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Archive for the ‘CSR’ Category

I know… I don’t blog enough around here anymore. Okay, I don’t blog around here at all. Watch this (empty) space. I will be back soon and regular. In the meantime, I do blog over at CSRWire more regularly. See below the latest one over there where I looked into my sustainably made crystal ball and imagined the strange (un)sustainable world of tomorow.

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No, this is not another “looking at 2014” piece. I am more interested in looking a little further ahead. The world we live in has changed dramatically over the last 10 years and there are larger trends changing the world in ways we can hardly imagine.

Imagine, for example, if we somehow had better insight into how transportation will change across the world over the last 50 years. Or how manufacturing will shift away from the U.S. and other developed countries or how the brands we love dissolve into nothing more than grand design houses with limited manufacturing capabilities. Not to mention how technology has changed the world – wish there was an app for all that.

I’m more interested in the mega trends that will shape our world over the next 50 years. What will drive the fundamental change in the way we source, manufacture, interact, communicate, build relationships, sell, transport etc.? In short, here are four mega trends that I believe will change the world of sustainability in a way that makes most of what we think is important today silly and obsolete.

Well, we’re done with the silly season after all…

1. Everything Is Personal

The rise of the individual over the group has in itself become a group activity. The marketplace of people has become so crowded that people are fighting to stand out. We have moved from the Pepsi Generation to the Me Generation. From consumers to individuals. This is already challenging the way brands interact with people, as people want to be known as Jane, Dick and Sipho – the individuals. They want brands to conform to them and not the other way around.

Brands who want to survive must find a way to engage in a conversation – a dialogue – where they are informed as much as what they inform. In other words, get ready to lose control of your brand to save it. As the new Edelman brandshare™ study shows, brands who ignore this new sharing revolution do it at their own cost. By losing control and allowing your own brand to become individualized you will empower individuals to love you, connect with you and advocate on your behalf.

At the same time, you will also lose control of what your brand looks like. Conversations with consumers won’t stop at Likes. They will want to be part of the design process. In many cases, they already are – go design your own Timberland boots or Nike’s today.

This mega trend will also influence how companies implement sustainability across their value chain. As technology and transparency make the world smaller, consumers will be driven toward making everything personal – and leveraging the power to know where their purchases came from, i.e., manufactured, sourced, farmed, etc. It’s already possible – we can trace coffee, wine, water, cocoa and even diamonds to any specific location today. And this is already playing out in the marketplace with sales of fair trade coffee outstripping the sales growth of traditional coffee.

As individuals design their own products they will also have the ability to pick the ingredients and/or materials, enabling them to make ethical choices from the source right through to disposal. As a brand, your ability to control your supply chain will thereby become even more important – because your consumer will drop you if you can’t give her the right goods to make your product.

2. Two Classes

Income inequality is growing faster than ever before. The rich aren’t just getting richer – they are getting richer at a rate that is bad for the U.S. and global economy.

Simply put, income distribution in the U.S. and in the world is unsustainable. This isn’t an ethical issue but a sustainability issue. I am not making a judgment call on whether the rich should or should not own as much as they do or whether CEOs should get paid as much as what they do – I am merely looking at the impact of this fast growing income inequality. The impact hampers economic growth and, as the fall of the Roman Empire showed us, huge income inequalities are bad for countries. Today, the U.S. has a worse level of income inequality than the Roman Empire.

The long-term solution? Either get rid of it or find a way to ignore it.

The problem with the rich in Roman times was that they could not find a way to cut income inequality. They gave a little bit away but never did enough to change the underlying systemic problems and reasons for income inequality. The same is happening today in the U.S. and the world.

Universal health care gives the poor(er) a little bit of breathing space but does not challenge the nature of the economic system and the underlying challenges: an obsession with fast growth, short-term investors addicted to high profit margins irrespective of values, too-big-to-fail industries and companies rewarding high risk takers, and a reward system that encourages investors and business leaders disconnected from long term business and societal needs.

