Corporate social irresponsibility?
You’d have to live under a rock to escape the ‘sustainability’ bandwagon that everyone’s jumping on. Personally, I’m all about it. I consider myself a ‘semi-conscious’ consumer, who genuinely cares about the environment. I don’t go to the extremes of making my own toothpaste or drive an EV, but I do believe that we need to be more considerate to the world we live in and the creatures within it. Otherwise we’re all f***ked, right?
So this brings me to ‘corporate social responsibility’. An idea created in the 1980s and drilled into me at university. Pitched as the ‘future’ of big business, CSR is made up of two basic principles. 1. Rigorous compliance with financial and legal rules. 2. Embracing ethical actions that go beyond making profits. Needless to say, I drank the cool-aid. My youthful naivety eventually wore off and I’ve begun to realise some major flaws. Are these CSR initiatives creating real world results? Is it really just a way to distract people from all the other bad things you’re doing in the background? Does it really create responsible corporations? Here’s my thinking…
A little good, with a side of ‘stuff it’.
Corporates are good at making money. That’s the crux of it. What they aren’t so good at is developing CSR initiatives that extend beyond the annual report and into real world. The theory of ‘moral licensing’ plays into this topic as it creates a greater tendency to act ‘immorally’ if we’ve already displayed our ‘moral’ integrity. Which is one of the things CSR does for corporations.
A famous example of this is Volkswagen, which In 2015 claimed to have created a ‘clean’ diesel engine. Consumers thought they had hit the jackpot. A ‘testament to their environmental CSR initiatives’. Initiatives in 2014 included statements such as – ‘Environmentally friendly products’ and ‘Climate and environmental protection’. But it was all bull. The shiny new ‘clean’ diesel engines were anything but this. Eventually the media caught wind that the company was being accused of falsifying emissions tests. Sure enough, this was closely followed by flurry of resignations from top execs. And Oliver Schmidt, who led VW’s engineering and environmental office in Michigan was sentenced to seven years in prison for his role in the scandal, along with 6 other VW employees.
It looks like they had a great idea with good intentions but didn’t quite know how to execute it. So they decided to fake it. Is this moral licensing in action? Or just straight up corruption? Either way, the environment lost out to short term profit, which means that for Volkswagen, CSR is a marketing exercise. And we all know that’s the tip of the iceberg when it comes to empty words on a CSR report..
No one likes to nark, especially on themselves.
Imagine you’re a kid running in the house, mums told you not too because you might knock over that very expensive macramé egg from Nana. One day you’re running around inside, knowing full well you shouldn’t, when you hear a loud BANG and Nans egg is in pieces on the floor. You look, no one’s seen you, so you slink away, pretend nothing happened and hope mum won’t find out. This is sort of what it’s like with CSR. You’re trusting a child (the corporation) to ‘tattle’ on its bad behaviour.
Like a child, corporations would more often than not cover up the ‘whoopsy’ rather than face the consequence. But unlike a child, they should know better. The Oil and Gas industry were massive adopters of CSR. Makes sense, right? But unlike the child in the story they don’t have mum there making sure they aren’t running around the house breaking stuff. A big part of CSR is voluntary reporting, which means the business is meant to report back on all the socially responsible or irresponsible things they are doing. For example, BP’s 2006 CSR reports stated a total of 417 oil spills over that year. But their 2010 CSR report only attributed 300 oil spills to 2006. Meaning 117 oil spills disappeared from BPs records. Seems odd right? Most large oil companies use external organisations to verify their CSR reports, but the self-reported environmental indicators go unquestioned. Moral of the story, you can’t trust corporations to snitch on themselves.
The social enterprise silver lining.
You’ve read this far and might think I am some antiestablishment hipster. But trust me, I’m not. The way I see it, corporations are big, old fashioned, slow moving beasts. Their traditional approach to business is so entrenched in their business model that it’s harder to implement change that creates results. And quite frankly it’s the antithesis of the fast-moving world we live in. So what’s the solution?
Where I see opportunity is Social Enterprise. And I think my fellow millennials and Gen Z will agree with me. To qualify as a Social Enterprise, you have to apply commercial strategies to achieve both business and social goals. It’s having a purpose that extends beyond making a profit. Fashion as an example is the second biggest polluting industry and has a bunch of human rights issues to boot. Yael Aflalo, founder of US clothing retailer Reformation, decided there was a better way to do fashion. So that’s what she did. How you ask? By developing an unconventional business model. Instead of making everything as cheap as possible, then slapping on a margin. Reformation source and recycle deadstock, repurpose vintage or use natural materials which have minimal impact of the planet through creation to end of life. They set standards to measure their business practises against the entire supply chain, from garment designs to retail stores. Proving that you can make money and do good at the same time.
Where to from here?
Whether you’re a Volkswagen a BP, or a hipster social enterprise, it’s clear the concept is far from perfect. The big change in the last few years is that consumers are demanding more than ever. They want to feel like their purchase decision is doing more than adding to the bottom line of some big corporation’s profit report. That’s why social enterprise could very well be big businesses, biggest competition even with a CSR report filled with glowing achievements.
At the end of the day, I believe CSR’s born of good intent. But there needs to be some fundamental changes made for it to be an effective concept. Good intent won’t cut it when all the bees die and our oceans are drowning in plastic. As the old saying goes ‘the road to hell was paved with good intentions.