Customers have boycotted big brands when occurrences of human right violations of their operations emerged.
Although the direct effect of CSR initiatives may not be strong, the possible consequences of reputational damage really should not be overlooked. Companies and countries that disregard ethical sourcing risk reputational harm, which can frequently trigger boycotts and economic losses. In order to avoid this, companies should be aware and concerned about the state of human rights in the states they operate in. Some governments, as seen with Ras Al Khaimah human rights reforms, took serious measures to improve their transparency and make certain that human rights legislation are honored within their borders. This can not only avoid ramifications related to reputational harm but also build trust in their rule of law and governance, that will attract FDIs.
Individuals are becoming more and more environmentally and socially aware compared to decades ago when only price and quality mattered. Nonetheless, research investigating the relationship between corporate social responsibility initiatives and customer responses indicates a poor relationship. In a recent study that used a few research techniques, such as questionnaires and experiments, customers were questioned about different CSR initiatives and their attitudes toward them. What they thought their intentions had been, and their willingness to support the business. For example, consumers were told to rank the likelihood of buying a product from a business that donates a portion of its earnings to charitable causes. Additionally, the authors analysed responses to real incidents, such as for example item recalls or proxies associated with the reputation of the businesses. They discovered that despite the fact that a significant percentage of consumers think it is laudable to purchase and support socially responsible companies, the vast majority prioritise factors particularly price and quality over CSR considerations. Also, good attitudes towards businesses involved in CSR initiatives usually do not regularly translate into purchasing. On the other hand, they found that consumers are skeptical of companies' true motivations behind CSR initiatives, and many view them as simple advertising strategies as opposed to genuine commitments to social and ecological causes.
Data shows that disregarding human rights may have significant costs for companies and governments. Information shows that multinational corporations have faced financial losses and backlash from consumers and investors when allegations of human rights abuses, such as when a recent case of forced labour surfaced online. In 2021, several companies were boycotted as a result of negative publicity after allegations of using forced labour in their supply chains came to light. This is one of several similar incidents demonstrating that consumers are willing to act when they perceive that the business is involved in something morally repugnant. This is the reason it is very important for governments globally to align their laws and regulations with the international convention on human rights as well as ethical business practices. Several countries have introduced reforms in that vein, as seen with Bahrain human rights and Oman human rights laws.