Corporate responsibility: how can you tell substance from spin?

June 6, 2012 7 By admin

This guest post is by Erinch Sahan, an Oxfam private sector adviserIndonesia - Flores - Cocoa3

I must admit, I am drawn by the idea that companies have seen the light. I want to believe that pursuing profits will result in a sustainable world and the end of poverty. The literature around Shared Value (coined by Harvard business academic Michael Porter) supports the idea that there are many undiscovered common interests between society and profit. Sometimes this is the case: where well-paid workers deliver productivity gains; where poor people become consumers and can afford to buy more stuff; and natural resources are managed so that everyone can continue to make money into the future. The business case  is well made. However, as short term financial pressures weigh heavily on managers, too often, corporate actions do not match the sustainable business rhetoric. And we know that many companies are great at building a good image when what they actually do is far from sustainable.

Currently, everyone is turning up the rhetoric on corporate responsibility. GSK, Unilever, Nestle, Shell, Imperial Tobacco Group; visit any multinational’s website and you’ll find something about how it’s core to their business to act in the best interests of society and the planet. It’s hard to tell between the truly good ones (like Body Shop, Innocent and Ben & Jerry’s) and the Halliburtons of the world.

Frustrated that I can’t get beyond the online PR spin, I’ve taken to asking them questions like ‘when push-comes-to-shove, and it’s costly to be responsible, who wins the fight, your buying manager or your corporate responsibility team?’ The answer, unfortunately, is almost always ‘buying’.

CSR spinLet me provide some context. I work on agriculture for Oxfam because that’s where the poor people are. I care about brands for two reasons. Firstly, that’s where our supporters have power over companies. Secondly, the brands are usually the most powerful players in supply-chains, who can get the big changes to happen. This means that we zero in on food and beverage companies and retailers. So that’s who I’m talking about.

Incidentally, these are also the companies that are often in the vanguard of exploring ways of making money while, at the same time, improving the world (through securing supply, stable chains and consumers buying their products with a clear conscience).

The side of the business that is concerned with product quality is usually the first side to buy into the business case to act responsibly. This is because long-term supplier relationships are good for quality and usually good for development. But the performance of the buyers, who hold real sway in these companies, is measured on profit margin, so they need to get the lowest price and usually drive who the company does business with.

One CSR manager recently told me that “if you want buyers to make ethical decisions, you have to give them a mandatory target to meet. Otherwise, our buyers just tell me I’m naive when I suggest that they prioritise ethical purchasing”. One major retailer that has set substantive social and environmental targets for staff is M&S through Plan A (see pic). We’ll know the tide has turned when retailers with more ‘savings-focused’ consumers join the party.

So how do we know if a company is doing the right things? Next time you run out of conversation with someone who sells stuff ultimately produced by poor people, try a few of these questions. It’s one way to start to get beyond the very seductive PR lines.

1) Who’s responsible for the corporate responsibility targets, the CSR/Communications people or the buying team? For example, at Plan AStarbucks, buyers are now responsible for meeting social responsibility goals.
2) Do they even know who’s growing/making their stuff? (I’ve been amazed at how many don’t)
3) When there’s a problem (e.g. child-labour), do they drop their suppliers or work with them on systems that will prevent the problem?
4) Do they ask the people at the bottom of their supply-chain what their problems and priorities are? One way is through a study such as a poverty footprint (e.g. Coca-Cola and Unilever).
5) Are they experimenting with new ways of doing business that improve conditions for the poorest people in their supply-chain? For example, lots of the big chocolate producers (Mars, Nestle, Cadbury/Kraft etc) are piloting different ways of getting technical knowledge to small-scale farmers who grow the cocoa in their chocolate.

Any other suggestions?