By Milena Bar, Ottilia Henningsson, & Dr. Kristjan Jespersen
◦ 5 min read◦
The Science-Based Targets initiative aligns firms’ emission reduction targets with a net-zero emissions pathway. Firm commitment yields significant abnormal returns which are larger for firms committed to larger emission reductions and for high-emitting firms.
The IPCC’s sixth assessment established a code red for humanity and provided mounting evidence of widespread, rapid, and intensifying climate change. The Paris Agreement, ratified by over 190 states and non-state actors in 2015, formally stipulated the goals of limiting global warming to ideally 1.5°C and at a minimum well below 2°C with the aim of reducing the most catastrophic damages related to climate change onto the natural environment, human health and global financial market. The need for climate action is urgent and requires engagement from governments, individuals as well as corporate and investor participation.
Incentivizing corporations and investors to act voluntarily on climate change is critical to redirect private capital towards environmentally responsible business practices. The Science Based Targets initiative (SBTi) is becoming the global standard for firms seeking to set emission reduction targets aligned with the required global decarbonization targets established in the Paris Agreement. By encouraging voluntary corporate carbon emission reductions, the SBTi is a critical tool to reduce the private sector’s reliance on fossil fuels.
2021 record year for new approved targets and committing firms for SBTi
Since its founding, just seven years ago, SBTi has experienced exponential growth in the number of committing firms and has mobilized firms representing more than a third of global market capitalization to reduce their carbon emissions. In 2021 the initiative took steps to increase the ambition level of firms’ emission reduction targets. When first established, firms could commit to reduce their emissions either aligned with the reduction targets of 1.5°C or 2°C. However, from summer 2022, the initiative will only be accepting the more ambitious emission reduction target, as set out in their campaign Business Ambition for 1.5°C.
Since company engagement ultimately comes down to whether committing to SBTi will drive wealth for shareholders, understanding the stock market response to firm commitment to the SBTi is essential not only for businesses looking to commit, but also for investors. To justify the integration of a climate credential such as the SBTi in investment management, it needs to be able to provide excess returns. To understand the stock market reaction to firms’ announcement of SBTi commitment, we conducted a short-horizon event study on a portfolio of 1.535 firms.
Firm commitment to the Science Based Targets initiative aligns environmentally sound practices with financial viability
Firm commitment to the SBTi indeed yields a positive announcement abnormal return and thus speaks to the credibility of SBTi in constituting a credible signal of firm commitment to sustainable business practices. Even more encouraging is the finding that firms committed to the 1.5°C target experienced substantially higher returns, indicating a stronger positive market reaction when exhibiting a higher cost of commitment and higher target ambition level. The market evidently differentiates between ambition levels by rewarding businesses that are pledging themselves to more demanding emission reductions and a more climate-friendly business strategy. These findings are particularly relevant in light of the SBTi making the more stringent emission reduction target the new standard for all firms via their campaign Business Ambition for 1.5°C and may encourage more firms to increase their efforts in reducing their greenhouse gas emissions.
Stock price reaction in response to commitment to the Science Based Target initiative
In turn, high carbon emitting firms, proxied here by firms identified by the CA100+ list, reaped the largest reward in their stock price following commitment. This finding further confirms the market’s more sensitive reaction to costlier commitments, but also creates concern about whether the SBTi may have to rethink a recent strategic decision. The SBTi announced that they will not be accepting targets set by firms operating in the Oil and Gas industry, thus abandoning the industry specific methodology for fossil fuel firms which had been in development for several years. Fossil fuel firms have a key role to play in successfully achieving the goals of the Paris Agreement, thus begging the question of whether the SBTi is not missing out on covering an industry critical to combatting climate change and a sector of firms who are highly rewarded by the market for committing to reduce their emissions.
