Harvard Business Review’s cover story this month, “Creating Shared Value,” should be a celebration of how far CSR (Corporate Social Responsibility) has taken us. Just look at how much closer we are to accepting CSR as a core competitive strategy. As fans of authors Michael Porter and Mark Kramer know, these two have been proponents of CSR for years, pushing the field forward with new ideas like “Strategic Philanthropy” and now, “Shared Value.” Most impressive about their latest article is its place on the cover of this conservative business journal.
Two years after Harvard Business School ran an alumni conference on the future of capitalism (which eerily coincided with Lehman’s collapse and market’s 900+ point drop), that institution’s journal leads with this article, subtitled “How to reinvent capitalism — and unleash a wave of innovation and growth.” Finally, the argument about whether CSR is key to our future or just window dressing seems to be put to rest.
I applaud the authors. But why, aside from promoting their consulting business, would they insist that CSR is discredited and should be replaced by Shared Value? They misstate CSR’s mission as “doing good” when in fact it is “doing well by doing good,” which is the same as their concept of Shared Value. In fact, until recently, they were huge supporters of CSR. In their 2006 article, “Strategy and Society: The Link Between Competitive Strategy and Corporate Social Responsibility,” they pointed out flaws in CSR but weighed in heavily in its support.
Whether you call it Shared Value, CSR, ESG, or Corporate Citizenship, or Sustainability, or Corporate Responsibility, or Triple Bottom Line or any of the other terms people use, we are all pushing the same agenda—to do well by doing good. And the term “CSR” is well known and accepted in business.
It has been written about extensively in the business press. Most controversially, it has appeared twice on the cover of The Economist. First, to dismiss it per Milton Friedman’s “The business of business is business,” then a second time, in support of the concept. CSR has a set of metrics in place through the 20+ year old SRI ratings, a self-reporting structure in GRI, and a requirement in many companies’ RFP’s for a CSR report. Insurance, risk assessment, accounting bodies including FASB and many other industries and institutions all have “CSR” or “Sustainability” efforts underway. Porter/Kramer do a great service in lifting the issue to the front page of business, but why would we want to abandon all the progress made under the CSR rubric?
With CSR finally accepted as a core business strategy, Porter/Kramer now jump into the fray not with ideas of how to move more companies into the “Doing well to do good” camp, but with arguments about why their new name and model is better than CSR. Worse, even though they have several branding pros on the staff of their consulting firm, they dismiss the value of communications in support of CSR as mere promotion, ignoring the importance of communication in changing consumer behavior. Many of the companies Porter/Kramer cite as examples of Shared Value have used their brand to change consumer behavior for the better (think ads and promotion for GE Energy Smart CFL light bulbs). Yet Porter/Kramer fail to mention this.
Watching TV last week, I came across a great example of CSR communications’ power to increase sales while saving the planet. The EPA confirms that in many cities, “The personal automobile is the single greatest polluter.” A key component to reducing these emissions will be the Electric Vehicle. Current ads for the Chevy Volt, the leading American-made Electric Vehicle (EV), are clearly good for Chevy’s brand reputation. But dismissing the ads as mere promotion misses the more important story: the advertising reduces fear of the EV by showing how easy it is to recharge, thereby persuading more consumers to buy EVs. If this is CSR, I’ll take it over Shared Value any day.
Originally published on CSRHub.com
The Port of Seattle’s CEO, Tay Yoshitani wants to run the greenest port in the country. Now that companies like Walmart and Costco are measuring the carbon footprint of their products as competitive differentiation, energy used by ship transport becomes an issue, including energy used at port stops. Yoshitani believes that the environment is a competitive issue, an ethical and economic opportunity. And 70% of cargo that goes through the Port is discretionary. It could go through another west coast port on its way to its final eastern destination.
Yoshitani’s team is working hard on his mandate. Installing the first self-powered Electric Rail Mounting Gantry Cranes to move cargo containers onto rail cars. Centralized air plant for grounded planes at SeaTac, lowering emissions and saving airlines $400,000 each year. Financial incentives and a “Green Gateway” flag for ships that use lower sulpher fuel at berth, which saves Elliott Bay in Puget Sound, and keeps the neighboring residents happy.
And yet all of these wins for Seattle’s environment might be wiped out by a decision that’s winding its way through the courts now which would make a port in Longview, 128 miles south of Seattle, the highest polluter on the West Coast. As reported by Climate Solutions, an Australia-based coal company is opening the door to make Washington the coal-export hub of the Pacific rim. The plan is to send low-grade coal mined in Wyoming and Montana — a grade outlawed in the US because is so toxic — on trains through the Columbia River Gorge through a Longview port, to be burned in China. And other coal companies are already lining up with their own proposals.
Why should Washington care about coal burned in China? I was in San Francisco the last time a windstorm carried clouds of black soot from China down the West Coast. The resulting pollution was so thick that we thought the East Bay Fires had started again. Burning dirty coal in China is certain to denigrate the air all along the West Coast, and the single point along its route where environmental concern is strong enough to block it will be the ports from which it is shipped.
Ports are used to being environmentally sensitive because they are on or adjacent to wetlands and other fragile habitats. They are also quite nimble, being between a state agency and a private company. And they have a lot of experience in “earth justice,” with a cadre of internal and external lawyers focused on environmental issues. The real issue is whether any law can protect our citizens from foreign-born pollution, even when it originates on our own shores. And the Longview, WA port is the test case.
