It counts to (really) care
Consumers are unambiguous when it comes to the social responsibility of large companies. According to opinion research firm Ipsos-Mori, 77% of us expect companies to be doing more to contribute to society. A similar proportion (73%) says it will reward those that do. So do they? Well, that depends. Consumers, it seems, want to know not only what companies do but why they do it.
Motivation matters. Adopt corporate social responsibility (CSR) policies for less-than-honest reasons and consumers will smell a rat. And many do, this research suggests. Based on annual data submitted by more than 4,500 firms over a 19-year period, the authors find that many companies adopt CSR activities in the wake of health and safety disasters or major ethical wrongdoing: what the paper refers to as the “penance mechanism”.
A smaller number engages in CSR in the hope of generating reputational credits to help offset a brand-bashing ethical crisis should one ever arise. Neither approach pays off, however. Welcome though good practices may be, consumers don’t feel they are penance enough for past unethical behaviours. Worse still, they may well see it as “deceitful, seeking to ‘greenwash’ their past mistakes”. Nor does the second so-called “insurance mechanism” necessarily work. Why? Because the more noise that a company makes around CSR, the bigger the backlash if disaster strikes.
The paper investigates two more-positive motivations. One is when companies are doing well and feel flush enough to give some of it away through social programmes – what the paper refers to as “slack resources”. The other is far more frequent and is born from a conviction that CSR improves financial performance, be that through higher sales, greater customer loyalty, better media coverage or improved recruitment and retention.
The problem with the slack resources mechanism is that it’s flighty. The classic case is IBM, which poured money into CSR during the good times, only to row back fast when profits dropped. The “going well by doing good” firms, in contrast, not only persist longer but can genuinely expect to see significant financial returns from their CSR investments. “We hope [this] will encourage managers and their respective firms to act more conscientiously,” the paper concludes. Too right it should.
Kang C, Germann F and Grewal R (March 2016), “Washing Away Your Sins? Corporate Social Responsibility, Corporate Social Irresponsibility, and Firm Performance,” Journal of Marketing, Vol. 80 (2): 59-79.
Time to get honest about eco-labelling
Products get labelled as “green” in one of two ways – neither of them satisfactory. The first, and most common, is the presence of an environmentally friendly attribute, such as recycled or bio-based content. What the marketers keep quiet about is that the remainder of the product’s components may well derive from a non-renewable source or involve the release of waste, pollution or emissions.
The other means of earning an “eco” stamp is for a product to undergo a lifecycle assessment (LCA). A more thorough approach, for sure, but still far from perfect. LCAs involve charting the environmental impacts of a product’s complete components, then aggregating these environmental indicators and comparing them like with like. If a product’s overall profile performs well in comparison to the benchmark, it is considered “green”. Yet the rating is fundamentally relative. So green simply means greener than the rest, not green green.
Enter “net green”. Not a wholly novel concept, but one that the Stanford Social Innovation Review clearly feels is an idea whose time has come. In place of arbitrariness or relativism, net green accentuates positive change. If, and only if, a product reduces overall environmental impact should it be considered green, the theory’s advocates argue. The same standard can apply to whole businesses too. The idea marks a significant raising of the bar.
It’s not as simple as it sounds, however. Take car-sharing, often touted as a green alternative to individual car ownership. What if the ZipCars of this world persuade us to start using cars (albeit shared), instead of public transport? Or what if we drive further than usual because the costs are lower, or the car we’re sharing is an emissions-belching gas-guzzler? A study by University of California, Berkeley, for example, found that the majority (58%) of car-sharing users were previously carless. On the flip-side, only 17% got rid of their own cars after signing up. And most of those cars stay on the road, just with different owners. Ultimately, the authors of this paper rule in car-sharing’s favour, with every shared car calculated to decrease the production of just over half an additional vehicle.
Putting aside the complexity of the maths, the idea of net green is a welcome one mainly because it incorporates the environmental impacts of a product’s use, not just its manufacture. This pushes manufacturers to think seriously about consumer behavioural patterns and adapt both their product design and communications accordingly.
A final note: “net green”, as defined in this paper, remains ultimately relative. All things considered, is a product greener than it used to be or could be? Another version of the same term raises the bar yet further by asking whether a product’s very existence is ultimately a net positive for the environment. Examples of such products are few and far between. Answers on a postcard, please (recyclable, of course).
Zink T and Geyer R (Spring 2016), “There is no such this as a green product”, Stanford Social Innovation Review, Vol. 14 (2): 26-31
William Shutkin, the Richard M Gray Fellow in Sustainability Practice at Presidio Graduate School, is to step down in June. Shutkin is also resigning from his position as president and chief executive of the US graduate school, which enjoys a strong reputation in sustainable management education.
The 2016 International Conference on Sustainable Development, Business & Economics is due to take place 16-18 June in Amsterdam. The conference is supported by the International Journal of Business Tourism and Applied Sciences.