Feeds:
Posts
Comments

Archive for the ‘value’ Category

Something has been bugging me for a while now. It’s not a new issue but something that has been slapping me on the head daily for the last few months more than it has done in the past. Maybe it is the continued economic struggles the world is going through. Maybe it is the Occupy movement. Or maybe it is just me in desperate need of a vacation on my dream island of Kauai. Whatever the reason might be… The question I ask myself is whether we working in sustainability/CSR/Shared Value (or whatever you call it) are dealing with the fundamental challenges the world face today or are we just working on some of the symptoms and applying band-aid to a sickness that needs much more than what we have to offer?

I don’t question that we are doing the right thing for the right reason. We are trying to make this world a little bit more sustainable. We are trying to make companies be more responsible as good citizens of this world. We are trying to prove that good business can be done by doing good. That capitalism with a heart is possible. That money can be made by sharing value with society. That business has a social purpose that it should embrace. Yes, we are doing good work and we are making a difference. But is it enough?

The world is consuming at levels that are unsustainable. We cannot consume the way we have in the past and expect everything to be okay. But the economic system that we live and survive on is based on more consumption. Consumption of products. Consumption of credit. Consumption of energy. More and more of each and everything.

We’ve seen where this has got us so far. The rich are getting richer and the poor are getting poorer. It’s been like a frog being boiled. It’s been a slow squeeze on the middle class and the working class over decades. When the system started running into problems we the people adapted and everyone started to work to pay the bills and buy those things we need – and those things we want. But income didn’t keep up. And slowly the world got into more debt to stay afloat. And then the bubble when kaboom.

The same is true of the environment. We consume so much more crap food, in the West especially, that farming had to change from providing us with food to providing us with GM foods, hormone injected meat, fields of corn for sugar and cereal and everything you can think of, and so much more crap. All because we wanted more and more of this crap food to feed our greed and insecurities. And we manufactured in ways and drove our cars without knowing that slowly but surely we are choking the world and messing with the climate.

And so it goes on. We know how we got here. We got here because we believed we needed things when we really just wanted it. And lines got blurred more and more between need and want. Between necessity and luxury. We consumed and we consumed and we consumed. It worked for a long time. It fed us and made us wealthy – or some of us. And we got addicted to it. Growth, growth, growth. The bigger the better – in what we have and how we looked. We consumed ourselves to a standstill.

But the “system” cannot live any other way. How do we get out of the economic slump? We’re told by consuming more. A key moment for me was when then President  Bush said right after 9/11 that people should go and shop and go on with their daily lives as if nothing happened. Well, something did happen. The same is going on right now. The world is suffering on a societal and environmental perspective. The world is a very different place from 3 or 4 years ago. But we’re told we need to consumer more to get us out this slump.

I always tell my kids and my clients that we can’t expect different outcomes by doing the same thing. The same is so true for us right now. We can’t go on the way we have and expect the outcome to be different. We cannot consume the way we have and expect a different outcome. We cannot do business the way we have and expect a different outcome. We as humans know this when we hit our heads against a wall – we stop doing it and go around the corner. We’re not stupid. Or are we?

So what does this have to do with sustainability? Well, we’re still telling people to consume. Yes, we are telling them “buy this product because it is so much more sustainable”. Energy? We’re not asking people to cut down on their use but rather to use renewable energy. Okay, sometimes we ask them to use less energy but not really to buy less energy using products. Do you really need so many televisions? Do you really need 2-4 cars? Do you really need a house that large? Do you really need spend so much money during Black Friday? No one is advertising asking people to please not buy so much of their products this coming festive season. Very nice of Patagonia to say they want people to buy less but we know they aren’t really saying that they need to grow a little bit less. Or not at all. They still want to grow but hoping that people will buy the slightly more expensive and sustainable product or buy the Patagonia product instead of buying from a competitor.

We in sustainability and CSR are making the world a better place. I don’t doubt that for a moment. If every company does what we in sustainability and CSR want them to do then we will be in a much, much better place. But are we dealing with the underlying weakness of the system or are we delaying the hurt to the next slump? Put it this way. Would the world be in a better economic place if every single product is made in the most responsible way possible? I don’t know - but I think we would’ve been heading to the same problem if we didn’t address the underlying addiction to consumption and growth.

That is really the 3 pillars of sustainability – product, profits and purchase.

Product – how the product is made. Make it as sustainable as possible. Make it by using renewable energy, sustainable sourcing, manufacturing without exploitation etc. Make it the best we can. And make the impact on society and the environment as light as possible.

Profits – do your business to make a profit. No business can live without it. It is at the heart of business. But don’t confuse profits with growth. We’ve become addicted to growth because of the shift in investors from long-term to micr0-term. Not even short-term anymore. That would require a day or a week or two. The majority of investors of today don’t give a damn about the company and what it makes – only about the return they can get in the next 5 minutes, or seconds. And they are holding businesses ransom. We saw this during this recession. Profitable companies laid off workers. How is that for commitment? They didn’t say “we’re struggling on the growth front but still profitable – so we’re going to knuckle down and work, work, work to get out if it but won’t let our people go as long as we are profitable.” No, they let people go because the micro-term investor demanded it. Puh-lease don’t talk to me again about your employees being your greatest asset. Your don’t sell the crown jewels with the first sign of a bit of a struggle.

Purchase – people need to buy your stuff for you to be profitable. But the reality is that we also need to get people to buy less stuff. This is at the heart of the challenge to business. How do you make stuff and sell stuff but make sure people buy less stuff. Guess what… I don’t know.