As climate disasters become more prevalent and more severe, firms who fail to transition to a low, or zero, carbon business model can be expected to become more vulnerable in the long run. To expand the analysis, we further tested the performance of a portfolio strategy screened for firms committed to the SBTi. Despite the underperformance of an SBTi screened portfolio against a portfolio consisting of only non-committed firms in the medium-term, there is reason to believe that a portfolio with SBTi committed firms may provide higher returns in the future. Given that SBTi commitment represents a commitment to aligning the firm’s operations with the net-zero emissions pathway, it can be perceived as a safer bet in the long run. Moreover, portfolios consisting of SBTi firms were shown to be characterized by lower volatility. The objective of investors is shifting to increasingly sustainable and impact focused investment profiles, hence portfolio and asset managers may use SBTi commitment as a filter in security selection to achieve their client’s demand.
Looking Ahead
Financial institutions have a key role to play in driving systematic economic transformation towards a global net-zero carbon emissions economy in their power to lend and invest. As evidenced, firm commitment, ambition level and cost of commitment are reflected in the stock’s pricing mechanism, making the business case for the firm to set ambitious targets for decarbonization, and providing rationale for investors to in the short run utilize the market’s reaction to firm commitment in investment processes and strategies.
About the Authors
Milena Bär is a recent graduate in MSc Applied Economics and Finance and is working as a student researcher in ESG and Sustainable Investments at Copenhagen Business School. Her research projects are mainly within the field of ESG metrics and regulation, with a focus on the investor’s side.
Ottilia Henningsson recently graduated with a MSc in Applied Economics and Finance from Copenhagen Business School with a keen interest in the transition towards a more sustainable financial industry.
Kristjan Jespersen is an Associate Professor at the Copenhagen Business School. He studies on the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance.
Summary of the discussion with Sophia Opatska at CBS
◦ 8 min read◦
This blog post is a repost and has first been published by UCU Business School on 5th of April 2022.
In normal life, I am a vice-rector for the strategic development of the best Ukrainian private nonprofit University and founding dean of UCU Business School. Right now, I am one of 4 million Ukrainians who left Ukraine because of bomb shelling and war, which Russia started on February 24th.
Sophia Opatska, 2022
What happens in Ukraine right now is devastating. Every day more and more people die, more and more cities are ruined. Over the weekend, the Kyiv region was liberated after a month of occupation. Pictures of Bucha (a beautiful small town near Kyiv) can make any normal person sick: mass executions, civilians being killed on the streets, lying there for days and weeks, half-burned bodies of raped and naked women, robbed houses. Those pictures are telling the terrible truth about Russia, russians, and their war in Ukraine. There is no excuse for terrorism and what we live through and observed by the whole civilized World – is terrorism and genocide.
Since this meeting and discussion is about business and economics, there should be numbers. So I will try to get into them, but no numbers can validate what Ukrainians saw in their cities after russian invaders left them.
According to various estimates, our economy is ruined by between 500 billion and trillions of dollars. In 5 weeks. And it will take years and years to rebuild Ukraine.
I think this is the first time in history when war is so connected to economics.
Unfortunately, Russia’s domestic political stability at the moment looks high. Protest sentiments in Russia are low, there has been no significant split between elites, and the loyalty of the security forces to Putin is not yet in question.
There is little dissatisfaction with the consequences of the war among a small number of elites, mostly «technocrats» and «old officials». Young people under the age of 30 and the urban middle class are the most affected by the current situation and sanctions out of the population capable of protest.
There are two types of sanctions – official sanctions of countries and private companies.
The G7 and the EU have decided to disconnect several Russian banks from the SWIFT system. The disconnection of banks from SWIFT does not limit their ability to make payments in foreign currency, but slows down payments and makes them more expensive.
It is important to note that the problems of banking transactions are rather temporary. At the moment, this leads to supply disruptions and rising costs, but over time, both importers and banks are adapting. Alternative and fast methods of payment through third countries or analogs of the SWIFT system will be created (for example, Russian SPFP and Chinese CIPS).
