Davis ThinkingRemember a recent post that began with the words “I’m peeved“? I was peeved by an executive’s failure to understand that diversity is part of social responsibility. Well, it set off quite a chain reaction in the blogosphere, with many publications and bloggers offering their own take on the issues. What caught most everyone’s attention, however, was its argument over terminology. What is CSR?
Marketing’s purpose is to demonstrate value and provide differentiation. Judged by that criteria, cause marketing isn’t any more useful a tool than coupons. In fact, it could actually be worse. That is, in some cases, cause marketing can actually do more harm than good--the opposite of corporate social responsibility--eliminating all justification for the practice.
Can companies do well by doing good? Yes—sometimes. But the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.
Like motherhood and apple pie, corporate social responsibility has achieved iconic status as a feel-good pursuit. Corporations around the world have embraced its charitable philosophy and created divisions devoted to its pursuit. The problem, however, is that corporate social responsibility — by design and definition — can only go so far. Because no matter how widely a firm defines its reach, and how generous its leadership grows, the primary objective of any for-profit firm in a capitalist system will still be as Friedman described it: to maximize the returns of its shareholders. Or at least not to engage in any activity that undermines those returns.
Striving to do more good is associated with greater profitability, equity and asset returns, and shareholder value creation. But that's still not good enough. Today, the bar is being raised: success is itself changing. Those are yesterday's metrics of success — more importantly, maximizing good lets companies outperform on tomorrow's measures of success.
Nike recently released their “Corporate Responsibility Report FY07-09” and I was so impressed by it, I just had to share my thoughts about it. Many of you know how big of a Nike fan I am, so it’s probably not surprising that the report resonated so strongly with me. But actually, I don’t think my positive brand bias has much to do with my reaction to the report. After all, I take a very skeptical stance when it comes to corporate social responsibility because many companies’ CSR efforts lack integrity the way their brand efforts do – they emphasize the saying vs. the doing.
Few things have changed faster than the way we communicate. Coupled with the Corporate Social Responsibility (CSR) or green movement, there has been an explosion of information available about how and what companies and organizations are doing to improve society and the environment. During the past year, at least three major events have influenced how communications relate to CSR.
Last year, Alice Newstead, an employee of the cosmetics company Lush, took part in a rather unusual and macabre window display. Covering herself in body paint so that she resembled a shark, a pair of meat hooks were then inserted into the skin of her back near her shoulder blades. Next, she was hung in Lush's shop window by her skin, blood trickling out of the wounds. For shoppers on London's Regent Street, it was undoubtedly the most attention-grabbing window display going. Needless to say, there is unlikely to be a strong correlation between a meat-hooked, bleeding young woman and increased sales of moisturiser.
Corporations engaged in recession-driven cost-cutting are trimming or eliminating corporate responsibility initiatives. Though corporate survival is key and consumer skepticism of business CR initiatives at an all-time high, such actions are short-sighted. Now more than ever, businesses need to be saying "yes" rather than "no" to their social responsibilities.There are five key reasons.
Corporate social responsibility is a hybrid PR/branding program that attempts to convert compliance into goodwill. Often CSR lives outside the marketing function, somewhere deep in the bowels of legal or operations. Once a year, the company's varied social achievements are collected by the investor relations department for the now-compulsory CSR addendum to the annual report. CSR attempts to align corporate needs (profits, revenue, growth) with social needs (people, community, planet). Themes such as "we're being less bad" or "we're trying to give back" dominate the subtext and water down the potential marketing value of the exercise. In the end, CSR is a compulsory exercise designed to limit liability, boost morale and add to the branding story of the company. From 2003 to 2008, CSR grew along with other nice-to-haves such as corporate meetings, green buildings and skunkworks programs. When the recession slammed the economy last fall, only the profit center programs survived. As a movement, CSR is either dead or on life support.
Today CSR stands for Corporate Social Responsibility. It's a concept that deals with a business's obligation to the people that help make it successful. Certainly, CSR embraces environmental responsibility, but it goes beyond that. It includes a company's policies and practices to better the lives of its employees, their community and society as a whole. It can embrace issues such as poverty, literacy, disease, education, biodiversity and more. Pretty much every forward-thinking CEO has embraced CSR as a key part of doing business today. According to CRO magazine, CSR is now a $37 billion industry. But what about the other side of the coin? What about the consumer's responsibility? As the old adage says, it takes two to tango.
Thank goodness, now the recession’s here we can forget all that nonsense about corporate social responsibility (CSR) and get back to trying to make some money. Admit it, the thought had occurred to you. There may have been much talk of (newly rediscovered) responsibility in Davos last week. But for most managers the biggest responsibility of all will always be to make a profit and stay in business. The good news is that serious CSR types understand this.
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