This growing income inequality isn’t just a widening of the gap between the rich and poor but, more importantly, changing the nature of the middle class. The middle class has always been the bridge of hope between the poor and rich but now they are carrying an economic burden beyond their means and fast losing pace with the rich.

The new class system, unfortunately, isn’t between rich and poor but rather those who benefit from the system and those who “hang in there.”

While clearly unsustainable, there is little that can be done within the current economic system to alleviate this trend. The result: people will become even more entrenched in their class, defining their needs and wants according to their economic status – an acceptance of life rather than striving towards a new economic class.

However, this financial divide will also create a different kind of economic and social divide. Where you live, eat and play; what you buy and watch; and who you interact with, will increasingly be decided according to where you fall in this economic divide, creating a need for economic and social systems that can cater to both societies. You already see this with where people shop, what they drive, where they eat, what they watch, buy etc. Expect this trend to increase even faster over the coming years.

Examples can already be seen in the fast growing sharing economy as growing income inequality creates a new economic model that encourages sharing resources for financial gain – aided by developments like the growth of social media and the move toward cities. Uber, Sidecar, AirBnB, etc. allow anyone to start their own business and make it personal – but I bet their target audience isn’t those who buy Ferraris or who stay at the Four Seasons.

It is, in fact, a combination of all these trends that is leading to a major shift in how people are adapting the capitalist system to address their needs – but away from the big business model. And regardless of the outcome, it is clear that the impact will change the very nature of business in years to come.

3. 3D Printing

Like the stories of rock bands, the instant sensation of 3D printing has been 30 years in the making. While, the discussions today are about immediate controversies such as printing guns, the real disruption with 3D printing will be the ability to print stuff we use every single day – it is already printing apparel and footwear and food, and even human organs!

Imagine the future in 50 years when we will be able to print everything we need from our homes or local 3D print locations. Our food, clothes, furniture, even replacement organs and everything in between. The challenge is not the technology but the delivery of the “ink” to the printers. Traditional transportation methods – trucks and trains – won’t be able to keep up with the demand, likely leading to delivery via pipes and cables, much like gas and water today.

While 3D printing has the potential to have significant impact on infrastructure development and transportation, we are decades away from fruition. Today’s infrastructure is not geared toward delivering the world of tomorrow. Expect a transformation of cities and how we live and move around, which will lead to enormous changes across supply chains globally.

With people printing their Levi’s or Timberland’s or even the Big Mac at home, raw materials will be able to skip the middleman – the manufacturer. In other words, 3D printing will complete the move from brands controlling both design and manufacturing to becoming nothing more than design houses.

4. New Generation Gap

The last mega trend is the way social media is changing how we experience information and form relationships. There is a new generation gap between those who see new technologies and social media as an additional way to communicate and interact and those who see it as the only way to communicate.

Social media does not replace personal experiences or the importance of building physical presence to start a relationship – it enhances those relationships. It is an additional way to stay connected with your “network” no matter where they are. And, of course, another way you can consume.

But the younger crowd experiences this new social world differently.

For them the new technology is a natural extension of how they make friends and interact with the world. A snapchat is as good as a handshake. The need for physical interaction is not necessary any more to build trusted relationships anymore.

This is a huge shift in how humans have developed relationships and organized themselves. The suburb of tomorrow has gone digital – a place where people go to be with their own community. And then they step outside (if they really have to) to go to work. Social media, like little else, will change the landscape of tomorrow completely. Mega cities just need to connect to us via wireless. We can order cars through a sharing app. Work is a video away.

In other words, social media confirms the move to the personal and will challenge how we organize our social, economic and political systems.

So what will the world of tomorrow look like? Will it be a world of selfish individuals printing their ideal partners at home in their connected mega city apartment? Or will it be one where the individual is celebrated as making up this new connected world where we share what we can eat and print?

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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.

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Everything seems to be turning green. And there is nothing wrong with that – companies creating new, innovative products and services that are good for them and good for the environment. But consumers haven’t completely bought into this yet. A number of green products aren’t flying off the shelves the way companies anticipated. Why is it that the green revolution has taken companies by storm, but not consumers? With the environment at the forefront of consumer concerns, it makes one wonder, why consumers aren’t dropping the bad stuff and buying the good stuff. We build it, but they just won’t come.Why? 