And if we are talking about the economics, let me give you 10 consequences of sanctions in the near future (1-6 months, key – 2nd quarter of 2022) for Russia in order to understand if and how they help Ukraine, mostly leading to changes within russia itself. As a basis, I took a report from the Ukrainian Institute of the Future that analyses the impact of the sanctions.
1.Devaluation. During the month of the war, the Russian ruble fell by 19% against the US dollar. In March, the European Union and the United States imposed a ban on the import of banknotes into Russia. Though the official exchange rate almost did not change on the «black» market, one dollar is estimated at 250-300 rubles.
It is believed that the devaluation of the ruble by 10% leads to inflation by 1%. Accordingly, the fall of the ruble will lead to a «weight of wallet», a reduction in real household income, and a reduction in effective demand.
2.Reduction in the supply of imported products, a sharp narrowing of supply, shortages of certain goods.
According to FourKites, since the beginning of the war, imports to Russia have fallen by 59%, including imports of household goods and industrial goods.
3. Inflation. A reduction in supply is always an increase in prices.
First, the rise in prices will affect the «middle-class urban family», which has a high share of imported products in the consumer basket. Due to sanctions and inflation, the consumer line is expected to change in the long run, namely simplification, fewer high-tech products, and an increase in the share of Chinese and Indian goods (medicines, gadgets, cars, etc.).
In villages with conventionally grown potatoes, locally produced pasta, oil, and sugar, it may be a little easier at first. However, with a certain time lag, prices will rise for everything, including domestic products. And for low-income people, whose consumer basket consists mainly of food and medicine, the consequences will be the most traumatic.
Inflation is hitting the poorest. But the poor are not a protest power. The likelihood that they will join the protest audience remains low. It is most likely that 70-80% of the population will suffer, trying to «squeeze» something out of the state and thus become even more dependent on the state.
4. Fall of the industry: decline in production, fall in employment, unemployment. The largest hit by the sanctions is the aviation sector, the automotive industry, mechanical engineering, the electronics sector, the oil, and gas sector (its modernization), and metallurgy. The more technological the production, the higher the share of imported components, and, accordingly, the more it will suffer from sanctions.
If the shutdowns take place, it will have a multiplier effect on the economy. And this can be disruptive. e.g., The Russian car industry employs about 300 thousand people, and another 700-900 thousand are employed in Russian companies that are suppliers to the car industry.
5.Falling incomes and employment in services. The first thing that consumers save on when real incomes are reduced are services: beauty salons, fitness centers, catering, restaurants, recreation, and more. The tourism sector is likely to fall. A decline is expected in trade. This is an important part of the Russian economy: the share of wholesale and retail trade is almost 12% of GDP and 15% of all employees.
6. A blow to the construction and real estate market. About 40% of Russian companies have already frozen their construction projects across the country. This is due to the imposition of sanctions against Russia, which leads to disruptions in the supply of construction materials, their shortage, and a rise in price. According to experts, since the beginning of the war, the cost of building materials has increased in some segments by 80-100%. Some companies decide to freeze some projects indefinitely and redirect resources to complete near-completed projects.
7. In Russia, it is planned to transfer to the state assets owned by foreign companies that have left the market. The Public Consumer Initiative has created a list of 59 companies that can be nationalized, including McDonald’s, Volkswagen, Apple, IKEA, Microsoft, IBM, Shell, Porsche, Toyota, H&M, and others.
8.Exit from partnerships of oil and gas foreign partners. I am not going to name all, just a couple:
BP sells a stake in Rosneft (19.75%).
Shell is leaving the joint venture with Gazprom and is terminating its participation in the Nord Stream-2 project.
Exxon Mobil stops oil and gas production in Russia (on the island of Sakhalin) and stops new investments. The company leaves the Sakhalin-1 consortium and recalls American specialists from Russia.
What is critical here is that companies are leaving with their own technologies, including offshore drilling technologies for gas production, which Russia needs to develop new fields.
