The Myth of the Responsible Consumer

My friend Nancy Giordano has a wonderful newsletter called Cultural Acupuncture in which she explores many topics, mostly centered around the future of the modern, responsible corporation. You might like to receive it too.

Nancy and I got to talking this week about a theme in most writing about corporate responsibility that drives me bonkers – it’s about how much consumers care about the responsible behavior of companies they interact with.

So, for example, Cone Communications’ most recent Corporate Social Responsibility report claims thatnine-in-10 consumers [sic] expect companies to do more than make a profit, but also operate responsibly to address social and environmental issues…[and] Eighty-four percent of consumers globally say they seek out responsible products whenever possible.”

Yeah, uh huh, that’s exactly how people decide what to buy and not to buy.

Can we please, please put these sorts of nonsense statements behind us? Consumers say one set of things. They do another set of things. What they say and do are not mutually exclusive. But the amount of overlap, when the question being asked reflects directly on how morally a customer behaves, had better be taken with a heap of salt.

Statements like this one – which are everywhere – paint a picture of a much more engaged and active consumer than the one who’s really out there. Most consumers don’t dig deep. Most consumers aren’t willing to go out of their way. Most consumers don’t actually switch nearly as much as you’d expect. Most consumers don’t want to bother with all of this. And most consumers certainly don’t make “ethical” purchases most of the time.

Stating that they do suggests that we’re much further along than we actually are in building an economy in which the true costs of what we consume is taken in to account.  We are at the very beginning.

Think about the question that leads to this “data” about 84% of consumers seeking out responsible products “whenever possible.”  It is something like:

How often do you seek out responsible products when shopping?

  1. Never
  2. Occasionally
  3. Sometimes
  4. Often
  5. Whenever Possible

To me, this question essentially equivalent to:

Are you a total jerk?

  1. Whenever Possible
  2. Often
  3. Sometimes
  4. Occasionally
  5. Never

OK, end of rant.

The impact-to-scale ratio

Every so often, I cannot help but comment from afar on corporate social responsibility (CSR).  I worked in this area for IBM and GE before coming to Acumen, and I greatly appreciate what it takes to get big companies to do things differently – to incorporate a broader set of stakeholders and to think in terms of longer time horizons when making decisions.  I also know how hard it is to move the needle on this stuff (e.g. Nike).

With this potential for impact, as a general rule I’m always amazed at what companies can get away with talking about and not talking about in public forums.

Simply put, should it be OK for a company to talk about a single program or initiative if that program / initiative is tiny relative to the scope of the entire organization?

I don’t think it should be, but time and again I’ve heard CEOs of companies with $50 billion to $100 billion in revenues give major speeches about $20 million programs (that’s 0.2% of revenues!).  Not once, but often.  And the programs are used as proof points for statements about how the company conducts its business globally.  It would be no less absurd for a CEO to talk about one call center or to talk about its smallest division in its smallest market – which of course would never happen.

There should be some minimum threshold of impact to scale before any CEO is allowed to talk about anything of this nature.

The reason we care about how corporations behave is because of their size and scope.  So: Apple’s supply chain matters a lot, what Apple does in and around Cupertino is good to know but essentially irrelevant.  Pepsi’s Refresh program is a wonderfully innovative form of corporate philanthropy coupled with crowdsourcing, but their opportunity for real global impact starts and ends with what they are and aren’t doing about obesity and  diabetes.  When Wal-Mart puts its weight behind fluorescent bulbs it matters.  If BP were to shift a major portion of its business away from fossil fuels the world would care, but Deepwater made it pretty clear that they are not “beyond petroleum.”

I’ve argued before that we can do much better than “more than nothing” when talking about the role of corporations in building a better world, and when you get Fortune 50 CEOs in a closed room to talk about the world and the future it’s clear that all of the top companies care deeply about these issues and see them as core to their long-term success.

But somehow we keep on falling into this trap of talking about nice, ancillary philanthropic endeavors as if the person on the stage is running a medium-sized nonprofit and not a multi-billion dollar, global institution.

We can do so much better.

