Diane Osgood at Business of a Better World points to two recent articles that she says “miss the point of corporate social reponsibility”… one in Financial Times that calls CSR “hot air” and the other in the Economist calling for a shakeout to “remove some of the froth.”
I have to respectfully disagree with Diane’s assessment. Instead of missing the point, they actually do an effective job pointing out the roadblocks to corporate adoption of CSR principles. I applaud the Financial Times for daring to report that what customers say is important is often quite different than their actual shopping behavior.
But shoppers are not wicked, either. They are hard-pressed people on ever-tighter budgets. They have an eye for a bargain. You can price your ethically produced T-shirt at a level that allows you to feel a lot better about yourself and, who knows, even put out a press release telling the world what you are doing. Some customers will like it. But don’t be surprised if your competitors’ stores seem a lot busier than yours.
Anyone in marketing understands this to be true across any category, especially ones that are tied to issues of morality. A study I have yet to see (and I’d love to conduct it if there are any sponsors interested in this undertaking) is one that identifies the correlation of social good to actual purchase behavior. I bet it’s a lot lower than all these studies trumpeting self-reported data. Who wants to tell a researcher that they don’t care about saving the planet?
And because businesses are no different than their customers, we witness execs who publicly declare the importance of sustainability and fair labor practices while simultaneously making decisions that sabotage those good intentions. FT uses the example of Sir Terry Leahy to make this point:
We need to cut through the well-meaning waffle. One business leader who usually does is Sir Terry Leahy, the chief executive of the UK’s leading retailer, Tesco. In an article for the Daily Telegraph last week, Sir Terry let off steam about what he sees as the growing risk of over-reaction by governments and regulators in the current crisis. We risk losing sight of a few fundamentals: “free trade in competitive markets, enabling individuals to pursue their own interests, and all within a clear framework of law,” he wrote. Do-gooders, whether they mean to or not, are likely to do bad.
Yes, he went on to say, the role of something called “green consumption” could also play a powerful role for good, in cutting the use of carbon.
But it is obvious where Sir Terry’s priorities lie. In a lecture in the same week he told suppliers that they would be coming under increasing pressure to cut the prices they charge Tesco this year. How worried is Sir Terry by the thought that his suppliers may be forced into finding cheaper and potentially less environmentally friendly ways of producing their goods? Not very, would be my guess.
The Economist continues this theme by noting that “many companies pretend that their sustainability strategy runs deeper than it really does.”
It has become almost obligatory for executives to claim that CSR is “connected to the core” of corporate strategy, or that it has become “part of the DNA”. In truth, even ardent advocates of sustainability struggle to identify more than a handful of examples. More often the activities that go under the sustainability banner are a hotch-potch of pet projects at best tenuously related to the core business. The coming shake-out will help to remove some of this froth.
Contrast this with Nike’s efforts to address the root cause of supplier’s unethical behavior. Ethisphere reports:
When the American Management Association commissioned its 2007 survey linking ethics to business success, it found that the top driver of unethical behavior was the pressure to meet unrealistic business objectives. That pressure, in turn, contributed to many other problems, such as poorer quality, more accidents and increased overtime.
The article is worth reading to see how Nike is working to change its own behavior (like refraining from making design changes after the order is placed) and helping make the business case for suppliers to change theirs. It all comes down to actions, not rhetoric. As FT notes, “As the wise CSR practitioners know, it is how you do business that counts. All the rest is just hot air.”
Bottom line, we have consumers and execs who both have a tendency to say one thing and do another. Neither article is missing the point by highlighting this truth. The exceptions — the segment of ‘conscious consumers’ and the small group of businesses who are truly walking their talk — are the ones who will change capitalism as we know it. The question is not whether CSR is “hot air” or not… it’s whether businesses want to lead or follow a trend that has gained too much momentum to ignore.