There is another “P’s” we have to address within the system as well to make the world truly sustainable. Parity…

Parity – we can’t live in a world where so few has so much and so many has so little. It is not sustainable. It. Is. Not. Sustainable. Get it? The gap between the highest earners and the lowest earners are just too wide. The gap between the 1% and the 99% is unacceptable. The gap between the pay of the executive and the lowest paid workers is not good for the company or society. No one is asking for 100% equality in pay. But the gap is just too damn wide. It is greed and nothing more. Any reason given is just snake oil. It is not just and not right. And more importantly, it is not good for business and it is not good for capitalism.

But it goes further than that. The West cannot consume the way they have and allow the rest of the world to slowly die. We live in a global world. The West is the 1% and Africa is the 99%. It is not sustainable. It is capitalism gone bad. It is the dark underbelly of greed. It must stop.

So until then we in sustainability are using band-aid to deal with a much more serious disease - unless we start seriously dealing with all 4 of these P’s – Product, Profits, Purchase and Parity. The challenge is we can’t do this on our own. We need to widen our circle because this means we need to forge new partnerships outside of business to get this right. But that discussion is for another day.

Now I need to get to Kauai to consume some sun.

Read Full Post »

Sustainability should be much simpler than what we make it out to be. It’s not very complicated – take actions today that leaves the world in a better or no worse place for future generations. But the devil is always in the details. And this made me think a little of what are the different levels of sustainability. And how the concept of sustainability and the current trends influence business in the future. I’m sure this is way too simple so feel free to chip in and help define the levels of sustainability. These are rough thoughts that was hatched during my daily commute on public transport and therefore very rough…

Why make these distinctions? Because it helps us know how to work with and help each company. They are all very different and needs to be treated differently. Many moons ago I had a client who asked me to help them become “like Timberland”. My response was pretty straight forward – “You know you are an extractive company, right?”

More importantly, it helps us think of the future of sustainability. We know what a sustainable future should or could look like – what role does business play in this future?

1. I don’t do sustainability

There are many companies out there who just plain do not believe in sustainability. They believe in one thing and one thing only – increasing their ROI for the next few days. Even a quarter is a long-term vision for them. They will campaign against anything that asks them to take their impact into consideration – climate change, labor rights, equality in the workplace etc. They will comply to local laws because they have to and not always because they want to. That’s why they lobby and fight against so many of these laws. They will take subsidies without thinking of their own responsibility. They will cut corners where they can – and in most cases stick within the law. They will sell you snake oil and call it green. They’ll do the minimum and think that is the actions of a responsible company. They will use meaningless words and phrases that sound cute but mean nothing like “the business of business is business“. I won’t spend too much time on these companies. Arguing with them is a losing fight. They see what they want to see and nothing we can say or do will make them change their ways. I won’t invest in them and I won’t work with them. There are just too many other companies trying their best and who needs counsel, help and support. Let’s rather focus on those who see the sustainability of their company and the world as linked to their business bottom line. In any case, I don’t believe these companies will survive for long. History shows us that companies that think this way eventually just die a slow death. Eventually society will see them for who they are – in it for themselves and not really part of society.

2. I act responsibly

Of course there are a range of companies who just aren’t sustainable. The nature of their business and/or their current business model means that they can act responsibly but the company itself cannot be seen as sustainable. They must change how they source or manufacture over time to become sustainable. It doesn’t mean that they can’t be good corporate citizens. Many if them are good citizens who act with great responsibility. I see them as the CSR group rather than the sustainability group – a small but important distinction. Let me use an industry as an example. Most companies in the extractive industry just cannot be seen as practicing sustainability. They take stuff from the grounds and can’t replace it. They can’t leave that specific world in the same or better place. It’s a stretch for them to claim that. I worked with a very well respected luxury goods company and they refused to use the word sustainability. When I asked them why their response was “Because we mine diamonds and can’t put it back. And eventually we will run out of diamonds.” When will they run out of diamonds? Who knows! But the principle is right. But they do incredible work – one of my top 5 companies when it comes to CSR. Incredible work. They do everything right when it comes to sourcing their diamonds, adding value in developing countries where they source from, refuse to buy rubies from Burma, lobby against unsustainable mining practices – they tick all the boxes. But the nature of their business means they take full responsibility of their impact and are incredible corporate citizens – just not sustainable. This is in no way knocking them. Many of these companies do incredible work in difficult circumstances and delivers a product we desperately need today (and tomorrow) – we can’t live without them. I am proud to be associated with them and to work with them. So many of them are shining examples of what responsible businesses could and should be doing. Those in the group who practice sustainability can learn from these companies on what true responsibility in communities and supply chains mean and how to measure and reduce your impact in the world.

3. I am sustainable

Sustainability is slowly but surely becoming mainstream. More and more companies are embracing the discipline of sustainability to build a better business for the future. They have practices that highlight what can be done to make business work and help secure our joint future. They source in ways that do not deplete these resources. They take action on their energy use and tackle climate change in action and voice. They treat workers with respect and speak out against injustices. They will help their suppliers to become more sustainable themselves. They will take responsibility for their products and empower consumers to take responsiblity where they have a joint responsibility – such as driving recycling with consumers. These are the companies who are the leaders of today. They believe in values adding value. They know their future business success is tied to the sustainability of the world around them. The way they operate, source and manufacture, ensures they still have the ability to operate this way in future – the resources are replenished to ensure a better or same tomorrow. The world will be a poorer place without them. In so many ways.

4. I help make the world sustainable

This fourth category is the one that bugs me the most. It’s the most challenging and most complex. Maybe I should break it up into more levels of sustainable businesses, but for now I will keep the three distinctions of this group here.