Employee since 2007

The next time you’re in CostCo, check out the employees’ badges.  Right under the employee’s name, the badge say “Employee since _______”.  Subtle, but powerful.

From what I know about CostCo, this is the real deal – they care about employee longevity, about treating people right, and about setting themselves apart from their peers.  Barron’s called them the “anti Wal-Mart”, and with average 2007 pay of $17/hour – 42% higher than Sam’s club – there seems to be real truth to the story.

And then in the perfect twist, analysts like Emme Kozloff of Sanford Bernstein calls CostCo’s CEO Jim Senegal “too benevolent” and analysts at Deutche Bank complain that “it’s better to be an employee than a customer or a shareholder.”

(Now  I’m supposed to drop in the chart of CostCo’s 10-year stock performance and show how it’s drastically outperformed the Dow and Walmart – each of which have offered a 0% 10-year return versus 80% for CostCo.  So here’s the chart if you’re curious.  But that’s not what’s on my mind.)

Costco v. Wal-Mart v. Dow Jones Inex
Costco v. Wal-Mart v. Dow Jones Inex

What’s on my mind is that, while I recognize that Jim Senegal has to do the dance of saying he pays employees well and treats them right because it’s good for the bottom line – because employee retention is higher, “shrinkage” (aka theft) is lower, and CostCo’s more affluent customers value interacting with happy employees – at some point we have to get to the heart of the matter.

When did it become accepted that actions that are right and moral – like paying employees a decent wage – have to be explained away and justified?  When did we accept the notion that people should be moral in their lives but that the moment they show up for work their morality is subsumed by their obligation to maximize profits (whatever that means)?

All great companies exist to change their industries, to change the world, so the starting point is a sense of purpose and a willingness to play by a different set of rules.  The question is: how far are we willing to go?  Of course great companies should do great things for their shareholders and make lots of money for (all!) their employees, but the notion that it is better for management to be amoral rather than moral undercuts the foundation of our society, our values, what makes us human being.

It may sound naïve, but I find it ironic that in a country (the U.S.) where values, morality, and religiosity have such a central place in our culture, in the corporate mainstream – which is itself populated mostly by values-driven, moral, religious people – it is verboten to talk in any serious way about acting in a moral way because it is the right thing to do.  Instead there’s this Texas Two Step, nudge-nudge wink-wink from CEOs to Wall Street to say “honest, guys, I’m just doing it to make more money!”

And then all of a sudden, a company that wins the Global Renewable Energy Award and that plasters magazines and billboards and tradeshows telling the world that “BP” stands for “Beyond Petroleum” is responsible for a 60-mile oil spill that will wreak unknown and unmitigated havoc on the environment, on wetlands, on marine life, and on us.

When will we as a society get to the point where we see that this is all connected?

add to : Add to Blinkslist : add to furl : Digg it : add to ma.gnolia : Stumble It! : add to simpy : seed the vine : : : TailRank : post to facebook

Mystified in the egg aisle

The other day my wife sent me to the supermarket to buy some eggs.  You should try this yourself: go into the supermarket to buy just one semi-generic item (eggs, milk, orange juice) and you too might be paralyzed by the overabundance of choice.  (and no, the USDA Egg Buying Guide doesn’t help)

I had the option of buying a dozen eggs for $1.99, $2.99, $3.99, and $4.99.  Organic, cage free, no antibiotics, vegetarian feed…or just plain old-fashion industrial-supply eggs.  A 250% price differential between the least and most expensive option, and lots of claims on the packaging and pictures of farms I’m pretty sure don’t exist any more in the U.S.

I consider myself reasonably informed about food and I care a lot about getting good, healthy food for me and my family.  I know a least a little about industrial food production and how terrible it is, and I worry appropriately about antibiotics and growth hormones and conditions for livestock.  I’ve even read Michael Pollan’s The Omnivore’s Dilemma and Eric Schlosser’s Fast Food Nation (both worth reading).

But what I know still isn’t much use in the egg isle.  I’m pretty sure that the “all natural,” “organic,” “free range” and “cage free” labels have enough marketing lies to be untrustworthy.  And I feel like a fool simply buying the most expensive option and assuming that it’s somehow the most natural and the best.

