24 July 2010

FOUR POINTS: Will CSR Become Just Another Marketing Fad?

LEADER: Ben Gaddis
Location: Austin, Texas

Three months into the debacle that is BP/Deepwater Horizon and many questions still remain. Will this latest oil well cap succeed in keeping a lid on the spill? Will this event be the catalyst for a change in US energy policies? Have we fallen so far that Kevin Costner is our only hope for saving the Gulf Coast? I saw "Waterworld" and "The Postman". God help us. But as a marketer, what interests me most are the implications this disaster will have on marketing efforts going forward.

In this issue of FOUR POINTS we ask: Will the BP disaster cause companies to genuinely become more socially responsible, or will we see more short-term 'greenwashing' efforts?
Here's my take:

American consumers have a short memory. Marketers know that and will act accordingly. I predict that we will see most brands partake in somewhat half-hearted 'social responsibility' efforts over the next year, then shift their focus to the issue of the day. Why? Because American consumers are also fickle and the things that motivate their purchase decisions change faster than Joe Barton recanting his apology to Tony Hayward.

Here's an example. I live in Texas, and while the notion that everyone rides horses to work is far from the truth, everyone does drive a pickup truck. Everyone. Yet in the summer of 2008, as gas prices topped $3 a gallon, watching the evening news would lead you to believe that every rancher was trading his F-250 for a Prius hybrid. The media fuelled the flames and marketers followed. Every automotive advertisement focused on increased gas mileage, grocery stores gave away free gas cards, the travel industry panicked.

Then something odd happened. In the midst of the oncoming recession, the price of oil dropped drastically. All of a sudden, the media switched its focus from oil prices to jobless claims and sub-prime mortgages. And slowly but surely, those ads for trucks started to re-appear. Miles per gallon claims were replaced with the "Hyundai Assurance". Consumers had shifted their focus, and marketers followed.

Now this is far different from greenwashing. Those automotive advertisements were responding to a consumer backlash against price and not environmental issues. Or were they? The average consumer who switched from a truck to a hybrid stood to save a whopping total of ... $500 - $700 a year. That doesn't take into account the fact that a hybrid typically costs 15%-20% more than a standard vehicle. In fact, many of those consumers were reacting to their surroundings and what was being portrayed on the evening news. The media had essentially taken an issue that needed to be addressed -- sustainable energy -- and blown it out of proportion. They attributed the backlash against gas guzzlers not to price sensitivity, but to a concern about global warming and our dependence on foreign oil. A year later those problems still exist and yet we don't hear nearly as much from the media, and even less from marketers, about them. I believe we will see much the same scenario come from the BP event.

Over the next 6-12 months, consumers will face a deluge of advertising from companies touting their 'commitment' to social responsibility, and it will be effective ... for a while. The Dial commercial with the man in the white coat cleaning off an oil-soaked pelican will sell more soap. Oil companies, led by BP, will remind us that they are more focused than ever on preserving the environment and providing cleaner energy. Then the next big event will come along and consumers will shift their focus ... and most marketers will follow.

Most companies will take advantage of the short-term benefit associated with being 'socially responsible'; but few will truly embrace the idea. I believe those that do will reap the benefits for years to come.

POINT: Joy abdullah
Location: Kuala Lumpur

Given the controversy and online mileage generated for BP, the question that's begging an answer is, will most companies talke advantage of the short-term benefit of being socially responsible, or will they approach it from a longer-term, truly socially beneficial point of view?

A rise in global consciousness about our earth has come about. Just see the human chains of linked hands across global cities for the recent Earth Hour initiative, as cities around the world in diffferent timezones switched off their electrical apliances for an hour. This is the power of social connectivity.

So to the point of my post: What are the Islamic-based organizations, in spite of having an in-built shariah system of ethics and values, doing with regards to social responsibility? Given the prime importance of Shariah in Islamic finance, social responsibility is a commitment to moral standards as well as social norms. In essence, this means that Islamic financial institutions have a greater purpose than merely having Shariah-compliant products. Instead IFIs should be engaging in a higher proportion of productive profit and loss-sharing investments, and attempt to rebalance wealth distribution by investing in projects and countries with the greatest social and economic need.

The question still remains: Like their conventional counterparts, would they view social responsibility as a strategic growth driver, or would it just be part of being a 'greenwash'?

POINT: Hilton BarbourLocation: London

To my mind, the worst label that any marketer can be branded with, is the one of superficiality. Where our efforts are so blatantly without brand authenticity that they become nothing more than lipstick on a pig.

While many in the UK have jumped to BP's defence in some misguided nationalistic fervour, some punters have pointed out that merely truncating your name from British Petroleum, liberally using the colour green in your logo, and splashing out on potted plants in your reception area, doesn't make you an environmenatlly conscious organization. Espcially when the company commitment to exploring alternate energy sources has never been financed beyond a pitiful 4% of annual expenditure. Kinda makes a mockery of the "Beyond Petroleum" tagline doesn't it? It lacks, ahhh, what's the word? ... oh yes, authenticity.

