a positive influence on society, companies must not ease up on their efforts. This could risk a change in public opinion, resulting in damage to their image. We have also seen the link that exists between perceptions of the influence of business on society and the index of corruption. Companies should really be aware of this concern: the public is very sensitive to the topic of corruption, and a business showing its determination to maintain its integrity might benefit in terms of image. The fight against corruption is a matter that concerns all players in society. European governments should take account of the fight against corruption in all aspects of decision-making. This is by no means a topic that only affects emerging economies or developing countries; all countries are at risk. Fighting corruption is a way of improving the image of both the public sector and national companies. Ultimately, citizens, governments, and businesses will benefit from developing and enforcing more effective rules on lobbying and political financing, increasing transparency and making public bodies and national companies more accountable. Question: Do you think that the overall influence of companies on society in (YOUR COUNTRY) is very positive, somewhat positive, somewhat negative or very negative? Correlation between people s opinion on the subject and the corruption index in that same country. Source: Standard Eurobarometer (EB), for the European Commission, EB72, Autumn 2009, conducted by TNS; Flash Eurobarometer (EB) Employment and social policy for the European Commission, FL363 September-October 2011, conducted by TNS; Eurostat: Unemployment rate in the EU, February 2013. Corruption Perceptions Index of Transparency International: http://cpi.transparency.org/cpi2012/results/ TNS Europe Think... April 2013 TNS 2013 2

Analysing the main perceived positive and negative impacts of companies on society can help to improve public views of business influence. Growth Insight Since the beginning of the banking crisis in 2007-2008, unemployment has been perceived as the main issue by Europeans. It is therefore no surprise that people consider job creation to be the main positive effect of companies in society. 57% of Europeans mention this, ahead of all other factors. Four items follow, at a respectable distance, all mentioned by between a third and a quarter of respondents: contributing to economic growth (32%), providing training to employees (31%), developing innovative products and services (27%), and paying taxes (25%). In every EU Member State, job creation is the first positive effect mentioned. The highest proportions are recorded in Sweden (72%), Austria (70%), and Finland (69%); the lowest are measured in Greece (48%), Slovenia (45%) and Italy (43%). Outside the EU, job creation is also the most positive effect of business for large majorities of respondents in every country surveyed, most strikingly in Brazil (81%). There is a similar consensus across the different socio-demographic categories: creating jobs is the most important positive impact of business on society for every category of Europeans. The young (15-24, 25-39 and students) and white-collar workers are the most likely to mention this factor. When it comes to the most negative effects of business on society, European responses are more diverse. Corruption comes first (41%), confirming the finding described above: business influence on a society is seen as negative in corrupt countries, probably because companies are perceived as partially responsible for the level of corruption. Environmental pollution (39%) and redundancy (39%) share second place. Lastly, more than a third of respondents (35%) mention poor working conditions and the failure to respect labour standards. Large differences exist between countries and sociodemographic categories. Corruption is perceived as the main negative impact of business on society in 15 Member States, led by Slovenia (68%), Slovakia (63%) and the Czech Republic (62%). Four Member States put environmental protection first (with the highest score in the Netherlands, 53%); cutting back on employee numbers is mentioned first in six, most strikingly Finland (58%). Respondents in Germany are the only ones to say that excessive influence on government policy is the most negative effect (44%); in France, they feel that companies encourage over-consumption (53%). Think... lessons for business: European businesses need to counter the feeling that they influence society negatively. First, by building on what are seen as their most positive impacts on society. This is not an especially easy task, as creating jobs is quite difficult at a time when parts of the European economy are in recession. It might be easier to provide employee training and invest in new product development - these are also good ways to show how positive their influence can be on society. The other way of changing people s minds is to proactively demonstrate that they are trying to prevent the main negative impacts of business on society. When European companies become more aware of the negative perceptions of business impacts, they will be more likely to take the necessary action to improve their image in society. For example, by publicising their measures to combat pollution; or by showing that they respect all the labour standards in their country. Of course, companies that have never had to make redundancies could also publicise the fact. A business that hires will always have a better image than one that is forced to shed jobs. From a positive perspective, all companies need to bear in mind that creating jobs will always be their best asset in terms of public image. The link previously shown between the unemployment rate and the way business influence is perceived tends to confirm this. Good news about jobs should always be publicised and emphasised, particularly in these times where unemployment is the leading public concern. For their part, European governments can also play a role. Introducing stricter rules and supervising the way national companies respect environmental standards might initially be experienced as a constraint, but if this improves the way that companies are perceived, it will be a win-win solution.

Question: From the following items, which is/are in your opinion the main positive (green in graph) and main negative effect(s) (red in graph) of companies on society in (YOUR COUNTRY)? (Max 3 answers/respondent - Answered in %) Source: Special Eurobarometer (EB) Employment and social policy for the European Commission, FL363, September- October 2011, conducted by TNS TNS Europe Think... April 2013 TNS 2013 4

