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Does anyone still care about corporate responsibility?

The latest war in Iraq and the increased threat of global terrorism have had a profound effect on politics in this country. Not only have events in the Middle East managed to galvanise and motivate many (but by no means all) previously apathetic young people. Additionally these events have managed to erase from the radar, for the time being anyway, other pertinent political issues that were previously gaining significant momentum.

One of these issues was the growing tide of anti-capitalism, which up until three years ago had become a movement in its own right, culminating in the 2001 anti-globalisation demonstrations that took place up and down the country. Whilst the irony of seeing some marchers walking in Nikes and drinking a skinny latte was not lost on many of us there was, without doubt, a serious rise in consumer disaffection and disillusionment at this time

Today, this movement has been silenced, and for much of our media it is yesterday's news. For many young people in Britain the threat and reality of terrorism (Bali, Madrid) has worked to put their own lives in context. As one young respondent recently put it - 'At the end of the day, who gives a shit about where you buy a burger from when you could get blown up tomorrow'. However, whilst in the short term negative publicity in this area has been diluted, it would be foolish and nave to believe it has gone away forever.

If we hypothesise that the topic of globalisation will once again become mainstream, it follows that business should be exploring, in more detail, ways in which consumer concerns and grievances can be alleviated

One way companies can strive to do this is via 'corporate social responsibility' (CSR). Whilst an industry buzz phrase four or five years ago CSR, like the concept of anti-capitalism itself, has also ceased to be front-page news (no prizes for guessing the correlation!). Since November 2001 The Guardian has been publishing what it calls 'The Giving List'; highlighting which of Britain's top 100 companies gives the most to charitable causes, whilst exploring the impact this has on business and consumer perceptions. Interestingly, whilst the cash value of donations has increased in recent years, only 34 of the FTSE 100 gave 1% or more (of their pre-tax profits to charity and community projects), and the bottom 14 gave 0.01% or less. Overall, the share contributed by the UK's 860,000 businesses has shrunk from 4.8% to 4.3%. Although the issue of CSR has become less publicly salient in recent years, it remains a topical business issue and it is those companies that continue to champion the cause who will expect to benefit should the topic become big news once more. However, it is within this concept of 'benefiting' that much of the CSR debate lies. Should companies be entering into CSR with benefits to business a key strategic objective? Or should CSR be an act of natural compassion where business interests, for a moment, take a back seat?

buildings

There is no doubt that CSR, done in the correct way, can have a positive impact on a company at both an image and sales level, regardless of what the real intention of the company is (i.e. they may claim they are not setting out to benefit business, but could do so indirectly). Conversely, CSR done badly can result in negative publicity for a company and a consumer backlash. Whilst the line between success and failure can often be thin, there are certain measures that companies can adopt to ensure the CSR initiatives they enter into are embraced positively.

Key to this are honesty, integrity and sincerity. For some companies, caring - for example for the environment and underprivileged people - is simply a responsibility they can and should act out.

Typically, this ethos starts from the top and permeates down through the whole organisation. Boots, for example, has a history of CSR dating back 150 years, and embraces CSR as a matter of company culture, viewing it as an integral part of the way they do business. However, for Boots, their approach to CSR is not just about vast financial contributions. They also operate a far more subtle approach, which identifies more specific needs within both the local and global community - for example a community investment centre in Nottingham, re-cycling and re-distribution projects, and work with aid agencies in disaster zones. Not only does this demonstrate insight and awareness, it also illustrates their real commitment to the concept of CSR.

Another such company is the maverick hi-fi retailer Richer Sounds, which has been involved in charitable activity since its creation in the late 1970s. It donates over 5% of its profits to charity, whilst also involving itself in other areas. In 1994 it set up the Persula Foundation, which enabled it to widen the scope of the good causes it helps. Its projects have included homelessness, disabled people, human rights, bullying, multiple sclerosis and animal welfare.

For companies such as Boots and Richer Sounds, the benefits of CSR are significant. Whilst financial objectives are definitely not part of their CSR drive, the compassionate image their work projects definitely has a role to play in terms of creating, retaining and growing a loyal consumer base. Negativity is avoided due to the fact that consumers recognise the work to be responsible and genuine. In addition, the internal benefits can be equally dramatic. It is argued that staff naturally become more socially aware, better motivated and more productive. At Richer Sounds employees are actively encouraged to work on charitable projects out of the office on paid leave, something they believe is key when considering their very low turnover of staff.

