CSR - Cynical Social Responsibility?
A piece in the Times recently suggested that there is a joke going around corporate social responsibility that the C stands for cynical. Apparently this is ‘an indication of our mistrust of the growing number of ways that companies compete to look good’.
See:
Is the bottom line helping this mother and child?
And:
Guidelines: how to ensure that companies are really doing good
In the same piece, a researcher from Ethical Consumer magazine is quoted as saying: ‘CSR is all too often an ethical figleaf in response to increased activism and consumer awareness. On one level, giving money to good causes is great, but I am uncomfortable linking the idea of donating to good causes and buying a product. It distracts people from the real issues.’
The Times was talking about a Unicef campaign to eradicate tetanus in the developing world that is supported by a donation by Procter and Gamble. For every packet of Pampers nappies sold in the UK from October to December last year, P&G donated enough money for a tetanus vaccination. The initiative funded 7.4 million vaccinations.
This is a good illustration of a far wider debate. Unfortunately the debate is often very badly informed and its nature will end up damaging the prospects for what everyone wants to see – responsible corporate behaviour. This would be a huge shame. So why are some of the sceptics about CSR inadvertently undermining responsible corporate behaviour?
Essentially there are two kinds of criticisms of CSR. One which tends to come from the right of the political spectrum is based on the Milton Freedman view that the only corporate responsibility a company has is to increase its profits.
Not worth dwelling on this one too much as it falls apart relatively easily. Enron and Worldcom are excellent examples of companies who thought only about profit and as a direct result of not worrying about responsible behaviour lost all of their profits and went bankrupt. Similarly, is anyone going to seriously suggest that Birds Eye should not take an interest in sustainable fisheries when they won’t have a fish finger business if there aren’t any fish left in the sea? And climate change? Does anyone really think that business should not be worried about an issue that could potentially cause billions of pounds of damage to the economy?
Good corporate responsibility is about the creation of long-term sustainable shareholder value. That value is often created by companies who do not just go for a fast buck (as often their star wanes as fast as it waxed), but by companies who have a set of values and a way of doing business that inspires the trust of those on whom they depend – be they consumers, customers, staff, suppliers, regulators, media, government and shareholders. To create trust, you need to behave responsibly and if you have that trust, you can build a business that is more profitable over the long term.
The other kind of criticism of corporate responsibility is broadly speaking from the left of centre and NGO perspective. It is the kind exemplified in the piece in the Times above. It says that CSR is a fig-leaf or greenwash and that companies are using CSR merely to hide and divert attention away from their core business activities which are having a negative effect on the environment and society.
Now there may be some companies that try that – but they will be found out extremely quickly.
What most companies do is take the issue pretty seriously and they invest more in it than they did 10 or 20 years ago.
They are likely to do some of the following things:
Develop a new or a strengthened policy on CSR, often approved at board level
Review their social, environmental and economic impact with a view to reducing any possible harm and increasing potential benefits
Consult their stakeholders on their approach to CSR
Develop new programmes to reduce their environmental impact, attempt to tackle social problems and issues and contribute more to their local communities
Set targets to improve their environmental and social performance across a range of indicators from CO2 emissions and energy efficiency to diversity, human rights and contributions to NGOs, sports and the arts
Seek independent verification of their data
Publish a report regularly on their performance
Build on targets year by year
Now call me old fashioned, but I would have thought that companies that do some or all of the above would be praised by NGOs, the media and others who are keen to see responsible corporate behaviour?
But usually not. In fact, a lot of NGOs criticise them for ‘greenwash’ and the media regularly refuse to write positive stories about these companies because good news stories about corporate responsibility are not considered ‘newsworthy’ and good news does not sell newspapers.
I am not here to defend companies that do not behave responsibly.
But those that do, who invest enormous amounts of time, resources and effort into making a genuine attempt to improve their environmental, social and economic impact, who lead the way in tackling some problems and whose employees are committed to many worthwhile causes deserve to be strongly defended and praised when they do it.
If NGOs and the media won’t do that, it hardly encourages responsible corporate behaviour does it?
Criticism when it’s due and praise when it’s due. At the moment there is a fair degree of the former from some quarters and not enough of the latter.
And on P&G’s support for Unicef’s tetanus eradication programme, you be the judge. This is Cause Related Marketing (CRM). It is only one small part of corporate responsibility and the company’s sales benefit as a result. It is perfectly true to say that P&G through this programme is not reducing the amount of landfill caused by its nappies which are not currently bio-degradable.
But who wants to be the one to tell parents in the Congo that they and their children cannot be vaccinated as P&G has pulled out of its support because of criticism that this is a fig-leaf?