9.Sharp increase in interest rates on loans and lack of working capital in the business.
10.Reduction of microcredit (lending for those who cannot reach the next salary). People who live from salary to salary cannot get a loan today. This is again a factor in the growth of poverty, the barbarism of the population, and the growth of crime.
Russia’s economy is going down. Experts talk about the beginning of the economic winter in Russia, use the term “Iranisation” of the Russian economy, and draw parallels between Russia and North Korea.
Current sanctions have critical consequences in terms of living standards and quality of life in Russia over the next 10 years. Lack of prospects, opportunities to realize their life potential, the need to survive instead of making plans for the future and development – all this calls into question the feasibility of life in Russia on the horizon of 5-10-20 years and makes the issue of emigration more relevant than ever. Summing up in one sentence, we can say that «Vladimir Putin stole the future from the Russians.»
At the same time, the basis of internal stability in Russia is Putin’s personal image and absolute trust in him PERSONALLY by the population, not the government, parliament, or government as a whole. It holds an elite consensus, as well as a social contract in Russia, which he himself guarantees and embodies.
I would like to finish again with images of BUCHA – a beautiful town near Kyiv that made me sick on Saturday evening and the entire day yesterday. People’s lives cannot wait for another 10 years so that the current status of sanctions works slowly and mildly on society which Putin created in russia and people accepted by voting for him for 22 years and western society inviting him every time to the table. There is a huge moral dilemma in what we currently experience, there is a huge challenge to democratic order with respect to Human dignity, freedom of speech, and free society which Europe was building for many years.
There are many concerns: what if the situation engages more countries, what if we give more military weapons to Ukraine, what if… many more what if? But I would like you to ask yourself – What if Ukraine loses? Everybody in the free world will lose, as when they come here they will do the same as they did in BUCHA.
With more than USD 12 billion spent the 2020 US election cycle may well have been the most expensive political campaign in the world so far. Yet in the shadows of this epic political contest another campaign unfolded that in my view provides some really interesting early signals on emerging trends in corporate political activity.
Alongside the national election Californians went to vote on a number of plebiscitary ballot measures. Among them Proposition 22 that like no other exemplifies how business lobbying unfolds in the era of what is often called the gig-and platform economy.
Prop 22, as it is known for short, was spearheaded by Uber and Lyft as a last ditch effort after exhausting all judicial and legislative tactics to win an exemption from a new Californian labor law that aimed to force these companies to classify their drivers as employees, rather than independent contractors.
A special type of thing
Leaving aside the merits of the argument – as consequential and hard to defend the position of Uber and peers may be- Prop 22 is remarkable on many fronts. It exemplifies the growing use of what was once meant to be a plebiscitary counterweight to corporate influence by these very corporate actors to advance their own interests.
It saw platform companies that connect millions of drivers and tens of millions of passengers in so called two-sided markets take fully advantage of these relationships by intensely lobbying and mobilizing these constituencies for their cause.
It witnessed the deployment of targeted push messages and suggestive survey snippets through the proprietary app infrastructure, administered and tracked by a black-box algorithm that also sets prices and assigns business opportunities and thus commands Foucauldian-like disciplinary allure. Which driver would want to be seen and classified to be unsupportive of the company’s political project while the day’s earnings depend on being assigned this one lucrative trip to the airport?
Ballot 22 also starkly illustrates the chimera of political equality or of even the resemblance of a level playing field in a world with unconstrained campaign expenditures that resulted in the gig-side outspending the labor side by a factor of 10 to 1. And it is truly remarkable in its brazen disregard of democratic legitimacy. It aimed to expressly derail a provision that was not hidden on page 1205 of a large body of complex legislation and stealthily whisked through without much public scrutiny. Instead it took aim at a piece of legislation that had been in the public, even international spotlight for quite some time, extensively discussed and lobbied on and resoundingly tested and confirmed in court.
