Societal expectations of business

What has changed

• Societal expectations are what the public, customers, staff and communities believe a business should do — beyond what the law requires.
• The expectation has moved a long way. A business used to be judged mainly on whether its product worked and its price was fair. It is now judged on:
  • how it treats its workers, including the workers of its suppliers
  • its effect on the natural environment
  • its honesty in what it claims
  • its contribution to the communities it operates in
  • who owns it and where its profits go
  • how it responds when it gets something wrong
• These are expectations, not laws — which is exactly why they are an external factor. The business does not control them, they change over time, and they differ between countries.

Why they bite harder on a global business

• Different societies expect different things. Packaging that is normal in one market is unacceptable in another; an employment practice that is legal in a manufacturing country may be intolerable to customers in the selling country.
• Supply chains are visible. Customers and journalists now trace where things are made. A business is held responsible for its suppliers' behaviour even where it has no legal liability.
• Information moves instantly. A failure in one market is known in every market within a day.
• Retailers enforce it. Large overseas retailers audit their suppliers on labour and environmental standards. Failing an audit removes the business from the shelf, whatever consumers think.
• Staff care. Skilled employees increasingly choose employers on values, so expectations affect recruitment as well as sales.

The four kinds of sustainability

• At Level 3, sustainability has four legs, and the exam names them separately. Check which one a question is asking about.

Kind	The question it asks	Typical measures
Economic	Can the business keep doing this and survive financially?	Profitability, cash flow, debt, cost per unit
Environmental	What is the effect on the natural world?	Emissions, waste, water, packaging, energy
Social	What is the effect on people and communities?	Wages and conditions, safety, local employment, community contribution
Cultural	Does it respect the values and identity of the people affected?	Consultation, cultural protocols, use of imagery and knowledge, language

• Cultural sustainability includes ethics, in the standard's own words for AS91384, and in practice it is where kaitiakitanga, manaakitanga and the use of Māori knowledge and imagery belong.
• The four interact and often conflict. A response that improves environmental sustainability usually costs money, which is an economic sustainability question. Saying so is what an evaluated answer does.

Strategic responses to societal expectations

• Change the product — recyclable or reduced packaging, reformulation, a repairable design, a certified ingredient.
• Change the process — renewable energy, waste reduction, water recovery, lower-emission freight.
• Change the supply chain — auditing suppliers, a written supplier code, paying a certified fair price, moving away from a supplier who cannot meet the standard.
• Change the workplace — pay and conditions above the legal minimum, safety investment, local hiring and training.
• Contribute to the community — sponsorship, local partnerships, funding for the communities the business draws resources from.
• Report and be audited — publishing performance against targets, obtaining independent certification so the claims can be checked.

Impacts, both directions

• Positive:
  • Access to markets and shelf space that require certification or audit.
  • A price premium, where customers pay more for a product they trust.
  • Brand reputation and differentiation, particularly for a New Zealand exporter selling on provenance.
  • Staff recruitment and retention — people want to work for businesses they respect.
  • Lower costs eventually, since less energy, waste and packaging is also cheaper.
  • Reduced risk of the sudden reputational failure that ends a market.
• Negative:
  • Cost, usually immediate and often large: equipment, certification, audit, higher-priced inputs.
  • Slower or more complex operations, at least while the change beds in.
  • Management attention taken from the core business.
  • Higher prices, which can lose price-sensitive customers.
  • Exposure to accusations of greenwashing if the claims outrun the practice — a reputational risk created by the response itself.