CSR — Who’s Really Benefitting?
They say the road to hell is paved with good intentions.
So too, apparently, is the road to corporate wrongdoing.
At least that’s the conclusion to be drawn from a new study, which found that being good, or simply talking about being good lead many individuals to subsequently be bad. Concluding that Corporate Social Responsibility is actually a bad thing, resulting in more irresponsible behavior. But what is CSR?
Well, broadly speaking, Corporate Social Responsibility encompasses the economic, legal, ethical and philanthropic expectations that society has of organisations. However, to put this concept into context, we can take a look at the release of Kylie Jenner’s latest Lip Kit colour. This time around, Jenner has created a pale pink shade called ‘SMILE,’ which will also benefit a cool cause. “SMILE!” she wrote on the Instagram picture. “So excited to reveal SMILE, a beautiful pale pink shade that I created in partnership with @SmileTrain for #WorldSmileDay. Smile is launching Monday, October 3 at 11am PST! 100% of net proceeds will go to Smile Train to support cleft surgery for children in the developing world.”
As picturesque as this may seem, Jenner has undertaken this initiative in an attempt to greenwash her brand, and promote a misleading perception about her products. The workers at Spatz Laboratories, who produce Kylie’s Lip Kit, have complained of dirty, unsafe working environments similar to a “sweatshop.” With another employee claiming that it wasn’t the working environment that was making her ill. The employee said the makeup they produce for Jenner made her sick. “Early morning shift hours…was only provided with a lab coat, hairnet and safety glasses…No benefits. I love that I could see how make up was made from start to finish (sic)…but the downfall is that the make up particles made me cough and sick,” the employee said.
In fact, with the expansion of socially responsible investing and green consumption, green advertising has increased almost tenfold in the last 20 years, and nearly tripled since 2006.
From Nike’s sweatshop crisis in the 1990’s, ethical controversies of Walmart in mid-2000s, to BP’s Deepwater Horizon oil spill in 2010, and now Volkswagen’s emission’s scandal in 2015, critics view these as misleading, even cynical, attempts to shape public perception about a company without it actually benefitting the environment. You see in many of these cases, the charities do not align with the values and objectives of the organisation, and in turn leads to a loss of reputation and profit for the company. They also make vague claims about ‘empowering workers’, and creating ‘a better world together’ without evidence or meaning. Instead, set up green-leaf-logo ‘sustainability foundations’ to whitewash and greenwash their industries.
There has also been debate around whether the Kylie Lip Kit formula differs from that of ColourPop’s line of lip glosses — one which costs consumer’s a fraction of the price ($6) of Jenner’s cosmetics ($29). While although Kylie Jenner may appear to have learnt from her socially irresponsible ways, by donating all net proceeds from her SMILE lip shade to cleft surgery in developing countries, this is misleading consumers about the actual environmental performance of her cosmetics line.
While the Kardashian’s business model can be picked at and poked fun of for many reasons, Jenner’s mishap illustrates the effort many organisations are making to benefit society — but is this a good thing?
Many companies may appear to be contributing back to society through charitable donations. However, If an organisation says that they are going to ‘educate women in Africa’ by donating $30,000 a year — is this a sustainable solution? And it must also not be forgotten that these donations are still tax deductible. But while this may appear to be a win-win situation for the organisation, this illustrates the pure business intentions of profit. So why undertake CSR at all?
While some argue that if a corporation throws money at a problem, society will still benefit, this can lead to doing more harm than good, as they simplify problems into pretty pictures and portray false solutions. The unfortunate reality is that most companies view CSR as public relations and marketing, and in turn use social issues for advertising campaigns, with some companies doing CSR out of their marketing budget. And in some cases, companies spend more advertising their CSR, than on the actual causes for social good.
What? You mean it’s not about saving the planet? Or Africa? Or the dolphins? No it’s not. You mean Nike and Exxon Mobil aren’t trying to empower female workers while saving the planet from boiling over?
Unfortunately no, while it would be nice, CSR is corporate brand management, and has become the new form of advertising.
Not only is using serious world problems to sell products unethical, it desensitizes people to these problems. So many will assume that since someone else is seemingly tackling these problems, nothing more needs to be done. While others will believe that purchasing products packaged with CSR imagery actually helps to solve these problems, however since almost every product now has a green leaf logo on the packaging, saving the environment requires nothing more than going shopping — in which case, earth, you are welcome.
While large corporations take advantage of this approach for boosting their organisation’s reputation, socially responsible practices can have a positive impact on the organisation, by improving managing environmental risks, employee retention, and differentiating their brand to achieve greater consumer loyalty. This also helps contribute to the recognition of a ‘triple bottom line’ performance that includes not only financial returns for owners but also social and environmental benefits for the greater society.
As organisation’s battle the line between serving the interests of society, and delivering a healthy profit to shareholders, I should note that there are companies that are actually able to successfully implement CSR initiatives throughout their business structure. For example, Patagonia, founded in 1973, is one of the largest retailers of sustainable outdoor clothing. Patagonia’s commitment to developing social and environmental standards as well as transparency has earned the company B Corp certification. For over 30 years, Patagonia has donated 1% of their annual sales to environmental charities and grassroots organisations. The company view these contributions, not as some arbitrary form of corporate philanthropy, but as one of their standard costs of doing business and something that is as much a core element of Patagonia as selling shirts and jackets.
Ben and Jerry’s only use fair trade ingredients and has developed a sustainability program for dairy farms in its home state of Vermont. Starbucks, another notable example, has created its C.A.F.E Practices guidelines, which are designed to ensure the company sources sustainably grown and processed coffee by evaluating the economic, social and environmental aspects of coffee production.
While, popular theorist, Milton Friedman, and other conservative critics have argued against CSR, stating that a corporation’s purpose is to maximise returns to its shareholders and that it does not have responsibilities to society as a whole. CSR is about more than donating money or printing double-sided to save trees, it’s about contributing to the health and welfare of society, operating transparently and ethically.
Using the money shareholders have invested in a corporation to support unprofitable causes is clearly wrong. Corporations benefit society best by distributing profits to owners, who can then make charitable donations or embark upon other initiatives to benefit society. Therefore, businesses should only pursue CSR activities that will improve long-term shareholder wealth in alignment with organisational brand values.
But now that I know all of this, what can I do about it?
Well, aside from adorning your cynical sunglasses next time you’re out swiping the plastic, here are a few great resources on how organisation’s compare on social responsibility, as well as the worst places in the world for workers.
Top 120 Australian and New Zealand Companies
AMR’s 2016 Corporate Reputation Index
So the next time you’re tossing up between, the latest Lip Kit, freshest kicks, or even just grabbing a coffee — think twice about what you’re actually supporting.
Originally published at The Isthmus.
