Burgess COMMENTARY
This is a comment made June 30, 2013 on the CSRwire blog and on the LinkedIn dialog:

The question being asked is important, but in my view the phrasing of the question means that a useful answer will not be forthcoming. The economy and society is a complex system with all sorts of actors. Either this or that is never going to be the right answer.

In this complex system it is clear that the big corporate business organizations are a big part of why we are in the position we are in. Their engagement with CSR is tiny compared with their engagement with making profit and improving their stock prices.

Government is another big player in the performance of the economy and society. I don't see much evidence for a deep understanding of the role of government in the history of wealth, and I believe this matters.

The world of philanthropy, social business and NGO's have a big commitment to CSR, but compared to the big corporates and governments, they are very small.

If there were better metrics, there would be much more conversation around what is material, rather than merely what makes a 'story'. I argue that until we have more meaningful metrics there will continue to be economic and societal malaise, simply because those with power will never be held accountable for their abysmal social performance. They will be able to get away with a PR driven story based CSR that has no hope of being successful.

As a starting point, it would be good to know how much a company like Coca Cola (and all the other big corporates) spend on advertising their products, and how much these same entities spend on CSR ... but this is only part of the question. How much profit did the companies make, and during the same time, how much impact has their been for people, place and planet. Many companies have huge positive profit while at the same time having huge value destruction for people, place and planet. Our present money profit maximizing system delivers a 'race to the bottom'.

Almost every product and service we consume has a value chain that we know little about ... but is often replete with stuff about which we should be ashamed. The work conditions in Bangladesh are terrible, but on top of these conditions, major brands make huge profits, with no push back from the consumer because the bad news is drowned out by powerful brand PR and advertising.

How can anyone make smart choices when the aim of most communication is to 'sell' something with a minimum of real fact that would help the consumer make a good decision.

Peter Burgess TrueValueMetrics

Whose Responsibility is Social “Responsibility”? The Company Or The Consumer?

It’s easy to blame fast food, soft drink and snack food companies for obesity problems. After all, they make the products with ingredients that can lead to overeating and obesity.

By Sarah Coles

If a company is perceived to be part of a “problem,” can it still be part of the solution?

This is a question I asked when I saw Coca-Cola’s full-page advertisement in the New York Times last month related to its anti-obesity campaign, Coming Together. Coca-Cola announced new “global commitments to help fight obesity,” pledging offerings such as low- or no-calorie beverage options in every market, transparent nutrition information and support for physical activity programs.

The announcement garnered a lot of positive press for the company, but also drew criticism from skeptics who say that Coke is part of the obesity problem, so if they really want to address it, they should stop making sugary products.

Editor's Note: A similar scenario recently played out during our Twitter chat with Nestle Waters North America: with bottled water as its mainstream product, the question that came up time and again was can the company become part of the solution to a problem it is inextricably involved in?

Smarter Consumption

On one hand, it’s easy to blame fast food, soft drink and snack food companies for obesity problems. After all, they make the products that contain ingredients that can lead to overeating and obesity. But on the other hand, consumers who buy them could be said to be making poor choices. Frankly, even if Coke decided to sell only water, I believe people will still find a way to get sugary drinks – or new companies would sprout up. People aren’t going to stop consuming so we should at least help them consume smartly.

There is reason to hope that corporate educational campaigns can make a difference.

In 2009, the Program for International Students Assessment (PISA) ranked U.S. students 17th in the world in science and 25th in math. Since then, companies like Exxon Mobil, Pfizer, Intel, Bayer, Dow Chemical, GE and Samsung, to name a few, have all rolled out comprehensive activities that support math and science in U.S. schools.

And while the next PISA rankings won’t be out until the end of the year, there is some evidence that the numbers are improving. Last year, U.S. News and World Report reported that eighth-graders’ average STEM scores improved by 2 points, according to the National Assessment of Educational Progress, and 65 percent of students are now meeting at least the 'basic' knowledge level. It’s baby steps, but it’s fair to say that the sheer number of programs that have been dedicated to this cause by companies have helped elevate the urgency and bring it top of mind.

Social Responsibility: Compliance vs. Business Activism

We live in an age of information – and a time when information is very easy to find. Consumers are getting more educated than ever, and it does in fact affect their buying behavior. According to the 2013 Green Gap Trend Tracker report on American consumer behavior, 71 percent of Americans are “thinking green” and spending more time researching the environmental impact of the products they consume. Consumers also think companies should educate consumers on proper product disposal and do more to help them understand environmental terms and messages.