Which business sectors are perceived as acting most responsibly? Does the picture differ between EU countries and economic powers outside Europe? Growth Insight Discussing the positive or negative influence of business on society in such general terms can obscure the important detail. Which companies are we talking about? Large companies or SMEs? Pharmacological laboratories or retail shops? It is unlikely that these different business types are perceived as making the same efforts to behave responsibly towards society. In fact, Europeans differentiate between the types of company concerned: more than two-thirds believe that small and mediumsized companies (71%), food production and agriculture companies (70%) and retail and supermarkets (67%) make efforts to behave responsibly. These are followed by information, communication and technology (ICT) companies (62%), clothes and shoe manufacturing companies (51%) and pharmaceuticals (50%), all of which are thought to be taking the necessary steps to act responsibly by outright majorities of EU citizens. Relative majorities think that the same is true for construction companies (49%) and large companies (48%). But the dunces are chemical companies (40%, vs. 44%), financial and banking companies (34% vs.62%) and companies in the mining and oil & gas sectors (34% vs. 55%); only minorities of citizens believe that businesses in these sectors are making efforts to behave responsibly towards society. While there are variations between countries, mining and oil & gas industry companies are seen as making the least efforts to behave responsibly in 16 EU Member States. Seven Member States put financial and banking companies in last position. Some exceptions should be highlighted: last place is taken by clothes and shoe manufacturers in Sweden and Denmark, by pharmaceuticals in Poland, and by construction companies in Slovenia and in Hungary (in equal last place with mining and oil & gas industry companies). Interestingly, Romania is the only EU country where chemical companies are the least likely to be mentioned as behaving responsibly (equal with mining and oil & gas industry companies). In these countries, all types of companies are perceived as having a positive impact on society by majorities of citizens, probably because they are at the origin of the rapid growth in GDP observed in these emerging economies. Respondents in Israel trust mining and oil & gas industry companies least when it comes to making the necessary efforts (27%). In the US, financial and banking companies are seen as the least responsible (47%), perhaps as a consequence of the banking crisis. While many similarities exist between EU Member States, perceptions seem different in other countries, especially in the emerging economies. Think... lessons for business: Whether or not they reflect the actual efforts businesses are making to behave responsibly, public perceptions can have a great impact on European companies. Under such circumstances, these results can be useful. A chemical company in Romania (at the bottom of the hierarchy of companies making efforts to behave responsibly) which strictly complies with environmental and safety rules should make sure the public is aware of how responsible it is. Its public message could be: This is how you think we work; and this is what we really do. Companies perceived as behaving in a responsible way towards society should take advantage of their positive public image. For example, small and medium sized companies could make their responsible behaviour an important part of their marketing communications. The fact that the images people have of the different types of companies vary from one country to another is useful for companies in defining their international marketing strategy. For example, a clothes and shoe manufacturing company needs to adopt different approaches in Sweden - where an outright majority of citizens say they make insufficient efforts to behave responsibly towards society - to Poland, where more than two-thirds of people instead think that they are doing what needs to be done. Outside the EU, chemical companies are the least likely to be seen as behaving responsibly towards society in the emerging economies Brazil, China, India, and Turkey and in Croatia (equal with financial and banking companies). However, though they are in last position, chemical companies are still considered by outright majorities of respondents as making enough efforts to behave responsibly in China (53%), Brazil (55%), and India (58%). Governments need also to bear in mind that their support for a company will be better received by the general public if the company belongs to a sector that is perceived as behaving properly. Recently, European governments have experienced a backlash. Their financial help for banks in danger of bankruptcy has not always been supported by citizens, many of whom considered it inappropriate due to the role the banks had played in causing the crisis. TNS Europe Think... April 2013 TNS 2013 5

Question: For each of the following types of companies, do you think that they make efforts to behave responsibly towards society in (YOUR COUNTRY)? Answer: Yes. Comparison between the EU27 Members States and other countries outside the EU27 (Turkey, USA, Brazil, India, China, Croatia and Israël). Source: Special Eurobarometer (EB) Employment and social policy for the European Commission, FL363, September- October 2011, conducted by TNS

Precise plans for Growth Business Growth Promote action on jobs and training Though it seems obvious, it bears repeating: in the current context, where unemployment is more than ever THE priority for citizens, creating jobs is the best way for a business to improve its image with the general public. Providing training to employees and developing innovative products are easier ways, and just as effective on perception about how companies have a positive influence on society. Combat stereotypes Corruption, redundancy and the destruction of the environment are seen as the main negative effects of companies on society. Some companies are perceived as behaving irresponsibly towards society just because of their sector of activity, regardless of their actual behaviour. Businesses need to combat these stereotypes. They must publicise the measures they take. Share best practice Companies are not perceived in the same way in all countries. National businesses in a sector with a poor public image should study what is done in the countries where their activity is seen in a better light; applying best practice could help to improve their image. Define an international strategy Businesses with an international development strategy should check the image of their sector in the country where they would like to invest. The international communication strategy also needs to take into account these differences in perceptions from one country to another. Government Growth Fight corruption Respondents in countries with high unemployment rates tend to have a negative image of business influence on society. Fighting unemployment is therefore important, but it is already a priority for all governments! Governments should also take account of the fight against corruption in all aspects of decision-making: the perceived level of corruption affects the image of national companies. Regulate and supervise business more effectively Governments should use different means to regulate and supervise companies better. Government labels (for instance for companies that respect the environment or that comply strictly with labour standards) are a step in the right direction. Giving awards to national companies that have taken the most effective actions to behave responsibly would also help to improve a national company s image. Take into account differences in public perception Governments cannot base a decision to support a company in severe financial difficulties on the way the company is perceived by the public; and, by extension, on the consequences for their own image. However, as governing is all about anticipation, governments should base an informed decision on how citizens might react. Helping a business well-perceived by the public might be a safer choice. About TNS TNS advises clients on specific growth strategies around new market entry, innovation, brand switching and stakeholder management, based on long-established expertise and market-leading solutions. With a presence in over 80 countries, TNS has more conversations with the world s consumers than anyone else and understands individual human behaviours and attitudes across every cultural, economic and political region of the world. TNS is part of Kantar, one of the world s largest insight, information and consultancy groups. TNS Web: www.tnsglobal.com Email: enquiries@tnsglobal.com Twitter: @TNS_Global TNS owns all copyright in this paper (including all data contained herein). No person may reproduce or use any information contained in this paper in whole or in part, without express prior written approval. TNS Europe Think... April 2013 TNS 2013 7