The easy part is identifying those social innovators and entrepreneurs who focus on developing a business solution to a social problem. They are different from group 3 mentioned above because the nature of the products and services of group 3 is not aimed at a social problem but more about the “wants” of people. Most of the purchases of today are not because we need it but because we want it. We think we need a tablet but we don’t really need it, we just want it. A smartphone is a luxury and not a need. How many pairs of shoes do you need versus how many you want? Companies who are in group 3 still sells products in the “want” category but do so by taking responsibility for their actions and impact by making sustainability part of how they source, manufacture and take responsibility for their final product (waste etc). The social innovators focus on creating products and services society needs – new ways to get clean water to the poor, medicine people need to survive, nutritional products aimed specifically at groups in need, renewable energy solutions in challenging environments, energy-efficient cars (it’s more of a need than want if you only have one car!) – and much much more. They link the need of society to new product or service development and build a business around that. In some cases they might be a non-profit but the principle is still providing a tradeable solution to societal needs – micro-financing is a classic example.

Some of the companies in this category falls outside of this social innovation group though. They are still innovators but they actually focus on the want and not on the need. They develop new products and services that still deal with the current consumer behaviour of buying more stuff that is cool. They tap into the pop culture and fashion of the day and gives it a unique spin by giving it a social value over and above the hip new product. Think of TOMS. The product they sell isn’t unique and neither did they bring a product to life that deals with a specific societal need. They tapped into the mainstream consumer market by creating a cool new “I-want-that” product that has a huge societal benefit attached to it. The business model is very unique but the product itself is not. The concept itself is not that unique either. It is a logical evolution of cause marketing coming into maturity. From attaching a cause to a product to the cause becoming central to the product concept development itself.

The 3rd and last group in this category is the one I struggle with the most and my ideas are still only half-baked here so please feel free to rip it apart. But humor me for a moment.

All of these businesses in this group and the other categories still work within the system we know – sell more products and services to consumers. It operates within the current system. The challenges we face as a society today is challenging this system though. The question being asked is whether we can continue to expect these levels of consumption and be a sustainable world? I’m not talking about a narrow definition of sustainable consumption. Sustainable consumption debates have focused on selling more sustainable products and taking responsibility for your product post-consumer- whether it is how they are manufactured or used. The premise remains the same – sell more stuff. Sell stuff to increase ROI by creating new markets or pushing market share.

Is this system itself sustainable though? Can we really expect to build a more sustainable future by maintaining the same credit levels and expecting people to continue to buy more things? Let me give you an example… Are we any closer to sustainability if every single pair of shoes sold in the world now and in the future is made by TOMS? If we buy TOMS at the same rate of growth – does that make the world sustainable? TOMS might have a great business model but the world can’t handle buying at the same level we’ve had over the last 10-30 years – even if it is TOMS…

That is the essence of the challenge for companies – how to change the business model to remain profitable in a world that needs lower consumption levels and somehow keep investors happy. This would be the next level of business and sustainability. But this is a balancing act that is asking a lot…

The honest truth is that I have no clue how we can do this. Like I said, it’s just something that is bugging me at the moment. Somewhere the answer lies and I believe that good businesses, and society in general, will come up with an answer. We don’t have much of a choice as the runaway levels of consumption is not sustainable. And neither is the continuous pressure on the business bottom line via squeezed margins and market share. We’re close to a tipping point.

This goes way beyond the “Shared Value” concept. Shared Value argues we look at where business and society intersects and finding the joint value in that relationship to drive business and societal benefits. But what if the real value is to share less?

I don’t have the answer. But it’s worth exploring the options as doing nothing might not be an option for much longer.

Read Full Post »

This post of mine was originally posted on the goodpurpose blog.

Once again, I realized that a conclusion that I drew one year ago on Corpprate Social Reality still holds true: there are a myriad of factors influencing consumers’ purchasing decisions, and purpose can be a point of differentiation for brands.

The goodpurpose study validates my claims. The most recent study found that when choosing between two brands of equal quality and price, consumers worldwide value social purpose as the deciding factor over design, innovation and brand loyalty. We’ve re-posted the old blog below, and hope you’ll take a look for insights into consumer behavior that should inform your business’ decisions today.

 

So, consumers don’t care?

I was reading an old blog giving 4 reasons why most consumers don’t care about corporate ethics. It was an interesting read, and I will respond in more detail on the other issues at a later stage. But one issue stood out again – consumers just aren’t willing to pay the price. This typical excuse simply argues that people won’t do something as opposed to delving deeper into why people buy products.

If price is the only issue then Nike would not sell one shoe nor would Starbucks [disclosure: Edelman client] sell one cup of coffee. Okay, so quality has something to do with it, so (some) consumers will consider price and quality when buying a product.

So why do people in the US still buy American cars? A few years back, American cars were generally more expensive and of lower quality. But people bought them, because they were American-made. Okay so price, quality AND origin can all be part of consumer decision making criteria.

So why do some people buy from Home Depot instead of Lowe’s? They are equal in price, quality and origin. Well, maybe because the types and quality of services they provide cater to specific consumers. So consumer decision-making is about price, quality, origin and service.

And so on, and so on, and so on. There are always many reasons why people buy certain products and not others. We must realize that consumers are not a single robot or unit, but that everyone has their own criteria which they use to when making a decision to buy something. For some, quality ranks highest (that is why people are still paying $200+ for DVD players). For others, environmental impact or health attributes are most important.

Brand value is complex. And going beyond price and quality to include environmental or social issues in the brand positioning helps companies further differentiate their products from competitors. By going forward with corporate social responsibility messages, those issues become part of a range of brand elements.

