Drawing A Line: Consumers React To Companies That do Business in Countries With Poor Human Rights Records

The traditional drivers of consumer purchase decisions – product quality and price – are being superseded by a third factor - ethics. In our just a few clicks away, information rich environment, there is little remaining shade under which multinationals can obscure their questionable business practices. Consumers are acting on this new determinant and increasingly making their buying choices based on their moral standpoint.

A particular point of contention for the informed consumer is human rights and corporate responsibility, and in this context, objections to buying from companies that do business in countries that have a poor human rights record. 

To shed some light on actual consumer sentiment around this issue, PissedConsumer commissioned a survey on consumer attitudes towards such controversial business practices. The findings of this survey highlight issues around awareness and a broad concern amongst the general consumer public about potential complicity in human rights violations.

Consumer awareness: Where it’s lacking

Despite more and more information, investigative journalism and targeted criticism being freely accessible to the public, the mainstream perception of many brands does not take in their true ownership - the parent company behind the brand name. Thus, a majority of consumers may be unaware of the links that their favorite brands may have to larger multinationals that engage in unethical business practices, practices that would make many think twice about doing business with them.

This is evidenced by the PissedConsumer survey findings, where a huge 79.8% of respondents stated that they were unaware that supermarket aisle staples such as Oreo, Nabisco, Honey Maid, Ritz Crackers, Philadelphia et al., are subsidiary brands of Mondelez International.

With 89.4% saying they had no idea that Mondelez does business and pays taxes in countries that violate human rights, and even wage war, the survey reveals a huge disparity between the public perception of a brand and the reality. This tells us that there is a serious problem with transparency in corporate behavior and a need for clearer, honest communication from business to consumer about ethical stances and practices.

Why the lack of transparency? Such corporations may be operating under the supposition of plausible deniability or just plain obfuscation to distance themselves from the potential for a PR embarrassment or even a consumer boycott. Yet, following this approach, should the truth be revealed, the consequences for the company that not only carried out the act, but also deceived the public about it, would be much greater.

The informed consumer votes with their wallet

A lack of consumer awareness is indeed an issue, but when clear on a brand’s stances and ties, the average consumer will adjust their spending habits accordingly. For 73.2% of people, it matters a lot that the companies they shop with don’t support governments involved in human rights violations.

77.5% of survey respondents shared that they would cease buying brands under the Mondelez umbrella altogether as a way to signal to the multinational that they were put off by their unethical practices, and by that encourage them to cease operating in countries with human rights issues.

This is a clear signal to brands that consumers take these matters seriously, and that the long-term financial implications of reputational damage, erosion of trust, and consumer boycotts are a very real threat, a threat that surely outweighs the benefits of the short-term gains to be had from using cheap labor markets in countries with loose law around worker rights.

Corporate responsibility to the consumer, and the world

What about expectations? What do consumers feel the behavioral baseline for a brand must be to abide by what they consider to be the basic moral standards? 

80.2% feel that, more than just cut off any ties with countries that practice human rights violations, as a large international corporation, Mondelez should use its platform to take a clear stance against the governments of the countries in question. This seems to suggest that vague gestures or neutrality won’t suffice, and that consumers want companies to actually take a stand through concrete statements and actions.

This is represented by 71.2% of the surveyed consumers stating that it is critical that Mondelez make a clear objection to and denunciation of human rights abuses by fully exiting Russia and the Russian market while the country continues to wage war in Ukraine. PissedConsumer statistics from a previous survey show a steep reduction in American consumer tolerance for brands that contribute taxes to the Russian state and its military industry, indicating a persisting trend.

These statistics and survey findings paint a clear picture which shows us that most consumers feel that international corporations have a responsibility to not just abide by given moral obligations, but also use their weight and influence to actively promote them.

Russia and Mondelez: a case in point

In what some will call stubbornly digging its heels in with its choice to continue operating in Russia, despite international sanctions and condemnation of the country in response to the invasion and ongoing war in Ukraine, Mondelez is a prime example of a company that has sought to go against the grain of public and establishment opinion in pursuit of profit.

The survey findings show that a significant percentage of informed consumers are willing to take boycott action against Mondelez products due to their continued presence in Russia. The company’s stance is clearly at odds with the expectations of the majority of the consumer public.

From the perspective of Mondelez, is this sound business strategy? Why risk the financial consequences? Russia may represent a large market, but, as a business working in Russia, surely Mondelez and other companies in a similar position must consider the long-term fallout of a decision which seems to so obviously fail to maintain a fine balance between shareholder and ethical obligations? 

Staying on side: the implications for business

The findings of the PissedConsumer survey and their relevance extend beyond Mondelez and Russia, pointing to broader implications for businesses operating in countries with poor human rights records. The survey results suggest a growing consumer consciousness about the intersection of business and human rights, with potential ramifications for companies across various industries.

The Mondelez case serves as a useful example of the consumer backlash business can expect if they go against the grain and seek profit through collaboration with countries that have poor human rights records. A better informed, more conscious consumer has questions, and brands across all industries that straddle the line between shrewd business and morally dubious practices need to have an answer or face:

A tarnished reputation

Highlighted by the survey, contemporary consumers are increasingly informed and opinionated about corporate social responsibility. Turning a blind eye to human rights abuses to make way for increased profits, even indirectly, can cast a shadow over a company’s reputation, and cause many to dismiss them wholly, regardless of the quality or price of their goods. 

Consumer action

Consumer pushback can and will emerge as a powerful force against companies that engage in controversial behavior that does perceived harm, leading to customers taking action such as switching to alternative brands in protest against a company’s activities.

Withdrawal of investment

ESG is playing an increasing role in investment decisions across all industries. Fears of guilt by association with businesses linked with violation of human rights can prompt potential investors pulling out and looking elsewhere.

Organisations such as B4Ukraine investigate, research and publish data on company activities in Russia, highlighting the investment in as well as profits gained from operating in the country. Initiatives such as this make plain the facts of company activity that previously would not have been immediately apparent, thus making it easier for the consumer to make an informed choice and more difficult for a company to obscure their involvement in controversial markets.

Legal difficulties

Risk for business can be punitive, and many may not be aware of the legal ramifications of their actions, regardless of jurisdiction. Organisations such as B4Ukraine actively track and engage with business who have overlap with the Russian economy to fill the gaps in awareness about the potential legal issues facing them, as well as the complications stemming from the reputational damage that associating with the country will cause. 

Problems hiring talent and maintaining employee morale

Younger generations in particular place strong emphasis on ethical responsibility, which will pose a problem for those businesses looking to hire promising new talent. The impact on a company’s existing staff may cause difficulties too, as they bite their tongues and shoulder the burden of the negative connotations that the company develops.

Corporation and consumer: The future is collaborative

As businesses like Mondelez take controversial routes in their path to growth and profit, a failure to recognize consumer awareness and heed the consumer voice may very well sow the seeds for long lasting reputational and financial damage. 

Should businesses see informed consumers as a threat? Absolutely not. Informed consumers create value for a business with their feedback, and guide them towards a more ethical global market that prioritizes human rights and respect over profit. 

Through principled withdrawal from countries engaged in crimes against humanity, forced labor, and other practices that are in opposition to the moral values of democratic society, smart operators will find themselves on the side of the consumer public and the right side of history.

Survey methodology

An online survey of 1,326 users of PissedConsumer.com, from the United States, Canada, Australia, and the United Kingdom, was carried out in July 2024.