It strikes me that this matters because there’s an accepted wisdom that consumer’s decisions – and a growing preference for “greener” and more socially responsible products – will lead companies to behave more responsibly.  The egg-buying conundrum exposes the fallacy: while I’m relatively informed about egg production, I still don’t know enough to differentiate at the product level, and since all marketers are liars, I can’t rely on the information on the packet to make informed decisions.

There’s been a recent upsurge in demand for “better” products – organic food sales skyrocketed from $1B to $20B from 2000 to 2007 – but this doesn’t mean that companies don’t still have a ton of wiggle room.  Consumers just cannot know enough at the margin, which means that outside of egregious corporate behavior, companies that want to do the minimum can and will get by.

Put another way, change is going to come from personal leadership from within companies, with outside consumer pressure providing a general direction but never really being enough to separate the wheat from the chaff.

P.S. Any advice on the egg question is welcome

add to : Add to Blinkslist : add to furl : Digg it : add to ma.gnolia : Stumble It! : add to simpy : seed the vine : : : TailRank : post to facebook

CSR 2×2 Redux Part II – What are we really learning?

(Part 2 of 2 on “Should foundation program officers be more like venture capitalists?” is coming soon)

A press release on CSR just came over the transom today, and I read it as validation of the Corporate Responsibility 2×2 post I wrote last week.  Better yet, the release is from the Center for Corporate Citizenship at Boston College, run by Brad Googins (whose blog post was the inspiration for my original post).

The headline of the press release is “New Report Examines How Corporate Citizenship is Organized Inside Global Companies,” and it announces the findings of a survey of 330 global corporations on their corporate citizenship practices.

The release begins, “A new report released by the Boston College Center for Corporate Citizenship confirms that managing a company’s role in society is becoming a formal part of corporate structure and management practice, with many companies internalizing the function into corporate departments and cross functional teams.”

Wow, OK, that sounds impressive.  Keep reading….

In examining the management systems associated with corporate citizenship, the Boston College researchers contend the field is in an early stage…:

  • Corporate citizenship is not strongly linked to strategy or business plans in most companies
  • Top management identifies corporate citizenship as important but in most companies does not exercise significant leadership on the issue
  • Employees are seen as the most influential stakeholders for citizenship but inside the company are seen as the least informed
  • Boards of directors are just beginning to focus on corporate citizenship issues
  • Measurement and use of measures of corporate citizenship are weak
  • Minimal training is being done at every level on the relevance of citizenship to the success of the business

I don’t get it.

How can the headline be that “managing a company’s role in society is becoming a formal part of corporate structure and management practice” if a main finding of the report is that “corporate citizenship is not strongly linked to strategy or business plans in most companies” and that “top management…does not exercise significant leadership on the issue”??

While I recognize that in every evolving field rhetoric and messaging often run a few steps ahead of practice (hence the term “vaporware” in the technology space).  But the CSR space too often feels mired in wishful thinking about practice.   This runs the risk either of letting companies off too easily or, worse, having the CSR expert community play a supporting role communicating that CSR is front and center on the agenda when in most cases its at the bottom of a “nice to have” list.

Brad Googins’ comment on my blog was that he prefers to “see the glass half full,” and I absolutely agree that companies have made lots of progress in the last 15 years; that making progress is very, very hard; and that continuing on the current trajectory would be a very good thing.  But if we don’t do a better job distinguishing aspiration from reality, the field as a whole will lose credibility and will miss the opportunity to be taken seriously as a management approach for long-term corporate sustainability.

Corporate Social Responsibility 2×2 conversation

I want to thank Brad Googins, the Executive Director of Boston College Center for Corporate Citizenship, and Steve Rochlin, Head of AccountAbility North America, for commenting on my post on Corporate Social Responsibility.

This is the beginning of the conversation I’d like to see more of, namely:

Does the progress that has been made so far in CSR (on diversity and volunteerism and Environment, Health and Safety) give us hope for a future with a different kind of corporation (one that makes real progress on green initiatives, supply chain, serving the “base of the pyramid,” building fuel-efficient cars, etc. etc. etc.)?  Or will we always be stuck nibbling around the edges, never getting to real change in the “center” of the enterprise, its goals, standards, and how it makes decisions.