Originally published on CSRHub, http://blog.csrhub.com/2010/12/index.html
Recently, I met Jeni Krencicki Bareclos and Jennifer Marlow, co-founders of Three Degrees Warmer (http://threedegreeswarmer.org/), a University of Washington-based project that provides legal protections for the victims of climate change. One of their inspirations is a legal case that the Native Alaskan Village of Kivalina brought against some of the nation’s largest producers of oil, gas, and electric power. Kivalina’s 400 members and 107 buildings have to be moved because the permafrost on which the community is built is melting. The plaintiff’s case argues that the damage, estimated at $95-400 million in relocation costs, should be paid by the oil and gas companies who are responsible.
Kivalina is basing its case on the same argument that was used successfully against the tobacco companies, where big tobacco was convicted of conspiring to suppress information about the health hazards from cigarette smoking. In this case, one argument is that the oil and gas companies conspired to create false “scientific” information that created questions about what would have otherwise been accepted as incontrovertable, that human action is responsible for global warming. The argument follows that these companies created enough doubt to delay serious efforts to limit or reverse climate change, thereby exacerbating the climate change that destroyed the Kivalina’s community habitat.
The case was dismissed in U.S. District Court and is currently on appeal to the Ninth Circuit Court. But whether or not Kivalina is successful, the fact that the argument has been heard in at least one court is validation that the key issues in corporate social responsibility are inextricably linked. This case proves the case for environmental justice, linking climate change to a devastating social injustice. If the case is truly the result of conspiracy and fraud as the plaintiffs claim — and they say that records exist that will prove their argument in discovery — then good governance is a part of this as well.
All of which argues that you can’t have one CSR factor — or measurement — without factoring in the others as well.
Harvard Business School seems to be rebranding itself. I never heard the school’s original mission statement, “To train future leaders to make a decent profit decently” in all the time at school or since I graduated until now. I first heard it spoken and then repeated at the Global Summit (recall it’s subject was “The future of capitalism”) and have heard it since as well. A professor in the Social Enterprise Initiative referred to this on Thursday as “the kinder, gentler HBS.” It’s catching on with staff and alums, wouldn’t it be nice if the new brand took hold in the larger world too?
What better timing for a Harvard Business School colloquia on “The Future of Capitalism” than just after the market dropped 900 points. Two mind-shifting moments for me: first when Mahindra, Vice-chair of the giant Indian car maker, advised us that with our paltry 300 million citizens we must realize that we are really a small country. The second was when Larry Summers pointed out in his riveting speech that this financial crisis is the 7th we’ve had in 30 years, that the warning bell for capitalism has been sounding for a while. What I liked best was the upbeat mood, that HBS grads can really turn things around by pursuing returns from social contributions, which will reduce the inequity that is the heart of the problem and garner better financial performance too, Summers citing his own experience at Harvard. All in all, an amazing experience!
Last week, I moderated a roundtable on branding for 10 non-profit attendees at the HBS Club of NY’s Social Enterprise Summit. Given the focus on the conference, I expected the financial crisis to be the topic they would most want to talk about, and it was, though they talked about long term issues rather than what you might expect, the immediate issues of survival. I guess that’s the difference between non-profits and for-profits, non-profit leaders are in it for the long-term.
Non-profits see the crisis as a system problem and look at long-term metrics vs business’ focus on how to get through the next 90 days. Corporate managers look at measures of effectiveness almost exclusively through the lens of financial value, while non-profits (and as it turns out countries in Europe as well) measure well-being and happiness as well. Think about the ripple effect of how that simple change in key measures from GDP to Well-Being would alter behavior among businesses and government. Brand too could change, perhaps even more radically, from focusing on a brand’s contributions to well-being rather than benefits that add to perceptions of wealth.
What we who work in social responsibility have been on watch for is CSR being swept aside as mere survival becomes the storyline. Yet what I’m afraid of now is different: that CSR is for many a volunteer activity and not the main responsibility and therefore requires a lot of internal motivation, something that’s hard to come by when water cooler talk revolves around the latest depressing statistic – or even worse, whose job is in peril. It’s times like these that the bright tomorrow becomes just a bit too distance to spend a lot of time on.
Last week, I saw a presentation from Carat, the advertising/media agency, where they outlined the most common reactions to debt to a recession. They are (in no particular order):
• Out of control • Alone • Fear of the Unknown • Overwhelmed • Shame/embarrassment
Since there has been a lot of talk about the power of avoidance strategies over growth approaches in a downturn, I thought this is great food for thought. All of these fears are so primal, and almost any product can be positioned to address one or the other.
InBev just got the go-ahead to buy Anheuser-Busch, the stalwart corporate citizen of my birth place, St. Louis, as well as other US cities. How long InBev had been planning the move might be timed to the hiring of its first official CSR Director, whose qualifications included a stint setting up a CSR program for Saab, which was then owned by the ultimate symbol of American industry (if not Americana itself), General Motors. Co-incidence or advance planning? Just seemed odd that a company headquartered in Europe, far and away the leader in CSR over the US, would tap US talent for the job. Another example of CSR as competitive strategy?
About a year ago, I canvassed my branding and CSR colleagues to find out the best blogs for reading about how the two are being integrated. Not only had no one heard of such a blog, few could even name a branding blog. In fact, aside from Brand Channel and some other attempts that failed, the lack of branding blogs is astonishing for an industry that is all about communicating, especially since hardly a day goes by when someone doesn’t send me some bit of writing or opinion on the subject that I would love to share.
So welcome to a place for all of us, to share our latest ideas and insights, courtesy of my employer, Holding Associates, Inc.