Also, ethically-sourced products don’t necessarily have to cost more–although this is a common misconception. Some products might be more expensive, but corporate social responsibility (CSR) can also reduce costs and create opportunities. CSR is about doing business better – all around. If you are working with your suppliers to make them more efficient, you gain. If paying staff a decent wage can make them more efficient, you gain. If looking after the environment ensures you still have a product to sell tomorrow, you gain. As each consumer is different, so is each company. We need to acknowledge this and build the ‘corporate social responsibility solution’ around what makes business sense for each individual company and product or brand.

Read Full Post »

This post was originally posted on Vault’s CSR Blog - a great resources and a huge thank you to Aman Singh! It was part of a discussion between Alberto Andreu (Chief Reputation & Sustainability Officer at Telefónica)  and I on CSR and Sustainability. He countered with a great post. Great guy and great thinker. It was an honor to have such a constructive discussion with someone like him.

________________________

I am afraid Alberto and I violently agree with each other on the most important aspects of CSR: Where it comes from and where we are today. Where we might not agree as much is whether this is still CSR.

In my view, CSR is not a revolutionary process but one that continues to go through many changes—an evolutionary process. The graphic below is my first attempt to describe this evolutionary process.

Phase 1: Philanthropy

In its initial phase back in the 1970s, CSR was all about philanthropy and what business should do with some of its profits. Small shifts in thinking pushed this early form of CSR forward. Companies became more strategic with philanthropic initiatives and tended to focus on projects in their local communities. This eventually grew into Corporate Social Investment that brought a business sense to philanthropy – focusing on results and outcomes.

 

Phase 2: Globalization Forces Standards

Slowly, globalization started shaping our world more and the impact of business in this globalized world became an increasing focus for activists. From a narrow focus on philanthropy we moved into an era of citizenship. Companies became business players in a globalized world, or, as it became known, Corporate Citizenship.

They started developing standards to manage their risks. This led to the need for global standards – from extractive companies and human rights to how we report on CSR today.

Phase 3: Citizenship-led Cause Marketing

When the term cause marketing was initially floated, CSR became something business could benefit from for the first time. It was a huge shift in how we perceived CSR,– not just risk management. This benefit-based approach brought operations back on the table leading to the development of CSR as a business strategy.

Now, CSR was suddenly not about cutting costs but about increasing profits.

Phase 4: CSR & Sustainability Tied with Future Business Growth

The latest evolution of CSR, or sustainability, has taken this concept of business benefit even further and started looking into the future of business and society—the heart of CSR. Sustainability today looks at finding mutually-beneficial solutions to the challenges we face as society as well as future challenges.

But CSR, even today, is  still about how business can operate profitably within this role as a responsible citizen toward society.

From Reactionary to Risk Management

We have moved from a reactionary model of philanthropy to a crisis-led model in the early stages of globalization to a risk-based model in citizenship to a mutually-beneficial business model in sustainability.

We might have seen our understanding of CSR deepen throughout this evolution but the definition of CSR hasn’t changed much over time—CSR is the way a company manages and communicates its impact on society and the environment.

Many of the individual parts of this evolution (Philanthropy, standards, etc.) remain with us today but these are not the only parts of CSR anymore. We’ve adapted and moved on – keeping the good stuff, improving on them and adding to it.

The world of CSR is very, very different today. But it is still CSR.

An Argument for Terminology: Corporate Social Responsibility Fits Best

While this might be somewhat semantic in nature, it is still an important part of the debate: We should look at the description of CSR itself. Why do we use these very specific three words to describe what we do?

I would argue that the concept is actually a very good description of what we do today. Here’s why:

Corporate implies that this is about business.

  • It not only describes that we are busy with a discipline involving business but goes deeper.
  • It is about profits – how we make them and how we can make more of them today and tomorrow.
  • It is not about charity.
  • It is about building a sustainable business model that will continue to deliver business results for stakeholders – especially shareholders.

Social tells us this is about society.

It is about the impact business has on society and how we can manage this impact to ensure both business and societal benefit.

Even the environmental part of CSR is about society – how we can minimize environmental impact to benefit society in the end of the day.

The new developments in CSR – sustainability – further continue to prove that CSR is about a mutually beneficial relationship between product and service development, and societal value chains.

Responsibility reveals that business does carry a responsibility in this world – to do business in a way that benefits both business and society. Further, this responsibility gives business the opportunity to create new solutions to the needs of society. I would even argue that it is their responsibility to develop these new solutions and benefit by capturing new avenues of sustainable profit.

All three concepts—Corporate, Social and Responsibility—tell us exactly what we do today. CSR is also the perfect reminder of the relationship between business and society, and the responsibility they have towards each other. None of the other concepts proposed today actually tell us what we are doing and what we should be doing.

I say, long live CSR, and may it continue to evolve and change our business world for the better.

Read Full Post »

Can you remember the first time the two of you got together. The stolen looks, the uncomfortable moments of silence, the tripping over your sentences, the sweaty palms, the he-likes-me-he-likes-me-not thoughts, the private meetings when no one was looking, the uncomfortable first meal together. Yes, I am talking about stakeholder engagement. Just as with any relationship in the early wooing and courting stage, stakeholder engagement is never easy at the start.

Most companies just don’t know how to talk to activists and campaigners. Hey, make no mistake, activist hardly knows how to talk to companies either. But they don’t need companies to like them as much as what companies need them to like them. Or at least leave them alone and not target them.

Don’t feel bad when they target you. It happens to the best of companies. Sometimes it makes sense and sometimes not. I remember seeing an anarchist kicking a Nike sign at the battle of Seattle in ’99 – while wearing his Nike shoes and top…

But there are a few tips you should follow if you decide to engage and start courting. This is not an exhaustive list. Just a few tips to get you through those first uncomfortable early stages of stakeholder dating.