What do YOU think?

The Corporate Social Responsibility 2-by-2

Nathanial Whittmore, who writes a great blog at, posted yesterday about Brad Googins’ response to Barack Obama’s inauguration speech (Brad runs the Center for Corporate Citizenship at Boston College).  Nathanial was very enthusiastic about Brad’s call for corporations to step up to their citizenship responsibilities in the midst of the current crisis.

Brad’s post makes some sweeping claims, including, “Indeed, a great deal of rethinking and recalibrating corporate responsibility has been taking place, positioning citizenship at the heart of the enterprise.”

Reflecting on the years I worked in CSR (some of them collaborating closely with Brad and his colleagues at the BCCC), I have to disagree.  Outside of a very few organizations that were founded around a mission (like the Body Shop before it was bought by L’Oreal), I do not agree that citizenship is at the heart of the enterprise for 99.9% of enterprises.

So while I applaud Brad’s exhortation, I worry that now is the time when we’ll see less, not more, progress by corporations in CSR.

Looking at the evolution in corporate behavior and expectations around that behavior over the last two decades, my hope is that there’s a slow but inexorable pull of rising expectations – reflected especially in the progress in diversity initiatives, environmental responsibility, more strategic philanthropy and volunteerism, etc.

But my fear is that the vast majority of corporations are not ready or willing to make real tradeoffs in order to “do good” for the world, and that, in times of economic hardship, CSR becomes a “nice to have” that drops off the list.

I wrote about Nike a little while back, just one example of why I’m skeptical about many CSR efforts.   My fear is that very little progress has been made in areas that are hard to tackle and which involve real tradeoffs.  In fact, with all of the CSR standards out there (ISO 26000, the Global Reporting  Initiative, the UN Global Compact), it strikes me that there’s not a lot of straight talk about where the dial has and has not been moved in CSR.

This got me thinking about a 2 by 2 matrix of CSR – with impact on the world on one axis and level of tradeoffs on the other.  I took a stab at sketching this out:


There’s nothing definitive about this picture, and it’s only meant to be illustrative.  But one has to acknowledge that, thanks to changes in attitudes and expectations, we’ve made some good progress on the left-hand side of the graph (where the tradeoffs are low, and the impact ranges from low to high): the recognition that, for example, reducing energy consumption will be good business and good for the world; or that a more diverse workforce – and programs that support it – is the right thing to do and a great way to attract and keep more talented employees.

But if CSR is “at the heart of the enterprise,” and if, as Brad Googins quotes, Lee Scott, the Chief of WalMart, told the Retail Federation, “There is no conflict between delivering value to shareholders and helping solve bigger societal problems,” then we’d see a lot of movement on the right-hand side of the graph.

And, in most cases, I’m seeing no movement at all.

Mind the Gap (Something for something)

A reader emailed me with information on this entry from the BusinessToolsBlog, Donate to Charity with Your Mouse, Not your Wallet.  You click on links and the charities get money.  The reader asked me if I agreed that this was a promising way for people to get involved in and support organizations they might not know about – specifically because  people could support charities without much effort, and over time this would introduce them to the idea of being more philanthropic.

I’m torn about this. On one hand, there’s an economic value in just about everything you do online, so if someone wants to take that value and transfer it to charitable organizations I think that’s a very good thing.  And there is the distant possibility that by coming across one of these sites, someone might learn about a new organization and get involved in a more significant way.

But I’m unconvinced that this will open many people up to giving and to supporting organizations with their time and energy.  To the contrary, I worry that this reinforces the notion that you can get something for nothing, that change can come without effort and sacrifice.

This is the same hesitation I feel about the Gap’s Inspi(RED) t-shirts and other products that make donations to worthy causes – happy that the money is going to the cause; hopeful that the act of buying the shirts (or the water or the cereal) is educating people about and motivating them to act to support the cause; but worried that we might delude ourselves into thinking that this is enough – worried that buying the “responsible” shirt acts as a salve on our sense of responsibility to others, and worried that when doing something “good” becomes a fashion statement, we can loose sight of the impact in favor of the fashion.