Some products are a big hit with consumers – the Prius and CFL light bulbs are taking off in a big way. So why aren’t they buying green shoes, food, computers, etc.? 

There are many reasons why people buy certain products and not others – price, functionality, “coolness,” brand loyalty, etc. One often overlooked factor is: how do the environmental aspects of the product help the consumer? 

Let’s first look at why the Prius and the CFL light bulb are so popular. They allow consumers to feel better about themselves when they use these products. A person starts their Prius and immediately feels “greener” than their neighbor with the gas-guzzling SUV. They feel better and more environmentally responsible with every mile they drive. It is the action of driving that makes them “green.” The same goes for a CFL light bulb. They feel better about themselves each and every time they turn on the lights. The simple action of switching on the light enables them to feel like an environmental “activist” – that they are making a difference.  

You said you wanted a green car...
You said you wanted a green car…

The environmental benefit doesn’t come from the company making the Prius or the CFL light bulb. The “goodness” comes from the consumer using the product instead of an alternative product. A Prius isn’t a car – it is an environmental tool for the consumer. The CFL light bulb doesn’t just provide light – it provides the consumer with an opportunity to make a difference through the simple action of flipping the switch. 

The success of these “green” products lies in enabling the consumer to take action. The act of making a difference through using these products makes them successful. So many green failures can be traced back to lacking this fundamental element – allowing consumers to feel “green” each time they use a product. When all the “goodness” is in the making of the product and not in the using of the product, no other action is expected from the consumer. The only action the consumer needs to take is buying the product. But the act of buying is not perceived as an act of environmental activism. This doesn’t allow the consumer to feel that they are taking environmental action. 

Buying a green product, that’s green qualities are all in the production phase, leaves the consumer with a very basic question: what about me? 

You want to sell a green product? Then let your consumer be part of the “greenness.” Give them something that they can do apart from just buying the product. Give them a way to take action. Let it be easy – like starting a Prius or flipping a light switch. Give consumers simple actions that make them feel like they are making a difference each and every time they use your product. Let them be part of the change.

But what about those products that can’t make consumers feel that they are part of the green actions – that don’t turn them into “green activists” purely through the use of the product? Here companies need to be a little more subtle in their approach…

David Connor made me think of the role between a company and its consumers. David is one of a handful of people I admire for their thinking and pushing Sustainability/CSR forward. A true leader in the field. It helps that he is a fellow Liverpool supporter as well… You must follow him on Twitter (@davidcoethica) and bookmark his blog for regular reading – David Coethica’s Blog. Great guy and great CSR/Sustainability strategist.

In a recent blog he explores the relationship between a company and the consumer. What role should the company play in promoting sustainable products to consumers? Should a company put sustainability at the front and center of their communications to consumers? Should companies educate consumers about their impact and sustainability?

Well, if you are selling a Prius or a CFL lightbulb it might help. But even then you have to be very, very careful. The Prius struggled initially to get a foothold in the UK market. Why? Because they tried to sell it as the environmental car. So a few environmentalist bought the car but not too many others. They changed tactics and sold the car as a cool car for the younger crowd with some fuel efficiency thrown in to seal the deal. Bang – they were up and running. See the difference? They didn’t try to sell a green car as the primary reason the second time around.

Once you move away from the Prius example it gets even more complicated.

David argues that companies should do more to provide consumers with more information and education. The problem is that most consumers are very specific about what they want, why they want it and when they want it. Now remember, neither David or I are the average consumer. We work in sustainability and tend to be more sensitive to these issues. The average consumer shows no or little interest. They’ll tell us they will buy a green product and they may pay a premium. The truth is more complicated than that. We just don’t see them flocking in huge numbers to buy green products. (More on this in a future blog – consumer behaviour and movement towards sustainable products are evolutionary and not revolutionary. They move slow but steady in that direction in most cases.)