Firstly, do your homework and find out a bit more about the NGO and what it regards as its ‘bottom line’ – it is unlikely to be financial! I was invited to speak to the global affairs team of a very large pharmaceutical while I was at Oxfam (I headed up the Access to Medicine Campaign for a while). I was shocked to hear that the majority of people at the company thought that Oxfam only worked on health issues. And this happened when Oxfam was in the middle of their Coffee Campaign! Dig around a bit first and find out what the NGO does and what is their mandate. Most of them are registered with a constitution that states what they should focus on and how they should work. This will help you understand whether there is any potential for a longer term constructive relationship – or just a one night stand. Also a good tip when you start dating – know who you are dating. Except if you like blind dates.

Secondly, respect the differences between NGOs by not lumping them all together in the same room for a consultation exercise – NGOs are proud and competitive too. You wouldn’t want them to call a whole bunch of companies together and still expect special treatment just aimed at you. You should respect their differences and treat each one differently. Rather meet each one separately in an environment that works best to put them at ease. Meet them where they feel most comfortable – maybe at their place. Especially if you want to build the foundation for a long-term relationship. And even this should work best for real dates – don’t bring all your prospective dates together in the same room. They might just start sizing each other and you will be left with no date at all.

Thirdly, don’t make the mistake of thinking that you are the only company that is the target of the NGOs campaigning efforts, or that the NGO hasn’t other programs and projects that may have nothing to do with business. Just as with the large pharmaceutical company I mentioned, most NGOs have numerous focus areas and different programs and projects to try and achieve their overall goals. And most large campaigning NGOs have various campaigns going at the same time. They might have one single broad focus, but it plays out in different campaigns and programs. For instance, Greenpeace might be about the environment, but they focus on climate change, oceans, forests, genetic engineering and nuclear issues. So your company might only be a small part of their focus and interest. Same with real life dating. A friendly smile does not mean they want to date. It might just be a friendly smile.

Fourthly, start by talking, learning about each other and building trust rather than starting by expecting ground-breaking strategic partnerships. There might be a few obstacles to overcome – perceptions of what ‘big business’ is all about and a feeling that you want to ‘clean’ yourself by associating with them. Take it easy and just talk. Let them get to know you. Don’t create expectations. Just listen and learn and see where this might take you. Again a good tip for real life dating as well. Don’t ask them to marry you or expect ‘the commitment’ on the first date – it might just scare them off.

Lastly, remember that cash does not necessarily have the same currency as it does when buying products or services from other companies. First and foremost NGOs want to affect change. But they don’t always see money as the way to achieve change. Yes, some of them have huge budgets and operate like multinationals. But they generally have strict guidelines on receiving money from companies. For instance, Oxfam will not accept money from companies that fall within an industry they target in their campaigning. They might not even accept money for travel – never mind for a program. They would rather see you ‘do the right thing’ than pay them to do something. Okay, this one is less relevant for real life dating. Money generally impress prospective dates!

Okay, one more tip. Don’t expect them to agree with you on everything. And don’t make this a prerequisite for your potential relationship. I love my wife to bits. But we only agree 80% of the time. But we don’t let the 20% of the time we disagree define our relationship. No. Focus the relationship on what you have in common and don’t get stuck on the differences. It’s part of being human – we are all different. And the same for companies and NGOs – we are all different. And I learned that I am wrong 20% of the time in any case. Just ask my wife.

Read Full Post »

Last week I focused most of my The Mythmakers: The end of CSR. Again. on Porter and Kramer’s shared value  or CSV. I did mention Alberto Andreau’s argument that Shifting From CSR To CSV Isn’t The Solution and that the truth and future lies in Corporate Sustainability. I ran out of space and didn’t really give enough attention to Andreau’s argument. What follows are some parts of the original post that landed on the cutting room floor.

As I stated before, Andreau’s idea of Corporate Sustainability is just another way of practicing CSR. But I also want to focus on the three main points he uses against the use of CSR:

1. CSR sends the wrong message: Firstly, breaking down the individual words of the concept is problematic. But there is nothing wrong with expecting business to have a responsibility. The idea that business have some responsibility is as old as business itself. In some cases this is regulated and in some cases not. And remember – before regulations there was nothing. Those companies who had annual financial reports was seen as “responsible” before it became a requirement. And same for those companies who stopped employing slaves. All of these were early CSR practices and then became requirements. It’s not the wrong message – it’s only the wrong message if we think that business have no responsibility towards society. Regulatory or not. Remember, business is in an unwritten social contract with society – do no harm and at a push try to do some good (where CSR comes in). Business can argue that they should be able to do what they want and how they want to but the truth also lies in the reverse – society need not support you or even allow you to operate if they don’t like you. If you argue that business should be able to do what they want then you should also live with the fact that people should protest and target you because that is their same right. We in CSR believe that it is not an either/or question and that business and society need each other and both share a responsibility towards each other to ensure mutual benefits.

The “corporate” part of CSR tells us that this is about business. It is a business approach – one that should add value to the bottom line. “Social” refers to the societal part of the business. Business operates as part of society and have a social obligation – as stated above. And the “responsibility” part refers to the rest of the argument I make above. The combination of the three concepts tells us that this is about business finding opportunities and areas of co-responsibility in their interactions with society – and that they also have a responsibility towards society to add value. And society includes all stakeholders – shareholders, consumers, employees, communities, suppliers etc. All different parts of society. We so easily focus on the “responsibility” part of the definition and easily forget that it is a “corporate” strategy that includes opportunities to add value (money, returns, increased sales, new product innovations, cost savings etc) to and through values. Don’t get stuck on the last word – see all three and how they interact.