But enough about BP. Five months ago we were all haranguing Toyota for their pathetic safety record. A decade ago it was the financial toomfoolery of Enron and WorldCom. Let's admit it, the pursuit of profit will always provide incentive for companies to cut corners. That's not cynicism, that's just human nature.

But as marketers, where does our accountability begin and end? Would you counsel your C-suite colleagues to run a bunch of quality-focused TV ads like Toyota has started doing in the UK? Or would you refuse to do that until the quality control issues that landed you in hot water to begin with, had been addressed and those changes had been independently verified? Tough call with an annual bonus hanging over your head, isn't it?

Mark Ritson recently wrote a fantastic article, and follow-up, in the UK magazine Marketing Week on the differences between repositioning and branding. His point being that brands should concentrate on brand revitalization instead. A sage point. Look for the core elements of the brand (its history, its secret ingredients, its customer service) and find ways to contemporarize them. That, to my mind, has credibility. That shows authenticity.

In the UK, retailer Tesco is the most oft-cited example of a company genuinely committed to going green. This 2008 article from CEO Sir Tim Leahy unravels the motivation behind a total restructuring of the company's operating principles. Point being that marketing isn't leading this charge with some ads and PR releases, it is happening across all parts of the organization.

Therefore, unfortunately I have zero expectations that the BP debacle will lead to any genuine long-term environment CSR initiatives. Not without legislation, not unless the ultimate cost of the clean-up causes BP to collapse, and the potential for similar collapse causes real rumination amongst the Fortune 500. The reality I fear most is that most corporations will merely let out a sigh of relief, and thank their lucky stars it didn't happen to tem. Or, more pitifully, start running advertising campaigns lauding their CSR commitments.

However, I do have a more modest wish.

That is for marketers to see the BP rebranding exercise for the total BS it evidently is. And to ask themselves, when confronted by the desire to launch the next 'green', 'quality is our priority', 'we care for the future', 'we recycle because we care' or any other trendy new positioning, is it authentic? Is it true to the way our company actually operates, or is it just papering over the cracks?

If the answer if a resounding NO, I would hope they put the lipstick down, step away from the sty ... and make a stand for authenticity.

POINT: David Shaw
Location: Singapore

It's a strange world.

As recently as 10 years ago, you'd have been hard-pressed to find a green company operating profitably anywhere in this part of the world. When home is an island-nation with absolutely zero natural resources, you quickly grow a pragmatic perspective. I recall once wanting to print a brochure in bulk using recycled paper; when my boss realized it would add 50% to the printing costs, he nixed the plan. Tree-huggers were a foreign species back then. Business in Singapore was based on a 'deal' mentality. Capitalism was the order of the day.

Today the pendulum has apparently swung. Movies like 2012, Al Gore's An Inconvenient Truth and assorted angst over global warming have all served to raise the awareness of our fragile planet to tipping-point levels. Singaporean companies are much more inclined to wrap their brand and their product in a green sheen. You could easily be lulled into thinking it's St. Patrick's Day.

But peel away the patina, and you'll find few companies tracking sustainability metrics to purposefully position themselves for the future. Beyond token attempts to impose emission controls or measure a corporation's carbon footprint, there are precious few efforts to reduce the energy content of its products or raw material consumption; no investment in more fuel-efficient company vehicles; little reduction in energy consumption using motion-sensitive lighting in warehouses, solar lighting in lots and yards, and so on.

Yet a corporation's commitment to creating a sustainable workplace is probably the best indicator of its sincere effort to 'go green'. (While vehicles get the most attention, buildings actually use more energy -- and contribute more to global warming -- than cars, trucks and buses combined.) Make no mistake: Singaporean consumers want corporations to do the right thing -- it's just that, right now, they don't want to pay for it. Deep down, Singapore hasn't really changed that much. We're still the little red dot, striving hard to survive.

Will BP's oil slick lubricate any lasting mindset shift? At the risk of sounding callous, I suspect not. BP, its sub-contractors, federal and state governments, environmental activists, injured businesses and their insurers will all spend decades suing one another. The US Supreme Court, after all, took almost 20 years to settle the punitive damages arising from the Exxon Valdez spill off Alaska in 1989. But Exxon's stock price quickly recovered from that accident. (You didn't stop filling your gas tank at Esso now, did you?)

Countries, like traffic lights, turn green when it's time. You just can't rush these things.


Rick Koh, Singapore said...

Looked at from a distance, the progress the world is making on the long journey of CSR (done the right way) must seem glacial.

Hence, while the BP saga may not immediately change the behaviour of the giants of the corporate world, I believe we can nonetheless be hopeful about something...

That a few more people have had their consciences pricked.

That the next time they have to make a decision about a corporate action, they will do the right thing.

So, maybe, just maybe, we are all one more small step closer to conducting business the way it ought to be - with CSR no less integral than HR.

That will be the day, but we will get there.

Marketing is about fads. CSR is about survival.

dshaw said...

@ Rick - Ouch. That's a rather broad brush you've used on marketing. But I know what you mean -- it's the crap bits that give the whole a bad name.

Agree with your CSR take. My only regret is that we may not see the nirvana end-state within our lifetimes.

Thanks for your comment. Appreciate the dialogue.