For any company entertaining the idea of implementing a Corporate Social Responsibility (CSR) programme in their business, the main barriers to adoption have always been the high startup costs and inadequate return on investment; but perhaps we should reframe the question and consider the cost of not doing so.
With the rise of consumer expectations for environmental stewardship and social responsibility, combined with the long-term worldwide shift towards conscious consumption, CSR has gone mainstream as global brands from British Petroleum to GE repaint themselves in a greener hue. They believe a company can do the right thing environmentally and still make money doing it.
The former has even gone so far as to change the meaning of their very name to Beyond Petroleum, while GE has adopted ecomagination as their primary marketing message although one must wonder what exactly is eco-friendly about manufacturing nuclear weapon but never mind; where GE goes, the rest of corporate America must follow. And thereafter, the world.
Indeed, BRIC (Brazil, Russia, India and China) and other developing nations must come to terms with the fact that, in perpetual endeavours to level playing fields, they too will be required to meet ever stricter environmental standards for their products if they are to enter larger consumer markets.
K&N, a pioneer in Pakistan’s frozen poultry products industry, has placed strict bio-security measures in all its breeder farms. Its environment-controlled houses are equipped with modern ventilation, cooling and heating equipment which reduces the risk of disease transmission through mechanically and physically transferred disease causative agents. That’s better for us humans, but well have to explore how the chickens feel about it certainly better than the corner store poultry-keeper’s cramped style, we hope.
Across the globe, educated consumers are greening on their way to becoming green. Theyre leaning more and more towards brands that are good for both their families and the planet and this has led to a fundamental shift in how they buy. There is a new purchasing equation: given a choice (ceteris paribus: all other things being equal), the informed consumer chooses the ethically sourced brand. Note: this calculation demands that price, quality, efficacy, availability, and service all be equal]. The key word here is informed, and today the consumer is more informed than ever.
This product information is manifested by a new breed of consumers in several ways: the purchases they make, the brands they support, the companies in which they choose to invest, the web link they forward to friends, and the opt-in advertising they accept.
So what might be the criteria that a forward – leaning – or Renaissance – brand must possess to survive in the modern marketplace?
Perhaps well call them The Fab Five
1. They honour the importance of a corporate conscience: Ethics
Milton Friedman declared, the business of business is business. Not these days; companies that ignore public sentiment make themselves vulnerable to attack and will be punished in the marketplace. Corporations can no longer make the environment an externality as companies from Union Carbide, Exxon, and Nike can attest. Indeed, in a 2005 Wirthlin Worldwide survey, 82% of those questioned said that corporate citizenship has at least some influence on their buying decisions.
Twenty-first century companies such as Google understand this, as their Letter from the Founders states: We believe strongly that in the long term, we will be better served -as shareholders and in all other ways- by a company that does good things for the world even if we forgo some short-term gains. This is an important aspect of our culture and is broadly shared within the company. We aspire to make Google an institution that makes the world a better place.
They, more than most, know the internet has brought new levels of business transparency where actions are as important as what companies say in their marketing, and nothing kills a brand faster than saying one thing in your advertising, and doing another.
2. They adhere to global labour standards and practices: Wages
They support Global Fair Trade agreements and undertake a responsibility to support a fair and honest marketplace.
As Nike discovered, to their cost, one ill-advised production decision to have Vietnamese twelve-year-olds manufacture sneakers in sweat shops caused untold harm to their brand image and undid a decade of great advertising.
The anti-corporate position taken by fashion brand American Apparel illustrates the point: they tout their products as being manufactured without sweat-shop labour. They understand that today’s sophisticated Gen-MySpace consumer isn’t buying a product, theyre buying an experience. Brands have become more than just brands: they express us; an expression of our creativity, they’ve become a badge of individualism; and truly great brands transcend their category to become something bigger – they become a statement of our values.
And so the emphasis has moved from what the product does (the golden age of the Unique Selling Proposition) to how the brand makes you feel. The consumer’s internal monologue says: Yes, this brand understands and connects with me. I want to support this company and everything it stands for. I want it to succeed and become ubiquitous.
As Bob Lutz, former Head of Design at GM says, These days when everything mechanically in a car is great, design becomes a huge differentiation. The interior assumes a bigger role because it’s where the customer lives… If you don’t meet people’s psychological needs you’re dead.
3. They tread lightly on the planet: Environment
They strive to reduce their ecological footprint and deliver a product or service whereby no human being or animal is harmed by the manufacture of its goods or service.