Even more astounding, Prop 22 sought to prevent any future democratic course correction through including a clause that would require an unprecedented 7/8 supermajority in the legislature for overturning it – a much higher hurdle than is set for amending the US constitution.
All these features are fascinating in themselves and deserve a much more detailed examination which has already begun in academic circles, for example with regard to platform-led mobilization or data-driven corporate advocacy and to which I hope to contribute to in a longer essay elsewhere soon. Here and now I just wanted to offer some very early and unpolished ideas on one more, largely overlooked angle that makes Prop 22 and the corporate political actions of Uber et al. so fascinating.
In very broad brushes the thinking here goes as follows:
Businesses that are not explicitly chartered as public benefits corporations derive their social license to operate primarily by making a positive economic contribution in terms of innovation, resource efficiency et al. (and yes, by doing this as responsible corporate citizens that respect the spirit of applicable laws, planetary boundaries etc.). The longer-term ability of a company to be financially self-sustaining in a competitive, externality-free market situation is – absent any other claims about achieving non-financial societal benefits – a first approximation for such a positive economic contribution.
Society puts a higher economic value on the contribution of the corporation than the costs of its fairly priced inputs. The business model adds overall economic value, the business organization – not just the people involved in it as individuals claiming their citizenship rights – can invoke this overall economic contribution to justify a certain degree of standing in the democratic discourse.
Yet this is precisely not the case with companies such as Uber and Lyft. They have been losing vast sums of money for years, bleeding cash on every ride even while exploiting many regulatory gaps that lower their cost structures relative to their competitors in the ride-hailing business. All this was made possible by enormous sums of venture capital funding – USD 26 billion for Uber alone up until April 2020. Venture funders bet on those companies to eventually achieve a winner-takes-most status and commensurate pricing power in a market characterized by strong network effects and economies of scale /scope.
The envisioned route to economic dominance, however, also requires to simultaneously build and assert the political influence necessary to stave off regulatory efforts such as categorizing drivers as employees and many other pricey regulations that threaten to close the very regulatory arbitrage opportunities on which large parts of the business model of Uber, Lyft and other gig companies are ultimately built.
Overall this results in a situation where venture-funding is at least as much about blitz-scaling political power as it is about financing hyper-growth for market dominance. Both are necessary, both reinforce each other. The build-up of political good will and supportive constituencies is not a by-product of building customer loyalty. It is an essential part of the strategy to architect a business model that critically depends on regulatory accommodation and complicity. Yet, all along and rather ironically this heavy reliance on political action and political success stands in stark contrast to the relative normative weakness of claims made by companies without a clear route to profitability that cannot convincingly back up their political voice with an obvious net positive contribution to overall economic welfare. Stripping away all ornaments what’s left is a story of VC-funded particularistic political rent-seeking.
Now, much more needs to be explored here and there are many holes that can be punched into this storyline as described in these very broad terms. So please check back here soon for a more developed version of this argument. In the meantime I would love to hear your comments and criticism to help advance this conversation.
Epi-epilogue
Uber et al. won Prop 22 by a large margin of 58% to 41%. Prop 22 turned out to be the most expensive ballot initiative in US history. So far. After the vote Uber’s CEO announced in an analyst call that the company will “more loudly advocate for laws like Prop 22 [and] work with governments across the US and the world to make this a reality.” The company continues to loose large sums of money.
About the Author
Dieter Zinnbauer is a Marie-Skłodowska-Curie Fellow at CBS’ Department of Management, Society and Communication. His CBS research focuses on business as political actor in the context of big data, populism and “corporate purpose fatigue”.
As the global Covid-19 pandemic spread through Europe and North America, companies raced to communicate how they were responding to the crisis. Advertising that focuses on a company’s response to humanitarian crises is hardly new. Every holiday season features a parade of brands touting their seasonal partnerships with charitable causes. Yet these exercises in “Covid-branding” struck a particular nerve with both consumers and media commentators because so many of the brands stuck to the same script. Quickly that script even became the subject of satire.
