In the previous 2 decades, customers start looking for better products. Certifications for different products then emerge to help customers to recognise the products. For instance, energy star certificates the equipment with better energy efficiency while FSC help to improve forest management.
In the past, a fundamental tenet of American capitalism is that companies are expected to work for their shareholders’ best interest. The managers tend to choose the policy which would lead to maximising firm value (Faleye & Trahan, 2011). Thus, Shareholder primacy, focused as it is on profitability in the short term and maximisation of return. This leads to mono-capitalism. So, the shift to multi-capitalism similarly consequences a wider focus to tackle the interests of stakeholders. For example, Faleye & Trahan (2011) found that the benefits of being a labour-friendly company outweigh the costs of the practices. Hence, the focus of the business leaders shifts from shareholders to stakeholders — employees, communities, customers, investors and government etc. Therefore, nowadays, the concerns of the customers shift to stakeholders rather than just the products. The key idea is that our right to wellbeing should be free from harm by corporate activities.
While many companies start to engage in stakeholders, the customers now are interested in the disclosure. CDP is a very good example of this trend. They are helping companies to disclose the carbon and water in the supply chain. However, the program is based on volunteer disclosure.
Transparency can help to improve communication with the stakeholders. This can not only convince customers but also is an invitation to collaboration.
Reference:
Faleye, O., & Trahan, E. (2011). Labor-Friendly Corporate Practices: Is What is Good for Employees Good for Shareholders? Journal of Business Ethics, 101(1), 1–27.