Whilst the work of some companies is admired and respected, much CSR activity is greeted with a large degree of cynicism. According to a MORI poll released in November 2004 only 15% of the population believes that large companies are genuine about being responsible. Most at risk are those companies who adopt questionable production techniques or manufacture potentially harmful goods, as any schemes are simply seen as an attempt to offset negative publicity. However, ill thought through CSR can have a detrimental effect on any company, regardless of industry type. Tokenistic gestures and over promotion are sure-fire ways of convincing the consumer that a company is more concerned with business issues than social responsibility. Additionally, for many companies CSR can simply be viewed as an unnecessary cost, rather than an opportunity to build long-lasting external relationships and credibility.

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I recently discussed these issues in an interview with the corporate fundraising manager of a leading UK cancer charity. He explained that the majority of companies have yet to truly embrace the real essence of the CSR concept. He believes many of his clients are simply too concerned with short-term image boosting and immediate commercial success and that they often show little empathy for the cause they are championing. As he explains:

"There's a lot of impatient people around, who want results yesterday. They need to understand that an on-going, dedicated process of CSR will ultimately benefit their organisation to a far greater degree. But only if their approach is sincere and natural".

Closely linked to CSR is the concept of Cause Related Marketing (CRM) which, roughly defined, can be interpreted as the marketing of a company or brand, whilst simultaneously giving something back to a specific cause. Like CSR, CRM has also had its critics. Commentators and public alike have simply dismissed it as a cynical commercial ploy, designed to exploit consumers whilst at the same time attempting to portray an empathetic brand. However, as with CSR, properly executed CRM can actually have a positive impact on brands at both an image and commercial level.

At Egg we have conducted projects for various clients that have explored the potential for, and the reaction to, CRM initiatives in the context of their brands. Obviously it helps if the brand in question has an uncontroversial public persona (tobacco and fast food companies, for example, always suffer in this context), as this will often be depicted as a cheap PR stunt by an organisation attempting to deflect negative press.

Field

Our research has demonstrated that, whilst a degree of scepticism often initially greets the CRM concept, a relevant scheme can actually work to motivate consumers. One of the arguments in support of CRM is that, if a brand is going to market themselves anyway, they may as well give something back in the process. Additionally, it is recognised that commercial business is in the financial position to give charitably, and hence should do so. Also, many initiatives (e.g. football in the community, inner city play centres) are felt to be complementing, and in some cases addressing the failings of, local and national government.

During our research in this area, we have identified specific guidelines for creating appealing and relevant CRM schemes:

  • Make it relevant - ensure a link between cause and company. If the brand/product is a major cause of the problem, it's a non-starter
  • Keep it local - (vs. global) - creates the most interest and impact, ensuring that it can have effect in "my" life
  • Get the schools working for you - (if aimed at children) - maximises participation and generates awareness
  • Make it inclusive - facilitate participation where possible
  • Ensure it's sincere and believable - not at odds with other aspects of company operations
  • Stick with it for the long-term - demonstrate commitment
  • Tell them what you have achieved - consumers want to know what impact their efforts have had

The CSR concept is a problematic issue that can remain the archetypal 'catch 22' situation. By being seen to do nothing a company runs the risk of being labelled greedy, selfish and profit obsessed, whilst pursuing CSR can also lead to accusations of insincerity and hypocrisy. For some, it is a no win situation. However, it should be recognised that CSR, in addition to facilitating social and cultural benefits, can ultimately be a positive commercial venture for brands, if executed in the appropriate way. If corporate industry is to stave off or dilute impending consumer concerns then it is vital that it attempts to grow a more compassionate skin, and recognises that, as well as being super productive, it has the power to make a difference. Many will argue this is something the business community should be attempting to do anyway, naturally. Additionally, given the horrendous recent events in Asia, and the huge public donations that have followed, it is possible that consumer consciousness has been raised still further in terms of what companies should be contributing to the worlds less fortunate. Ultimately, CSR is a positive influence that should be encouraged, but it should be adopted for the right reasons, and in the right fashion.

As with so many things, whilst consumers are ready to embrace it, they must be treated with intelligence.

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