Going beyond the CSR facade
The House of Commons seems like a fitting place to discuss social responsibility, with our politicians under scrutiny to deliver on their promises to protect and serve us all – particularly the weakest and most disadvantaged in our society.
Our elected representatives are of course influential, but nowadays businesses are arguably more powerful in the struggle to effect and sustain change for good.
At the recent Chartered Institute of Marketing sponsored debate, organised by The Debating Group and held in the Commons, I seconded Keith Weed’s motion that: “Social responsibility claims by businesses amount to little more than posturing to gain commercial advantage.”
Businesses realised quickly that appearing ‘green’, ‘sustainable’ or ‘socially responsible’ is good for the bottom line. So to drive home a commercial advantage, many organisations have used the fig leaf of corporate social responsibility (CSR) to mask a less than robust commitment to the environment and to our communities.
Academic research supports their rationale. In their paper ‘The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness’, Henri Servaes of London Business School and Ane Tamayo of the London School of Economics say:
“This paper shows that corporate social responsibility (CSR) and firm value are positively related for firms with high customer awareness, as proxied by advertising expenditures. For firms with low customer awareness, the relation is either negative or insignificant.”
So, the key thing is that if a company is merely seen to be socially responsible, it can add value, without having to do too much of the hard work in actually being socially responsible. Too many companies try and get away with just talking the talk. For them, posturing is all that’s needed to profit from CSR. Two examples spring to mind: Starbucks and Google.
Starbucks would have us believe that they have made a loss most years since they set up in the UK, and as a result of that, pay little or no corporation tax. Meanwhile, if you look at their website there is a raft of information on the good works they do in the community, for the environment, in ethical sourcing, and in diversity.
I quote: “We’ve always believed that businesses can – and should – have a positive impact on the communities they serve. We’ve dedicated ourselves to earning the trust and respect of our customers, partners (employees) and neighbours. How? By being responsible and doing things that are good for the planet and each other.”
These are lofty claims and fine ambitions, but it my opinion, they, though quite legally, do not pay their fair share of tax in this country. This is posturing to gain commercial advantage over other UK chains and coffees shops which do pay their corporation tax. Is this really having the ‘positive impact’ they’d like?
Meanwhile Google’s chairman, Eric Schmidt, has been robust in defending the way in which Google funnelled £6bn of revenues from international subsidiaries, including the UK, into Bermuda last year in order to halve its tax bill. He declared: “We pay lots of taxes; we pay them in the legally prescribed ways. I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate. It’s called capitalism. We are proudly capitalistic. I’m not confused about this.”
Doesn’t Google’s own Larry Page confuse him? Page wrote the following in his 2012 Founders’ letter to shareholders:
“We have a strong commitment to our users worldwide, their communities, the websites in our network, our advertisers, our investors, and of course our employees. Sergey and I, and the team will do our best to make Google a long term success and the world a better place.”
Tell me again how avoiding paying corporation tax in the UK, one of Google’s biggest and most profitable advertising markets, is making the UK a better place? Especially when “You can make money without doing evil”, which relates specifically to advertising, is number six of Google’s ten founding principles.
There are far too many companies making misleading social responsibility claims and not taking a genuinely holistic approach. There is a groundswell of opinion that won’t tolerate this posturing any longer, especially when people can see companies like Unilever, at one end of the spectrum, and Tom’s at the other, building CSR into their DNA. Maybe finally we have woken up and smelled the coffee, Starbucks or otherwise.
Hamish Pringle, strategic advisor, 23red