Thus, enlightened growers might use organic farming methods that safeguard the health of soil and water resources, protect biodiversity, reduce their ecological footprint, and support sustainable agriculture.
Auto manufacturers would build cars that run on clean-air combustion or hybrid technologies; have a high percentage of recyclable parts; aggressively employ recycling technologies for end-of-life products; and are manufactured in an environmentally conscious method.
Health and beauty products would be organic, free from synthetic additives, not animal-tested, bio-degradable with raw materials such as palm oil sourced sustain-ably and not acquired as a result of felled virgin peatlands in Indonesia for instance. Indonesian peatlands are a huge source of carbon. According to Greenpeace, an environmental activist group, burning of Indonesian peatlands accounts for 4% of total global greenhouse gas emissions. Rampant defore-station in the peatlands and forests has made Indonesia the third largest emitter of carbon in the world.
The printed media industry would use 100% post-consumer recycled, unbleached paper and non-toxic printing inks.
The fast food industry would only purchase meat and poultry that is antibiotic-, hormone-, and nitrate-free; and has no artificial preservatives, or ingredients.
Household products would be non-toxic and environmentally safe, with consumer information leading users to, for instance, prefer vinegar over bleach for most purposes.
In Pakistan, Engro Chemical has successfully reduced the emission of green house gases (CO and CO2) on its per ton urea production from 850 kg CO2 per ton of urea in 2006. The reduction is perhaps directly linked to its energy conservation profile. As cited in Engroâ€™s 2005 Sustainability Report: over fifteen years, the company was able to reduce its energy consumption by over 31 percent.
4. They run counter to the global consolidation trend, offering more: Choice
This is not anti-globalisation, it is anti-consolidation; anything that limits consumer choice. Many of us are unhappy living in a Coke-or-Pepsi world and believe we deserve a wider choice of healthy products.
In the first decade of the American auto industry, there were 346 different car companies. Buick, Cadillac and Chevrolet were all independent before they merged to form General Motors. And now there are two.
In Pakistan, the emergence of MakkahColas, AmratColas and the like are a brand example of consumer empowerment through increased choice. Better still, perhaps are the examples of Pakola-ethnically flavoured milk-based drinks.
This innovation-based culture however is, knowingly or otherwise, often stifled by larger MNCs, through their bulky leverage controlling upstream and downstream supply chains. MakkahCola for instance had to shut down for various related reasons. Lack of consumer awareness of such issues often leads to un-empowered purchasing decisions where consumers are not fully aware of the consequences of their choices.
5. They espouse sustainability for future generations: The Future
They are moving toward sustainability in their business models and preserving our planets non-renewable resources for those yet to be born.
Big business is getting the message: Honda’s new 213,000-square-foot “Green Facility” car factory in Gresham, Oregon is the first Leadership in Energy and Environmental Design (LEED) Gold certified mixed-use industrial building. LEED is a Green Building Rating System. The building’s rainwater collection system gathers accumulated rainwater on the roof and funnels it into a 90,000-gallon storage tank and is used to irrigate landscaping and supply water for toilets; their conference room wall coverings are made from recycled telephone books, and the tabletops are made from compressed sunflower seeds. And the sweetest irony of all? The hallway flooring is made from recycled car tires.
Companies such as Honda are working towards a healthier future and a less polluted world. They are many years ahead of environmental legislation not only because they know it’s good for their corporate image, but because it’s a viable business model and they know compliance costs ten years down the road will be prohibitive. They are choosing to build a meaningful company that improves people’s lives.
And so, a headwind is turning into a tailwind: green is moving from niche to mainstream; the word no longer needs to be phrased in quotation marks. Environmentalism is an idea whose time has arrived: companies that choose to embrace it will leverage the power of consumer choice and build corporations with a conscience. Those that shun it are truly on the wrong side of history and will be penalized by the markets, markets that are increasingly informed and empowered.
Nestle Philippines, for example, initiated its Greening the Supply Chain. The program, running over the last couple of years, set out from board level to encourage business partners to adopt environmental management. The company has now recruited 55 more of its 300 or so suppliers to join the scheme. The programme aims to encourage sound environmental practices, as well as realising economic benefits.
As Machiavelli, a figure from Pakistan’s own Taxila-sprung Ardh Shastrae, said, He is prosperous who adapts his mode of proceedings to the qualities of the times.
But whose times? It is up to us to define our times. 150 years ago American Calvinists said, Business is about making money, and life is about doing good, and the two are not mutually exclusive.
It is key for tbl readership to analyse and apply the business values both in our cultural and religious heritage. Indeed, there is nothing new except that which has been forgotten.