‘The hallmarks of the coronavirus ad are so consistent they could be generated by bots. They begin with eerie drone footage of empty streets, a shot of a child staring plaintively out the window and then — cue the upbeat musical key change — a medical worker peeling off a mask, a guy jamming on a home piano, maybe a deeply pregnant woman rubbing her belly as if summoning a genie from its bottle.’
Amanda Hess, The New York Times, May 22, 2020
These patterns are important. In the uncertain early weeks of the pandemic, as governments were still crafting their responses, the stories brands told played a role in shaping how the public made sense of the crisis. What kind of a crisis was it? What sort of solutions did it need? What role should business play in delivering them? Covid-branding offered answers to those questions.
In this briefing note, we present a preliminary analysis of Covid-branding by companies in Europe and North America during March and April 2020. Our analysis finds that messaging clustered clearly into two ways could engage: ‘Covid-helping’ and ‘Covid-coping.’ These messages of ‘managing the pandemic’ and ‘managing yourself’ frame the consumption of goods and services as a way that consumers can show they care, presenting shopping as a form of everyday heroism. In this way, they make the case that private sector has a role to play in humanitarian response.
Economic Context
The Covid-19 pandemic has taken an extraordinary toll on the global economy. Measures to combat the spread of the virus, including border closures, and national lockdowns affecting one-third of the world’s population, shut down much industrial production and pushed white-collar professionals to remote work. These measures, coupled with a fall in consumers’ own confidence in response to the health crisis, contributed to rising unemployment, falling consumer activity, and the worst global recession since the Great Depression.
This context, with consumer activity declining overall and shifting from closed stores to online retailers, placed pressure on brands to compete for a share of the smaller e-commerce pie. At the same time, the recession placed pressure on marketing professionals to demonstrate their relevance at a time of overall corporate retrenchment.
Marketing Context
We focus our analysis on online communications, especially social media output. Social media marketing is often informal in tone and crafted quickly to respond to real-time events, so that brands can ride the waves of attention paid to viral news stories, from royal babies to sporting events.4 Most research about this practice has suggested brands choose to focus on positive or neutral stories to avoid mistakes, as humorous tweets about a serious event can backfire. That makes Covid-branding in the early weeks of the pandemic, when infection and death rates were rising, unusual.
We also examine promotional emails and newsletters, a form of content marketing. Content marketers have begun to develop more journalistic skills, including as storytellers and explainers of complex phenomena, and indeed many former journalists are employed as content marketers. Covid-branding, in which brands help consumers make sense of the emerging crisis, is an example of this phenomenon.
These online forms have not received much attention from researchers of corporate humanitarianism, which has focused on more traditional forms of print and broadcast advertising. We hope that this brief typology of how marketers used these newer forms in the Covid-19 pandemic encourages further research into these formats.
Covid-branding as Covid-helping
Brands that emphasized their role in helping to manage the pandemic did so in distinct ways. To understand this, we considered two aspects of each marketing message: First, whether companies are making an engaged or disengaged intervention. Companies which are engaged use their own business capacities toward the Covid-19 cause. Second, we consider whether companies are claiming to directly or indirectly impact the Covid-19 crisis itself. We investigate whether the brand claims to address the medical situation (direct) or indirect societal outcomes of the pandemic, including economic impacts.
The four modes of engagement
Direct Engaged: Business puts its core capacities into directly fighting Covid
Some companies with core operations in the fields directly linked to fighting the pandemic (i.e. health care or logistics companies) quickly began communications around their role.
This Novo Nordisk Facebook advertisement shows healthcare workers holding up a sign reading “Thanks” in Danish. Novo Nordisk is a leading pharmaceutical company. Photographs of healthcare professionals at work in Novo Nordisk-made protective gear signaled company’s direct engagement.