But the average consumer want their coffee when they go to Starbucks, boots when they go to Timberland etc. They don’t want you to complicate their need and want by telling them about all the “other stuff” when their need and want is clear. That’s the quickest way to alienate the average consumer.

Let me show you a funnel I created to try to make the point:

When you talk to the group on the left you can be as detailed as you want. They know the stuff and they are interested in it. However, when talking to the group on the far right you need to know that the majority of people fall in this area and are not interested in the “added baggage” of sustainability. They just want their “stuff”.

Companies must be careful to balance their engagement with consumers to both the topic that is relevant and the place where it is relevant. This is at the heart of “shared value” (there, I said it!) – don’t preach and don’t oversell, rather empower subtly. Companies must remember to keep the “act” part of what they do separate from the “talking” part. Do what you have to do as a company to be sustainable and have it embedded in the business – but don’t confuse that with what you talk about when engaging consumers. They don’t care about all the detail – only “what can I do and keep it simple”. And… “Give me my stuff!”

The easiest and most effective way to empower consumers is to not actually tell them they are being more sustainable. Be so subtle that they don’t even know they are becoming more sustainable. You can tell them later and give them a nice surprise. Draw them down the funnel from “I just want my stuff” on the right to “what’s your sustainability strategy” on the left.

This way the company can focus on their sustainability as it benefits the company and society (and the environment) – the doing part – and help consumers become more sustainable without them knowing it. An example – Starbucks can tell the consumer about where they get their coffee and how they source it all they want but the average consumer just want their cup of Starbucks. So Starbucks have great sourcing practices but sell the consumer their coffee and sometimes tell them subtly that it’s a damn fine cup of coffee on more than just taste level. It confirms the purchasing decision already made instead of driving new sales. It builds customer loyalty instead of new customers. That’s how most consumers think and act.

Keeping with the Starbucks example – what consumer do care about is the place where they share an impact with Starbucks. In their case it is the cup. They don’t really care how the coffee was sourced or if the building is LEED certified or not. They care about what to do about the cup once they’ve had their coffee. So Starbucks helps them recycle and encourages them to use tumblers. They can try to educate the consumer about sustainability and how the consumer can be more sustainable but the reaction from the majority of consumers will be, “What are you on about, dude? Just give me my damn coffee!”

The lesson from this is for companies to focus on that area where they have a “shared value” with the consumer. Where they have a mutual responsibility or an impact they share. For the electronics industry this is about “what the heck do I do with my old stuff?” This is especially true in a world where electronics are becoming another commodity for consumers to replace and dispose with ease. The “shared value” (said it again!) is companies empowering the consumer to dispose of the product in an easy way at the point of purchase. Their key consumer focus should therefore be about making recycling as easy as possible.

Recycling might not be the sexiest sustainability topic but it is, in most cases, still the most relevant one from a consumer experience perspective. Boring for those on the left of the funnel but actionable and empowering for those on the right of the funnel. It’s one of few places where you share an impact and a responsibility with the consumer.

The next step is helping consumers make the right choice. There are so many gadgets out there today – how do you choose the right one? By going to a store and asking the person behind the counter what is the best choice for them. What product fit their specific need. This can’t be done online as there are just too many factors and too many different products. Trying it online will alienate the consumer quickly. Even those companies who have sustainability as part of their brand knows that you can’t do it online. The rule of online commerce is “keep the clicks to a minimum”. Comapnies such as Timberland, Starbucks, M&S etc keep the purchasing easy and uncomplicated. It’s a different ballgame when they are in your store nthough. By empowering your employees you can help the consumer become more sustainable by matching their need with the right product. How is this more sustainable? By helping them make the right choice you ensure that they won’t replace it as easilyor quickly because the product match their need. You don’t sell them a car if they really only wanted a t-shirt…

Note, in neither of these cases do we even need to mention the word sustainability or CSR. “Hey Mr Consumer, let me help you pick the right product to match your need.” It’s sustainability disguised as good customer service! Don’t “educate” your consumer. This feels like preaching to them and they smell through the bull pretty easy. Or they will get alienated by the overload of information when all they wanted was their “stuff”. Educating consumers about sustainability is overrated in my eyes. (So much is going on in educating the consumer that we’re in danger of creating white noise where no one hears anything anymore.) Focus on the relationship you have with them and focus on your mutual responsibility. Don’t use big word. Make it easy. Once they are in the habit of expecting these then you can tell them what you two just did jointly and pull them down the funnel into a new world of sustainable opportunities.