2. Information overload: I agree that we have too much information today. But it is this same information that continues to drive new innovation in how we practice CSR, and how we live our lives in a world of information overload. The challenge is rather that CSR is developing so fast as a discipline that we can’t always keep up. Imagine if the concept of business was only started in 1970 and went through all its various changes and implications in 40 years. And really, CSR only took off about 15 years ago. That’s a lot of changes in a short period of time. The information overload is the wheels of CSR spinning at a 1000 miles a minute. It is daunting but it is exciting at the same time. We are in the middle of a new way of doing business – and we are at the center of that. Hang on – this is a wild ride.

3. Absence of global standards: Yes and no. Yes it will help if we have a few more global standards. But there won’t be a global standard for CSR. As I explained earlier – CSR is too complex and you can’t have a single standard for this complexity – only for some of the parts. And, we are finding new and innovative ways to implement CSR each and every day. How do you standardize innovation? Lastly, not even “business” have a single standard out there – only some of its parts and some guidelines at best. We don’t even have a single standard for financial reporting in the world – and that is such as basic business practice. What chance of a global standard for CSR then? Maybe our expectations are just too high on this front.

Of course there are some very specific challenges regarding his proposal to use Corporate Sustainability. Firstly, the addition of “corporate” does not address one of his own problems with the corporate part of CSR – “the term ‘corporate’ serves to instantly exclude every institution outside the realm of corporations.” I don’t think this is much of an issue but Andreau raised it as a concern regarding CSR so the same goes for Corporate Sustainability. Why is it okay for him to use it in Corporate Sustainability but not for us in CSR? Secondly, he argues that we need to widen the meaning of sustainability to ensure it covers everything he wants sustainability to stand for. Why is it acceptable to adapt the meaning of sustainability but somehow not acceptable to do the same with CSR? Actually, I am not asking for a change in the meaning of CSR but only a recognition of its complexity. I agree with his call for simplicity but I don’t think that changing the name will help. The simplicity lies in the earlier definition of CSR I gave and the complexity in the execution. I don’t agree with him that CSR has lost the battle against “philanthropy” and “social action”. Only in the eyes of some who practice it inconsistently or who haven’t kept up with the ever evolving world of CSR practices. Heck, just because some businesses don’t practice business in the right way doesn’t mean we should question business as a whole, does it? There are corrupt business out there; businesses who exploit workers; business who sell snake oil etc. Should we now say that all businesses are bad and should be dropped just because some practice it in the most harmful way? Same goes for CSR – some have practices they call CSR that really isn’t CSR. We should be diligent in raising our concerns with those companies who abuse the term – not abuse the term ourselves. And arguments where we question the concept of CSR only underlines this confusion. Instead of defending CSR against abuse and misunderstanding, we compound the problem by proposing new concepts and terminology and creating even more confusion.

All the additional points made by Andreau is as true of CSR as of Corporate Sustainability: It’s a business approach; it seeks to create long-term value; it embraces opportunity; and it helps manage risk. Thank you Alberto, you described CSR very well – it’s all of the above. Simple but complex at the same time.

To quote Alberto and change it just a little: “This is where the future lies: A unified return to CSR. Not CSR only in terms of philanthropy or compliance only but a sense of CSR related to value, opportunities and risk management.”

Read Full Post »

It feels like 1990 all over again. How many times do we go through these arguments that CSR is dead or CSR isn’t a very good description or that CSR is so yesterday. It seems as if we are back at the drawing board again. First we had Aneel Karnani make his Case Against Corporate Social Responsibility in the WSJ last year. Then we had Michael Porter and Mark Kramer argue in the Harvard Business Review that CSR is an old concept and that the new way forward is CSV – Creating Shared Value. And now we have Alberto Andreau arguing that Shifting From CSR To CSV Isn’t The Solution and that the truth and future lies in Corporate Sustainability. Oh boy, here we go again…

I won’t go into detail into Dr Karnani’s argument. It has been dealt with from all angles and most agree that he missed the point a bit. What he perceives to be CSR isn’t CSR but only what some companies claim to be CSR. He was working with the concept of CSR as practiced maybe 20 odd years ago but CSR and CSR practices today have changed dramatically. His definition and understanding of CSR was wrong and his argument therefore based on the wrong assumption. But what about Porter and Kramer, and Andreau? I would argue that they are making the exact same mistake as Dr Karnani. They are using a definition of CSR that is outdated and their understanding of CSR is based on what CSR was 20 years ago – or maybe even closer to 5 or so years ago.

Let me first say that it is an excellent piece. They capture the latest thinking and practices of CSR very well. Unfortunately they then argue that this is CSV and not CSR. It’s not, it’s still CSR. And what they propose isn’t completely new either. Those of us who have been working at the sharp end of CSR have been working on a similar concept and approach for a few years already but we didn’t call it shared value – we coined mutual or co-responsibility. The idea of mutual or co-responsibility is that (leading) companies should focus their CSR on those areas where they share an impact and opportunity with key stakeholders. Starbucks can focus on the cup when they deal with consumers and on sourcing when they work with farmers – helping consumer have a better impact and helping farmers increase yields, get better prices, be more sustainable etc. Levi’s helping consumer limit the impact of their jeans and working with farmers in farming cotton. Best Buy recycling or even buying back older technology. And many more leading companies share this approach to CSR.