Examples of countries where these products are in use underscores that the company serves a modern, global, and racially and gender-diverse group of professionals. Other direct engagement included shipping company Mærsk tweeting about “Mærsk Bridge,’ an air bridge and supply chain operation to transport PPE to healthcare workers.
Indirect Engaged: Business puts its core capacities into indirectly managing Covid
Since direct business engagement was only possible for companies whose core business was in medical or logistical operations, many companies emphasised managing indirect societal impacts of the pandemic in their early response.
As a food and drinks business with a national supply chain, Starbucks was able to use its core capacities to address indirect economic impact of pandemic on food supply. Promotional email highlights corporate donations of 700,000 meals to food banks and use of company logistics network to assist foodbanks with transport.
Makes the case that hunger “is part of the crisis” to underscore relevance of this indirect engagement.
Other indirect engagement included Draper James, the American actress Reese Witherspoon’s fashion brand, announced on its Instagram account on April 2, donations of dresses for teachers (deemed essential workers during pandemic); campaign backfired when dress supplies ran out.
Direct Disengaged: Business helps others directly fight Covid
Businesses who could not easily link their core operations to medical needs instead highlighted partnerships to help others managing the Cover crisis.
A promotional email from Camper highlights the use of 3D printers from its manufacturing operation to produce medical visors. The Email also highlights donations of shoes and slippers to staff and patients in hospitals.
Camper does not claim that they are themselves engaged in work to combat the medical crisis, but rather that they are making resources and equipment available to others who can do so.
Other direct disengaged examples included fashion brand Armedangels making cloth masks while explicitly stating on Facebook that they could not protect the wearer – “we can’t produce medical masks” – but that 2 euro from the sales of each mask would be donated to Doctors Without Borders, or gas company Crusoe Energy Systems announcing that they were donating computing power to Stanford University coronavirus research.
Indirect disengaged: Business helps others indirectly manage Covid
Businesses who could not easily link their core operations to urgent economic or societal needs instead highlighted partnerships to help others managing the impact of the Covid crisis.
Instagram post by crowd-funding platform GoFundMe promoting that its platform can be used by consumers to identify causes to support. Following the link to “learn more” shows company also offering free consulting to nonprofits on how to raise additional funds.
The company is not mobilizing its own resources to support Covid-related causes, but rather facilitating donations to other organizations through information sharing. Such consulting activity is not an ordinary part of the company’s core business.
Other indirect disengaged examples included Facebook offering grants for small businesses in the United States and using its network to promote the existing loan program from the US government.
Covid-branding as Covid-coping
Many brand engagements we examined did not make any claims to be helping combat the crisis, or its social impact, at all. Rather they focused on helping individual consumers to cope with the circumstances surrounding the crisis and its personal impact on themselves.
Because these “Covid-coping” messages focused on helping individuals, rather than society or the economy, our analysis focused on the demographics of what kind of consumers each type of “coping” message addressed, as well as what the messages said. We identified three coping mechanisms brands sold to consumers in these Covid-coping messages: coping-through-practicality, coping-through-pleasure and coping-through-denial.
1) Coping-through-practicality
Like indirect Covid-helping, it portrays shopping as way to address consequences of the pandemic, but instead of focusing on consequences for society, it targets how consumers can address their own needs.
An Instagram post by Zoku, a real estate company managing coworking spaces, offered private office rooms for professionals needing a socially distant office away from their household. Emphasis is put on a spare and clean layout of the office and “peace and quiet” for workers.
It suggests appeal to professionals with children struggling with disruption to work practices in shared family homes. Coping-through-practicality engagements largely addressed themselves to consumers in their identities as professionals and parents.
Other coping-through-practicality examples included laptop manufacturers advertising tools for working from home; home furnishings brands advertising tools for cooking at home; and phone, internet and electricity providers advertising their services as essential infrastructure for remote working and home-schooling. Marketing of this type emphasizes how brands could help families and businesses carry on “as normal” during a period of crisis.
