03 January 2012

Why Companies are More Social than Responsible about Corporate Social Responsibility

Source: Getty Images
Have you noticed how companies are falling over themselves these days to 'go green'?  Time was when all corporations cared about was how much they were in the black.  Anyone displaying a smidgen of environmental consciousness would have been labelled a 'tree-hugger' and marginalised as a contender.  Companies paid lip service to corporate social responsibility (CSR) ... and were sometimes more social than responsible about it.

Today the pendulum has apparently swung.  'Conscience movies' (remember 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.  Companies are much more inclined to wrap their brand and their product in a green sheen.  You could be 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 in commercial buildings (which actually use more energy -- and contribute more to global warming -- than cars, trucks and buses combined). 

What's wrong with this picture?  Why aren't companies (and consumers) all that they want to be?   I think there are two main reasons.

First, consumers want corporations to do the right thing -- but right now, they just don't want to pay for it.  This isn't to say that all the research on ethical consumerism is wrong.  It's just that individuals tend to dramatically overstate the importance of social and ethical responsibility when it comes to their purchasing habits.  To put it bluntly, there's a gap between what people say, and what they do. (When BP's Deepwater Horizon rig spilled millions of tonnes of crude oil off the Gulf Coast, how many of us stopped filling up at BP?)

For more ethically oriented consumption to take hold (which in turn would give companies more reason to be socially responsible), I believe consumers need to become more knowledgeable participants in the equation. Firms need to help their current and future customers become more socially conscious in their purchasing.  Anita Roddick was far-sighted enough to recognize this way back in 1976 when she founded The Body Shop.  It took some time and consistent communications, but today the company is the second largest cosmetics franchise in the world, with 2,4000 stores in 61 countries.

The lesson is clear: Brands have an opportunity to play into the needs of consumers to be human beings, to be global citizens, and -- through their brand choices -- to do the right thing.  Give them that chance, and you'll build their spirit while earning their loyalty.

The second -- and far more critical -- reason why some companies aren't as green as they seem, is this: There simply isn't alignment between brand strategy and business strategy.

I recall the time, in one of my previous marcom roles, when I wanted to print a brochure in bulk using recycled paper; the moment my boss realized it would add 50% to the printing costs, he nixed the plan.  Businesses have always been ready to embrace corporate social responsibility -- as long as it doesn't hurt them.

How can you tell if your company suffers from such a dynsfunction?  Fairly easily, actually: CSR leads who report into the HR department, and don't carry any quantitative, business-related KPIs.  LOB heads who don't -- or won't -- sign up for CSR-related objectives.  Platitudes that pass for CSR nods in blase corporate mission statements.  Companies where these leaders bump into one another only during the annual dinner & dance.

It turns out that companies, like trafffic lights, turn green when it's time: You just can't rush these things.

There is, however, hope.

Some companies have taken the very hard first steps on their journey towards true corporate social responsibility.  They have executed the first (and in some cases, the second) of what to me are the four key milestones on the road to sustainability:

1.The promise (they commit to the ideal)
2.The plan that communicates how they will make the change
3.The implementation of the programme
4.The measurement and report on performance

Their achievement is simply this -- in order to present the image of a business that cares about people and our planet, they actually became businesses that cared about people and the planet.  They took time out to weigh the importance of the sustainability conversation, and then they took a stand.  These organizations decided on a position, and they took pains to translate and communicate that decision internally and externally.  This commitment to People, Planet and Profits is, in essence, the Triple Bottom Line (3BL) approach.

Banyan Tree Resorts is a terrific example of how the 3BL has created a growing business that enriches both the society around it as well as the environment. In the early 1990s, Ho Kwon Ping purchased 600 acres of coastal land in Phuket, Thailand that was punctuated by lagoons of the most intense cobalt blue -- only to discover that its beauty came not from Mother Nature, but the pollution of a previous tenant, a tin mine.  Rather than walk away, the company dedicated itself to cleansing the acid-laden soil and planting 7,000 trees.  Their dedication to an ecologically sound resort helped nurture damaged coastal land back into a living ecosystem.  Their reliance on the local community, not just for fair-waged staffing but also for produce, meant livelihood for the people in the neighbourhood.  Banyan Tree's 3BL approach grew the economy around its business; and has catapulted its brand into nine countries across the globe.

Patagonia, dubbed the "coolest company on the planet" by Fortune magazine in 2007, has earned its sustainability stripes by holding and imposing some tough principles on itself and its suppliers.  A prime example is the company's stand on conventionally grown cotton -- an environmentalist's nightmare, since it is heavily dependent on noxious pesticides and defoliants.  Patagonia decided to switch to organic cotton in 1994 -- even though it cost 50% -100% more than regular cotton, and 20% of Patagonia's business came from cotton products.  The gamble paid off: After a tense 18-month transition, the market voted, Patagonia's sales rose 25%, and more importantly, an organic-cotton industry was established, allowing other companies to cross over. Today, the company continues to ignore fashion trends, and tells its customers that "the more you know, the less you need". In spite of this -- or perhaps because of it -- the brand has achieved cult status; and is sometimes referred to, by its fans, as Patagucci or Pradagonia.

All told, a company can do well by doing good. But corporate social responsibility is not an overnight bolt-on that can earn an organization some cheap marketshare points.  It requires some heavy lifting and real commitment in order for a company to come across as credible and authentic.  I reckon the more enlightened, younger generation of knowledge workers today place a premium on working for a company that has a clearly stated vision around this.  It matters to them.  And increasingly, it matters to the market.

So ultimately, the question isn't "Can we afford to do this?"  But rather, "Can we afford not to?"

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