Furthermore, we’ve focused more specifically on key stakeholders and not society as whole. There is a reason why – society is too broad a concept for a company to focus on. Break society into the various stakeholder groups and be specific in who you target – key stakeholders such as consumers or suppliers or investors or regulators or your local communities or even distant communities. The more targeted you are the better the chance of success. Of course you should always target more than one stakeholder but try to be as targeted as possible to know exactly where the shared value or mutual responsibility/opportunity might be. CSR works best when it is targeted.

Back to the meaning of CSR…

CSR has changed it’s meaning and how it is used substantially since the 1970s. It started off as all about compliance and pressure from activists for expand on their philanthropic commitments. But today it is as diverse as the concept of business. Business isn’t a singular description anymore. It describes anything from a large multinational company with a diverse set of products to an informal trader working in the streets of a township in Africa. It’s a bit like pornography – we know it when we see it.

Let’s define CSR quickly to provide some clarity. This isn’t a perfect science as we don’t have a single agreed definition. Mine is simple and I don’t claim this to be the final definition of CSR: CSR is the way an organization manages and communicates its impact on society and the environment. Simple. But it is this simplicity that hides the complexity and diversity of how we practice and implement CSR.

Porter and Kramer make the same mistake that Dr Karnani did by not recognizing the diversity within the CSR field. Some practice CSR in the risk management, compliance and/or philanthropy way they explain it and other practice CSR in the shared value way they explain CSV. It’s the nature of the beast – CSR is not a single discipline that covers every single company in the same way. Each company and industry focus on it in a different way. For example, for pharma it makes sense to focus on philanthropy because it is in the nature of the product(s) they offer. It makes sense to donate products to people who can’t afford it – or else they die. As simple as that. It doesn’t mean they don’t focus on other areas but their priority focus will most likely be around philanthropy – and at the core of their business: finding new drugs to help us deal with our health challenges. For companies such as Starbucks it is very different because they focus on consumers and farmers. They help farmers improve their practices and pay a premium price and help consumers improve their impact by offering recycling and encouraging them to use tumblers. Companies and industries are diverse in how they practice CSR. At best it focuses on those areas where their products or service intersects with society – and where the greatest societal needs intersects with business opportunities (or responsibilities).

(Of course we learn from different practices and improve on it but it is always unique for each company – or should be – as it should focus on the specific value the company offers through it’s unique products and/or services and brand and corporate identity.)

Some companies just do not have a shared value with society – or they have a very difficult case to make. For example, tobacco companies can build a solid case of shared value in their sourcing practices (and some do) but they will have a difficult case to make for shared value with the broader society. And the same goes for arms dealers/manufacturers, some military contractors etc.

Shared value is also limited by the timeframe and current knowledge. If we look at societal needs and shared value today then it makes perfect sense to provide a society suffering economically the cheapest fuel and energy. But we know that this will have a negative long-term impact. Shared value shifts and moves with time. What might be a shared value today is another issue to deal with tomorrow.

The idea of renaming CSR to CSV because of the perceived new way is futile. The debate continues each and every day and was at a height 5-7 years ago when some CSR practitioners (like me) argued that CSR has changed from compliance to differentiator and should therefore be renamed because it is now about business opportunities and not compliance-led responsibility. I was wrong back then. I confused the definition of CSR with the practice of CSR. And this is the fundamental mistake of Porter and Kramer. And Karnani and Andreau. They confuse the definition of CSR with the practice of CSR. The practice of CSR is complex and diverse – adapted to the needs of the complexity of business and flexible enough to continue to adapt and change with time and knowledge.

CSV isn’t the new CSR. It is a way of practicing CSR. I would even go so far as to say that it is the ideal way of practicing CSR – finding the shared value with society (or specific stakeholder groups). But it isn’t something different from CSR. It is how some practice CSR. And a damn good way to implement CSR if it makes sense for a company to do so.

As for Andreau – the same argument holds. Corporate Sustainability is just another way of practicing CSR.

Of course a major flaw of Anfreau’s argument is his argument that we need to widen the meaning of sustainability to ensure it covers everything he wants sustainability to stand for. Why is it acceptable to adapt the meaning of sustainability but somehow not acceptable to do the same with CSR? Actually, I am not asking for a change in the meaning of CSR but only a recognition of its complexity. I agree with his call for simplicity but I don’t think that changing the name will help. The simplicity lies in the earlier definition of CSR I gave and the complexity in the execution.

All the points made by Andreau is as true of CSR as of Corporate Sustainability: It’s a business approach; it seeks to create long-term value; it embraces opportunity; and it helps manage risk. Thank you Alberto, you described CSR very well – it’s all of the above. Simple but complex at the same time.

To quote Alberto and change it just a little: “This is where the future lies: A unified return to CSR. Not CSR only in terms of philanthropy or compliance only but a sense of CSR related to value, opportunities and risk management.”

In conclusion, what is described as CSV and Corporate Sustainability are not new but captures some of the latest developments of how we practice CSR. And they do an excellent job of expanding the thinking of how we (should) practice CSR. But there is a limit to their contribution. Let’s not get distracted by shiny objects and new names – let’s stop this arguing about what we call it as it doesn’t help us do the work we are doing and distract us with discussions about terminology. The value of Porter and Kramer, and Andreau, gets lost in the discussion of terminology. We argue about what we should call it instead of expanding the discipline and practice of CSR. The value of Porter and Kramer lies not in calling it CSV but in strengthening the practice of CSR – shared value, co-responsibility, mutual responsibility etc. I think their description of mutual responsibility is a much better description of my own – shared value describes it better than my idea of mutual or co-responsibility.