In conclusion – the most effective way to share sustainability with the average consumer is by making it easy for them and not always telling them (or preaching to them) that they are involved in any form of sustainability. It should just become part of their daily purchasing actions without them even knowing it. That’s the one side of the funnel – the consumer side. When talking to people on the other side – the influencers – then it is okay to show how these play out and how the company thinks. But influencers (me included) are not the average consumer and need a different approach.

This is not what David fear – “Am I the only person that is scared that far too many retailers are waiting for consumers to dictate the sustainability revolution?” It is being smart in how you pull them into sustainability. It’s talking their language, understanding their purchasing habit and making sustainability part of their decisions without knocking them over the head with it. It’s subtle but effective. It changes habits and expectations without them knowing it. It’s like teaching a baby to speak or walk. They can’t remember who did helped them and no one said “walk or talk” to them. We taught them these new skills without them knowing we were doing it. And they haven’t dropped these taught behaviours and actions – it becamse part of their lives. And they will teach others to do the same one day.

I don’t think David will necessarily disagree with me. But I think we need to be very careful when we talk to consumers about sustainability. The last thing you want is them to say you are greenwashing or alienate them because of the overload of information. Remember why they come to you in the first place – to get their “stuff”. Help them pick the right stuff to fit their needs and help them dispose of it responsibly. And they don’t even need to know you are doing it to be sustainable or help them be more sustainable. It changes the way they act without them even knowing it. They will become more sustainable without even knowing it. Now that is sustainability.

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 Is to make money right? Absolutely yes, but let’s not kid ourselves – there are rules. It’s not as if you can just do what you want to do. The “free market” might sound like a pretty neat idea but that only exists in theory. If markets were truly free we wouldn’t have all the subsidies, incentives, trade limitations etc that almost all companies benefit from or lobby for in some or other way. All markets are regulated to ensure that they serve a purpose. A social purpose that goes beyond shareholder gains only.

Do companies seriously want to debate this? Then give back your subsidy. Drop the demands for more favorable trade rules. Your business is about making money within a set of rules. Live with it even when all those rules don’t slap you on the back and give you money.

Some rules are written into law and you have to comply to them. But some rules are unwritten – the social contract you have with society as a whole.

Let’s put it in another way. We have laws regulating individual behaviour. These laws did not come from nowhere. Before they became written law, they were the unwritten rules we had as a society to organize ourselves and somehow get us to live in some sort of pact – harmony being a dream only. Before we wrote down a law that said – don’t kill, murder etc – we had that as part of the societal contract. It was a societal contract governing our behaviour. One that organized how we lived with and amongst each other and the roles and responsibilities each of us had towards each other and ourselves. We “gave up” our freedom to pillage and burn to gain from living with each other. A societal contract that defines and creates society. One that helped us move forward as a specie instead of going off driving individual gain only. There are and were many of these societal contracts to help drive cohesion. Stealing, murder, property rights, trade etc.

It’s the same for business. There have been unwritten rules of engagement – the societal contract to ensure that they serve a broader positive societal role and not purely out for personal gain. For example – Rule one, don’t sell me snake oil. And eventually that made it into law. Don’t sell me food that will kill me. That eventually became law. All of these regulations are there to underscore the societal contract that existed before the actual law was written.

