Getting customers to act on good intentions, how companies decide whether or not to verify a social report, and the power-hungry opportunists jumping on the corporate responsibility bandwagon
Cultivating green-minded consumers
Stop Joe Bloggs on the street and ask him if he’d rather buy green, ethical products or polluting, unethical goods, and his answer – yes – will come as little surprise. So why do Mr Bloggs’s good intentions rarely translate into purchasing decisions? According to a 2007 Chain Store Age survey, only one in four US consumers has bought a green product (organic food and energy-saving light bulbs excluded).
This paper seeks to explain what companies can do to get consumers to hold onto their green gusto right up to the cash register. A large part of the answer lies in overcoming the barriers facing green consumption, McKinsey’s Bonini and Oppenheim suggest.
First, marketers should understand the five barriers stopping people from green products: lack of awareness, negative perceptions, distrust, high prices and low availability.
Then, the authors argue, marketers need to think as “educators, not salespeople”. They must look beyond the product itself to the larger issues of pollution, climate change and so on.
The example of Procter & Gamble is instructive. The company’s Future Friendly campaign instructs consumers on everyday ways of becoming energy-efficient. Toyota, meanwhile, provides a successful case of combating negative perceptions of greener cars. The carmaker increased its hybrid model’s horsepower and promoted it as “quick, roomy and economical” to counter the belief that it had less power than conventional vehicles.
Other case studies from the likes of GE and Wal-Mart highlight how being honest and explaining the benefits of products to the environment and consumers can also help companies “shape their market opportunities”.
“Cultivating the Green Consumers” by Sheila Bonini and Jeremy Oppenheim, in Stanford Social Innovation Review, autumn 2008.
Social reporting: everybody is at it. But is assurance so uniform? According to this paper, apparently not. Taking as its research base 212 Fortune Global 250 companies that have adopted social reports between 1999 and 2005, Kolk and Perego find a mixed approach to assurance.
Only a third of reports had an independent third-party verify their content. Top of the list are companies in Europe and Japan. In the UK, for example, 44% of reports are verified. Further examination indicates that in countries where societal pressures are higher and disclosure laws weaker, companies are more likely to contract a third-party review.
The hypothesis explains why assurance provision has been slower to take off in the US, where a legally enforced compliance mentality dominates. In addition, the authors find that demand for assurance services increases in those countries where market and institutional mechanisms foster more sustainable corporate practices.
The findings have implications for the army of large accountancy firms that have moved into the social and environmental auditing space. The search for assurance contracts is likely to be much more fruitful in countries in which stakeholders enjoy a high profile and litigators do not.
A follow-up paper with additional insights into the impact of executive- and firm-level factors, country-specific social and environmental regulations, and the quality of assurance services would represent a valuable addition.
“Determinants of the Adoption of Sustainability Assurance Statements” by Ans Kolk and Paolo Perego, Business Strategy and the Environment, forthcoming.
The power plays of responsibility
Even the most well-intentioned actions can result in negative consequences. Watch out, Kirsta Bondy warns, or this could be happening with your company’s corporate social responsibility programme. Bringing a resource-dependence perspective to her research, Bondy shows that corporate social responsibility has the power to attract “opportunistic actors” to the field. Their goal is to benefit from the increased individual power that comes with the corporate social responsibility function, rather than further the cause itself.
Power has always been assumed to be a good thing in terms of corporate social responsibility; the more influence it wields, the more impact it can have. Given the moral language in which the discipline is couched (“doing the right thing”), it has also presumed to be free of the spectre of internal power plays. Until now.
Bondy’s incisive and lively analysis of how the corporate social responsibility function operates in a real but unnamed international tourism company gives weight to her argument. “Due to the link between CSR and the personal ethics of those responsible for it,” the paper concludes, “the power struggle may in fact be more intense than other business imperatives.” A practically focused piece of research that all corporate social responsibility managers (and their bosses) should read.
“The Paradox of Power in CSR: A Case Study on Implementation” by Krista Bondy, Cranfield University, in Journal of Business Ethics, Vol 82, No 2, 2008.
- The website caseplace.org is hosting a new curriculum library on employee ownership. The free online resource includes up-to-date case studies, syllabuses and other innovative teaching materials on business and sustainability.
- Wal-Mart is sponsoring a $35,000 competition to reward business students for inventing sustainable products or develop sustainable business solutions. Now in its second year, the Wal-Mart Better Living Business Plan Challenge will be run in collaboration with the on-campus group Net Impact.