2) Coping-through-pleasure
Exclusively comprised of brands in the fashion, fitness and lifestyle industries, with messages targeted to young and predominantly white women; present luxury goods as means of coping with pandemic through ‘self-care’.
A promotional newsletter for the “athleisure” brand Jolyn depicts a slim and muscular white woman on an inflatable pool float wearing sunglasses and painted toenails. Sunlight appears to reflect off the body of water in which she floats, with a caption advertising a “Bikini for staycation.” The Image and caption present the lockdown, which compelled individuals to stay home from their usual recreational activities, as a “staycation,” an unexpected source of free time at home.
Other coping-through-pleasure messages included advertisements from fashion brands including Anthropologie and Nicole Miller advertising loungewear as “self-care style” and clothing for “virtual dates or happy hours,” as well as make-up brands offering online tutorials for those with “more time (inside) on our hands.”
These messages present the health crisis as an opportunity for women to take a “break” from work outside the home and relax with home-bound versions of their usual recreational activities. They draw on influencer culture, which depicts recreation as a full-time occupation. Coping-through-pleasure offers the chance to purchase some of the influencer lifestyle, where the pandemic is not a stressor, and one can escape at a moment’s notice to a sunlit pool.
3) Coping-through-denial
Targeted widely to all consumers, these messages suggested that consumers shop as though the pandemic were not taking place, or advertised products which made light of the pandemic.
A full page newspaper advertisement in Corriere della Sera, Italy’s mostread newspaper, on 7 March, by two Italian ski resorts, Bormio and Livigno, captioned “Live the mountain with full lungs: There’s a snowy place where feeling great is contagious!”
At the time of advertisement running, lockdown was dissuading tourists from traveling to Italy, putting pressure on ski resorts, while deaths from the respiratory virus – which kills by targeting the lungs specifically – were at their highest in northern Italy, where ski resorts are concentrated.
Other coping-through-denial advertisements included Passports, a travel rewards program, contacting members in mid-March, when concerns about virus spread were focused on cruise ships, to advertise “the best pricing and exceptional bonuses” on celebrity cruises, and online retailers of topical and humorous T-shirts advertising limited range clothing with coronavirus-related captions. Notably, these engagements came broadly from the early weeks of our sample, and brands appeared to shy away from explicitly seeking to make light of the crisis or encouraging consumers to travel in spite of it, by the end of March 2020 when more severe lockdown and suppression measures were in place across Europe.
Implications for Brands
The different types of early Covid-branding in our sample, whether they focus on helping or coping with the pandemic, offer some cautionary lessons for brands.
About Commodifying Compassion
‘Commodifying Compassion: Implications of Turning People and Humanitarian Causes into Marketable Things’ is a research project focused on understanding how ‘helping’ has become a marketable commodity and how this impacts humanitarianism. An international team of researchers funded by the Danish Council for Independent Research (2017-2021), we examine ethical consumption intended to benefit humanitarian causes from the perspectives of consumers, businesses, NGOs and recipients. The research will produce a better understanding by humanitarian organizations and businesses leading to more ethical fundraising, donors weighing consumption-based models as part of more effective aid, and consumers making more informed choices about ‘helping’ by buying brand aid products. To learn more about our work, visit the website.
Maha Rafi Atalis a postdoctoral research fellow at the Copenhagen Business School, where her research focuses on corporate power, corporate social responsibility and corporate influence in the media. She is a co- Investigator on the Commodifying Compassion research project. http://www.maha-rafi-atal.com
Lisa Ann Richey is Professor of Globalization at the Copenhagen Business School. She works in the areas of international aid and humanitarian politics, the aid business and commodification of causes. She is the principal investigator on the Commodifying Compassion research project. https://www.lisaannrichey.com
Photo by Colton Vond, “Obey Consumerism,” March 3, 2019. Licensed under Creative Commons CC BY 2.0.