And, by the way, here’s what the NY Times reported last February about the RED campaign:

In its March 2007 issue, Advertising Age magazine reported that Red companies had collectively spent as much as $100 million in advertising and raised only $18 million. Officials of the campaign said then that the companies had spent $50 million on advertising and that the amount raised was $25 million. Advertising Age stood by its article.

You see how tricky this gets once you get into the details.

It strikes me that buying is one thing, giving is another.  As long as they are complementary we’re in good shape.

But I worry they might be substitutes.

Nike’s Corporate Social Responsibility efforts falling short? (or, why I’m so skeptical about CSR)

Here’s what struck me in Fortune’s recent article on Nike titled, “Citizen Nike” that looks into labor conditions in Nike’s supply chain: despite real, serious efforts on Nike’s part, conditions in the factories that manufacture their shoes hasn’t improved significantly in the last decade.

Want proof? If you make it to the last page of the article, you’ll find a sobering quotation by Richard Locke, a professor at MIT’s Sloan School of Management, stating that:

Despite ‘significant efforts and investments by Nike…workplace conditions in almost 80% of its suppliers have either remained the same or worsened over time.

The article goes on to say that in Nike’s fiscal 2006 audit of its 42 factories, 7 got an ‘A’ (best) rating and 13 got D’s (worst rating) because of multiple transgressions.

(an aside here is how incredibly friendly Fortune is to companies in these sorts of profiles.  If they wanted to write an article titled “Sweatshops Still Haunt Nike” or something similar, I’m sure they could have.)

This is incredibly sobering.  Nike has taken CSR – specifically, improving conditions in their supply chain and lessening the environmental impact of their products – very seriously.  They’ve appointed Hannah Jones, a well respected, senior person in the organization, to lead this effort and given her a team of 135 people around the world.  Plus, she reports directly to CEO Marc Parker.  Nike has taken a leadership role in disclosing who their suppliers, have been transparent about conditions in their supply chain, and they’ve been very public about their commitment to change.  And in some areas (like the environmental impact and amount of waste in their products) they seem to have made some real strides (pun intended).

But on the question of Nike’s factories, things are either the same or have gotten worse.

My point is: if it’s this hard for Nike to move the dial on these issues, then it’s REALLY hard to make an impact as a “responsible corporate citizen.”  Plus, the areas where Nike has made the most progress are those where there’s a strong business case (reducing $800M a year in material waste in shoe manufacturing), which gives me more hope for initiatives that have to do with efficiency and cost savings (read: green) and less hope for those that involve real tradeoffs (read: wage levels, healthcare, benefits, workers’ rights).

I’m incredibly glad that “corporate social responsibility” has gotten traction in recent years, but my personal experience resonates a lot more with what I read in this article about Nike (even with great intentions, commitment and resources, making real headway is hard and slow) than when I see advertisements proclaiming how a given company gives back and makes a difference.

In those cases, I’ll believe it when I see it.

Employees of a Nike sub-contractor in Vietnam
Employees of a Nike sub-contractor in Vietnam

Do you just do “more than nothing”?

I recently had the chance to look at the corporate responsibility / poverty alleviation project of a major multinational corporation, and it looked very familiar.  As far as I could tell, they took a set of things they already did, named it, studied it, collected a few metrics on it, and claimed thousands of jobs created, millions into the local economy, etc.

These days, it seems that every company has to do something “nice” for the world.  The problem is that, in most companies, a small group with not a lot of power, budget or influence is in charge of the “nice” projects.  Hence the result: going from doing nothing to doing a little bit “more than nothing.”  This might be good enough when your stakeholders aren’t going to dig any deeper – when all you really want is a theme for a section of your annual report, to write a press release, to get a few photo ops, etc.

I guess “more than nothing” is, well, better than nothing.  But it’s also pretty disappointing, and we shouldn’t pat ourselves on the back yet if this is the best we can do.