And like any law, it became more complicated the longer we lived together as a society. Those who don’t value the societal contract will try to find new ways to break it to stay within the written law or even change the written law. But because they are breaking the unwritten societal contract, we need to rewrite and bring in new written laws. Take killing for instance. It was pretty simple, you shouldn’t kill someone else. Well, what happens if it was by accident? Or in self-defense. Oops, let’s expand on that law a bit. And it becomes more complicated each day as people and companies try to find new ways to break the societal contract by finding ways to undermine the written law. (I wonder if these ‘complications’ with writing the societal contract into law were the first example of lobbying as well?)

Business cannot just operate the way it wants. It serves a societal need whether it is bringing the goods we need to us via a retail shop or provide us with the fuel we need to keep us warm or just get around. It does not have the freedom to do what it wants to do for the sake of itself. It must serve a purpose (real or perceived – thank you advertising) and play within the written and unwritten rules. You can’t exploit workers for the benefit of your bottom line. You cannot dump toxic materials into the water streams used as drinking water just because it is better for your bottom line. You can’t knowingly sell a product that will kill people even if it does help your bottom line. You can’t lie to people about what your product does just to increase your bottom line. You can’t use your bottom line as the sole reason why you do something – legal or illegal. That bottom line is not always in the interest of the bottom line of society – to live and prosper.

The unwritten rules and social contract with society is based on trust. People trust that you will do the right thing. It’s why people tend not to like government regulating behaviour – it not only creates the perception that it limits freedom but it goes against the principle of trust. And, of course, government will argue that these laws are there to serve the societal contract and ensure (consumer) protection from those who refuse to work within the spirit of the societal contract. The societal contract is based on trust. But lobbying behind their backs to “get away with it” because of greed or any other reason breaks that trust. The trust is broken when companies lie about their impact and when their impact is not beneficial to society – today or tomorrow. Especially if the company does it on purpose – knowingly. When you break that trust you break the societal contract. Then you cease to have a reason to exist. It’s not in the interest of the societal bottom line.

So, the business of business is to make money but only within the confinements of the societal contract – written or unwritten. The next time you lobby for something that is in the best interest of your company or you hide your true impact or your falsely advertise the benefits or impact of your product or service, do ask yourself if you are breaking the unwritten contract that you have with society.

Do you serve a purpose that is beneficial to society? And please refrain from drinking the Kool Aid. Think before you drink. Consider the truth before you answer. Because you are also a member of our society.

The business of business is to serve a societal purpose. We love it when you make money while doing this and we see this as the reward we provide you because you are one of us and doing something good for all of us. Now go and have a purpose. A real one.

So the next time you use the line of “the business of business is business” or argue against CSR or sustainability – please think again. Your responsibility might lie with your shareholders but your licence to operate lies with us. The people. CSR and sustainability is our way of defining the rules for you. We don’t expect you to like it but that’s the way the cookie crumbles. Live with it. Implement it. Embrace it. Or maybe we’ll just have to revoke your licence.

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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.

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I have been trying really hard. Really, really hard. You know. To be a treehugger. I think the whole concept of being a treehugger is really cool. You get to have the beard, the nice lean and muscled body, tanned and tough as nails. With my sunglasses and Bermuda shorts. Sandals and a knowing look in my eyes. Man. I am so cool. Me, the treehugger. But first, let me find a treehugging job…

The rebel of the forest. Defending the last natural old forests of our precious earth. These beautiful beasts whose breath gives us our precious clean air. The green jungles that hides the therapy for the soul and body. It’s there and we must protect it. And that’s what I do. I live in the forest. Patrolling every inch to make sure these wise old trees stay safe. Safe from the loggers. I am the phantom. I live in the trees at night and run like a tiger during the day. Stopping and smelling the air to see who is here. Who will feel the wrath of the rebel. But… Eww! What is that? What is that smell? It smells like something rotten – must be the dead carcasses. And those creepy crawlies! Worms and bugs all over the place. And the bloody ants crawl up my pants the whole time. And the food stink – fruits day in and day out. I need a BigMac now! And just water and water and water. If it isn’t drinking this foul stuff then it is raining and raining and raining. I now get why they call it the rainforest. It’s always bloody-well raining. Gotta get outta here. I need some fresh air, a warm bath, a beer and a braai (barbecue).

