Tuesday, September 30, 2008

How Responsible is Corporate Social Responsibility?

For a while now I've been suspect of some Corporate Social Responsibility initiatives by large companies. I believe that behind these well-meaning gestures, there is a another reason for them to exist..... its actually good business for the company.
  • Reducing your carbon footprint = reducing fuel bills

  • Using more recycled materials = making obvious use of lower quality materials

  • Allowing staff to participate in public service activities = good PR

  • Ethical employment = good PR and a reduced legal bills (or avoided restrictive regulation)

(Note: Someone please remind me that one day I should write a posting about corporate 'Greenwashing'!)

There's also the opinion that during these more economically-challenged times, companies may tend to push their social responsibility agendas down the pecking order (as job survival and a stable balance sheet moves up that order). This isn't entirely true though and some ethics can be recession-proof. Proof is reassuringly provided by Ethical Corporation magazine:

Consumers who already pay a premium for ethical goods such as Fairtrade and
organic produce are unlikely to be put off by an economic slowdown

I've now spent some time recently reading the CSR strategies and approaches of several companies (e.g. Coke's). I've found Tesco's probably the easiest to break up and digest (note: I'll purposely not make any reference to their food), this can be found at: http://www.tescoreports.com/crreview08/managecr.html

Their 6 CSR projects listed for 2008 are:

  1. tackling climate change

  2. waste recycling and packaging

  3. carrier bag use

  4. Community Champions

  5. making our Community Plan live in store

  6. trading fairly (labour standards in our supply chain).
Its suprising how quite a few of these map to my points made earlier. However I applaud the 'carrier bag use' project listed. Figures on numbers vary, but Uk shoppers definately use billions of them in a year. Obviosuly encouraging customers to use less of these will reduce their plastic bill. But Tesco's chief executive, Sir Terry Leahy, has said that the project will actually cost Tesco money, as they will be over-generous with their green reward points (1p earnt when you re-use you own bag). But just to be clear, we're talking about plastic bags here, which are made from oil, which readers may have noticed has significantly increased in price quite recently.

BTW: Can someone please tell Tesco that their biodegradable carrier bags are most frequently sent to landfill and buried. The only sticking point with this is that these carrier bags degrade naturally.... through expose to sunlight.

On the positive side, its also worth mentioning that through sites such as http://www.actics.com/, it is possible to influence the ethical actions of some (partnered and usually wholey responsible) companies. Hopefully this transparency leads to company advocacy, which then affects the bottom line.

But for me, perhaps the most striking fact is that most customers aren't prepared to pay more for a Socially Responsible product or at best only want to pay a fraction more, despite claiming publically that they would. In additon, MIT research has found out that companies don't need to be entirely socially responsible to gain the rewards brought about from being 100%. Which does then beg the question.. "how ethical do you need to be?".

Perhaps you only need to be ethical until it becomes uneconomical?
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