By focusing on what we call it we lose the value of Porter and Kramer’s work when they describe the roots of shared value – taking on Friedman, showing how shared value is a traditional part of the best companies, show how reconceiving products and markets can bring new value to business and society, highlight local cluster development as a driver to create shared value, and so much more. None of this is new – Starbucks have been sourcing this way for over 10 years; cluster development is a natural phenomenon and the modern version was started by a history prof and a garage owner in Chihuahua, Mexico; most companies started with a shared value offer – from Walmart bringing cheap food to the poorest Americans as close to their homes as possible to the mom-and-pop shops offering locally produced good. The beauty does not lie in the fact that they create the concept of CSV but rather in their ability bring the latest thinking and practices of CSR into one single place – and drive us further forward in the implementation and practice of CSR. It is a powerful piece and one that should be used to defend CSR and show how CSR has grown instead of using it to divide us even more because of a debate on terminology. Let’s stop arguing what we call it and focus on what we practice and do each and every single day. Let’s advance the discipline of CSR instead of creating more divisions through renaming it. Let’s focus on improving the impact of business on society and identify mutually beneficial opportunities instead of looking at the impact of what we call it. Let’s just do it instead of calling it…

CSR is dead! Long live CSR!

(Disclosure: As promised, I think it is only ethical and right for me to mention when I have worked or work with a company I mention in my post. It’s called transparency. All of the companies mentioned above – Starbucks, Levi’s and Best Buy are clients.)

Read Full Post »

It is election time here in the USA. To state the obvious – It’s an interesting time to be in the US. It’s even more interesting to watch how business behave during these election cycles. This election is especially interesting from that perspective as the two main parties are very divided on a range of social and economic issues. The emergence of the Tea Party and the right-wing in America begs the question – how do business lean during this election? And what does it tell us about their values?

For me this election raises the question of whether business have managed to really live their values through the political support they give to any specific party. The Republican Party is pitched by most as the business friendly party. The one that will look after the interest of business more than the Democratic Party. Of course this judgement is based on the value that the Republican Party will provide business compared to what the Democratic Party has to offer. Lower taxes, less regulations etc are all seen as Republican Party strengths – and all aimed at the value bottom line of business.

 But what about the values bottom line of business? How does their support of one specific party reflect on the values they claim to stand for? A few examples makes me question whether business takes their values as seriously when it comes to politics as their value bottom line.

Firstly, a number of companies are rightly proud of their ranking as good employers. And some of them are very proud that they are constantly ranked  by the Human Rights Campaign as Best Places to Work. The HRC lists the top businesses that support equality for lesbian, gay, bisexual and transgender employees. Now this is where I am slightly concerned that companies overlook these values when it comes to their political support. Do they take into consideration whether a specific political party of group (like the Tea Party) or a specific candidate support these values they uphold as important to their business? I dare say that not all of them do. Too many of the companies listed on the HRC Best Places to Work are also big supporters of candidates and political parties who do not believe in the equal rights for all their employees. I question whether employees are really the “greatest asset” of a company if that company is willing to sell the rights of their employees for a few dollars more to the bottom line.

Secondly, how about climate change? If your company believes that climate change is real and is a real threat to the long-term sustainability of your business – how can you justify supporting an individual or political group who do not believe that climate change is a threat that needs urgent attention?

This second point comes close to the value argument. The first point of equal rights for your employees is mostly a values argument but climate change is about both values and value. It affects your business sustainability and therefore the value you offer as a business. Maybe the world becomes grey because the business makes a decision between short-term value and long-term value. Tax breaks, subsidies, less regulations etc are all perceived as adding short-term value while climate change is something that will starting to hurt the business in 50 years or so. Like a frog being boiled…

I think that some of the support businesses give to Republican Party candidates and the party itself more out of legacy than anything else. They have always done so and will continue to do so out of habit. The truth is that both parties are pretty business friendly compared to most of the world. The value differences are more marginal than people would like us to believe. For example, businesses are cash flush at the moment, profits on Wall Street is up etc – all under Democrat rule. But like anyone who has a long-standing habit or addiction, businesses will support the Republican Party and candidates “because that’s what they’ve always done”. Not a compelling reason but still a reason.

For some businesses it is a clear-cut reason. If they believe that clean energy or a drive for more renewable and alternative energies will hurt their business they will fight against it. Guess who fights renewable energy more than the other when it comes to political parties? But what about that company who believes that the environment is key to who they are as a company? If you are in the outdoor industry then mountains mean a lot to you. People use your products to go and enjoy nature. So how would you feel if someone mines away that mountain top? Not so good. And how about being in an alliance with a company and/or party who supports mining that mountain top? Be careful who you form alliances with even when you don’t mean to be in a formal alliance. You are who you support and who your candidate supports. You can’t shout for greater action on climate change one day and then support a party or candidate who stands for the opposite. Stick with your values or stick with your value – if you believe they are separate. But please don’t claim to have CSR or sustainability in your DNA and then take actions which completely contradicts your statement.

There are many more of these examples. Companies in the construction industry – are you supporting the party who are providing cash to rebuild America or are you supporting those who say that they should never have spent this money in the first place? Retailers – are you supporting those who want to provide continuous tax breaks for the middle class or those who insist that the richest get the biggest cut or no one gets a cut?

Look in the mirror and ask yourself whether you are willing to trade your values in for a perceived value. History is littered with the easy way out – take the money and forget about the rest.

I don’t have a problem with that. Each company will decide what is best for them. Just do me a favor – don’t sell me CSR snake oil stories of “it’s in my DNA”. Embrace who you are and live it. Be true to yourself no matter what that truth might be.

Read Full Post »

Follow

Get every new post delivered to your Inbox.

Join 37 other followers