The activist of the seas. I can see myself. Standing at the bow of the boat. Scanning the horizon for those whale-hunters. Now I am the hunter. Like a pirate of old. Ready. Just ready to take them down. They don’t know my rage. My fury. I am the king of the high seas. I have seen things on these seas of mine. Corpses of people. And corpses of animals. Those dead whales we try and save. But not anymore. Not on my watch. I will… Pthu! Bloody seawater sprays everywhere. Standing on the bow wasn’t such a good idea after all. The water sprays everywhere. Salty water in my mouth. My body feels sticky all the time. And all we get to eat is bloody fish and more fish. And crap desalinated water. The boat stinks man. Like dead fish and men who haven’t had a proper wash in months. My hair is a permanent mess. And my hands. My poor hands. Cut to pieces by working the lines and ship each day. Oh, man. It doesn’t help that I get seasick from watching fish-tanks either. Gotta get of this ship. Now! I need some clean linen, a warm bath, a beer and a braai.

Okay. So I can’t be an active treehugger. That’s fine. I’ll just be a greenie. I’ll just live green then…

It’s a good start. I use public transport. Okay, I don’t use it because of any green reasons. I am just too bloody lazy to drive to work myself. I have too short a temper to sit in the traffic all day. And I am too stingy to pay for parking and tolls. But still. It is a good start. Oh, wait. I also have a refillable mug for my daily Starbucks fix. I am saving a few rainforests that way. No cup for me. No sirree, Bob! Not for me. Except when I forget my cup at home. Or when I am too lazy to clean my cup for a refil. Still. It’s the idea that counts though. Doesn’t it?

My problem is that I want cool stuff. The jobs look cool. But it isn’t really. It’s only cool if people can see you do it. And there is no camera following me. Treehugging just isn’t cool enough for me. Me fighting global warming? No problem. Just make it a bit cooler dude. Global warming just isn’t that cool.

I mean really. The iPad is cool. A red Ferrari is cool. The Kinect is cool. So many companies make cool stuff. Not green stuff. But that’s cool. As long as it is cool dude. That’s the problem with treehugging. The stuff that make us want to hug trees just aren’t cool man. And at my age I need to have cool stuff. Because I am not cool enough by just my little older almost middle-aged self.

So gadgets don’t work for me trying to be cool and a greenie. Let’s try something else. Something that says cool and green in a big way.

Let’s buy a Prius! Okay, let’s not. The Prius is just not cool. It’s a lunchbox on wheels. An ugly lunchbox. Come on. The Dodge Challenger. Now that is cool. The Toyota FJ Cruiser. Now that is cool. I can see myself behind the wheel of a brand new red Challenger. Sunglasses and all. Revving the motor while eyeing the guy at the traffic lights. Ready to smell my tires dude? Bye-bye. Oh, and the surfboard on the roof of the FJ Cruiser as I sit on the bumper looking at the waves through my cool Ray-Ban glasses. Now that’s cool. The Prius? Nah. Not so cool. I’ll look like the man I am – on the older side of the surfer group. All I can fit into the Prius is my neat little suitcase and a clean shirt for work.

The problem is that most stuff that makes treehugging easier just isn’t cool. Oh, there is a few cool stuff out there. Wind-farms. That’s cool. Neat Apple-like designs. That’s way cool. One small problem though. I can’t carry it around with me to show it off. And you need to show it off if you want to be cool. Oh, and it will take up the whole bloody backyard. Kids won’t like that I think.

Global warming is even more difficult. I can’t point to it. I can’t go, “See, there it is. There are those damn CO2’s”. Just too little these things. These stupid little molecules. Wind-farm to big and CO2 too little. That just ain’t cool. That’s so way not cool.

But those kids of mine. I sometimes wonder. Just wonder how cool it will be when they grow up. Will it be too warm when they are my age? Might be a bit too warm for them. A little bit too warm to live? And that is so way not cool…

Maybe it is time for a change. Climate change. Now that is way cool!

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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.

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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.

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