It's somewhat of a double-edged sword. How do companies begin to educate consumers about the negative impact of their own products? Where does shareholder accountability stop and social responsibility begin?

Despite the obvious dilemmas, companies are beginning to try hard to address issues core to their businesses these days. Food companies are required to put nutrition labels on everything, and there are stricter guidelines on food labeling and nutrition information. In fashion, H&M, Marks & Spencer (M&S), and Levi’s all have clothing recycling programs, and consumer products companies like PepsiCo have bottle recycling initiatives while General Mills and Kraft have packaging reductions.

Unilever CEO Paul Polman, a self-proclaimed “hard-core capitalist,” has been very outspoken recently about the company’s vision to double the size of their business while at the same time reducing their environmental footprint. The company has engaged in prolonged dialogues on issues close to its product line in the public sphere – nutrition, agricultural sustainability, water, cleanliness, etc. – and pledged to keep the hard fight going in the face of critical challenges.

The Bottom Line

At the end of the day, however, these companies are all businesses.

They make a product that a consumer demands and need to be profitable to survive. That they are no longer sitting back and letting concerns such as obesity and the environment be talked about around them and in fact, actively joining the dialogue and participating in the action, is commendable.

That’s not to say there isn’t room for improvement, but becoming part of the conversation is a step in the right direction. Further, if we go back to the law of supply and demand, it is the demand from the consumer that at the end of the day keeps a business alive. So if consumers stop buying a product, a company will either adjust their business model or go under.

It’s up to the consumer to make smart choices - choices that will impact how and where a company focuses its growth. And if you don’t think the consumer has the power to influence a company, just think back to New Coke.

Peter Burgess • I am appalled at the apparent inability of the actors in our modern socio-economic system to get things right. There is a system dysfunction that needs to be addressed in a meaningful way.

The corporate world ... big business ... seems to be able to make pretty good profits while riding roughshod over almost everything that matters. Wages are in the middle of a race to the bottom ... together with concern over worker safety and health, over the welfare of their families, over the quality of life in communities, and over what is environmentally sustainable. Profit and stock prices seem to be the only metrics that matter to those who make the big decisions.

After a bit of inquiry ... not enough to be called research ... I am convinced that there are huge PR initiatives in place so that the brands have the material to control the story and avoid being associated with something that they are intimately connected with in any moral or ethical interpretation of the situation but can excuse themselves because of the way they structure all their contracts under the rule of law, and the story control that they have carefully constructed.

I don't see much that is really serious about changing anything. Where are the data so that I can make an informed decision about what I buy. Where are the data about the source of profit in the supply chain. My guess is that where the profit is made is not where the products are made, yet it is where the products are made that is the locus of workplace safety. The maximize profit and everything else gets pushed to the bottom is a depressing fact of modern market economy, and I cannot pretend to like it at this stage in the early 21st century.

Peter Burgess TrueValueMetrics 7 days ago• Delete

Yesterday I was taking a visitor around some high end apparel and footwear stores here in the USA. To keep myself amused I started asking the sales help about the various 'green' initiatives that companies like Nike are associating themselves with ... and the various supply chain issues that the apparel industry is talking about. I did not find a single person that had heard of any of these initiatives. They had the sales pitch, but nothing about the green or sustainable dimension of anything. I was not surprised, and while I know there are many serious people who understand the importance of ethical business, there is a huge gap between what is now normal and what a new normal needs to be.

I am afraid that most of my generation of business, financial, political and academic leadership is in deep denial about the systemic dysfunction of the modern economy, but the silver lining is that many young people 'get it' and know that things have to change. So far, there has not been a clear articulation of what that change is going to be, but it will come, that is already clear.

I am an optimist ... the state of knowledge in science and technology is better than at any time in history by far and the number of educated young people is bigger than ever. This should be the basis for great optimism about the future, but the global economy is 'in a funk'. There has to be a reason. I would argue that the ideology about the economy that goes back to the work of Adam Smith could do with some rethink, in particular the economic dynamic surrounding productivity and the global economy that facilitates a race to the bottom for wages and the quality of life of those that labor for a living. Merely maximizing profit is no longer a viable socio-economic proxy for progress ... there has to be maximizing of the impact of economic activity on people, place, planet and profit, a more complex calculation, but not beyond the capacity of modern management systems should we choose to deploy them.

Sincerely

Peter Burgess TrueValueMetrics 1 second ago