Louise Holm Olesen 1
CSR – Ethical Communication
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Louise Holm Olesen
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CSR – Ethical Communication
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29 maj 2012
Louise Holm Olesen
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Context
Introduction ........................................................................................................................ 3
Problem statement ............................................................................................................. 3
Method ............................................................................................................................... 4
CSR overview....................................................................................................................... 6
Academic and Practice perspectives of CSR ....................................................................... 7
Carroll’s Pyramid ................................................................................................................. 8
The CSR Pyramid Pros ....................................................................................................... 10
Conclusion on the pyramid ............................................................................................... 10
Communication of CSR ..................................................................................................... 11
Function of a trustworthy name ....................................................................................... 11
What to expect.................................................................................................................. 13
CSR in Denmark ................................................................................................................. 14
Innocent Juice ................................................................................................................... 18
Innocent’s CSR .................................................................................................................. 18
Innocent’s approach to CSR .............................................................................................. 20
Innocent’s world wide web-page...................................................................................... 24
Conclusion ......................................................................................................................... 26
Bibliography ...................................................................................................................... 29
Appendix 1: ....................................................................................................................... 31
Appendix 2 ........................................................................................................................ 34
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Introduction
Innocent, health and pure, all sounds like something to be out of reach, but
actually it comes in 250ml bottles, which of course is 100% recyclable. The juice
company Innocent has proven that with an ethical point of view, you are able to
go the distance. Even before the company had established their name, the
ethical perspective had become the cornerstone of the company, and still today
the ethical perspective is pride of place.
There are without any doubt, that there are clear benefits for an organization to
engage in CSR activities. The more organizations’ devote resources to various
social initiatives the more they are able to develop a positive relationship with
the stakeholders. As Yoon stats:
CSR activities are consistent with a naïve business theory that
assumes that consumers will take the activity at face value and
attribute positive characteristics to the company, resulting in a
more favorable evaluation. This naïve theory dovetails with an
extensive body of attribution research that demonstrates a
pervasive correspondence bias. In general, social perceivers
explain actors’ behavior in terms of corresponding traits and
dispositions (Yoon et al. 2006:1)
An organization which is working with CSR realizes that CSR demands a lot of
thoughts and recourses, but it is able to foster and nourish a favourable attitude
among stakeholders. When working with CSR Innocent is committed to fulfil
level communication as "The stakeholders of an organization are not to be
manipulated into sharing the same point of view as the organization, but to be
invited to an equal dialogue" (Laljani 2009:13) The communication of CSR is
therefore a very effective tool for organizations to create acceptance of the their
CSR actions, and if it shows that all your thoughts and hard work is not
channelled out to the receiver correctly, then how will anyone even realize all
your hard work?
While CSR activities are running, organizations are more than willing to tell their
story and motivation behind by communicating and channelling them to people
by magazines or on at their official homepage.
Problem statement
It is no longer a question whether or not companies should engage in CSR, social
responsibility is often considered worthwhile in both short- and long run terms.
Engaging in CSR takes confidence-building measures towards stakeholders,
increasing the turnover, decreasing expenses and hopefully increase the
revenue; and in the mean time CSR addresses social and environmental
problems. The corporate reputation and profile depends on a clear strategy and
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the challenge within a cross-cultural perspective is for an organization to
transitioned all communication and performance of the corporate vision and
mission to the organizations internal and external stakeholders, as they has great
influence on the organizations operations. Therefore my research question is:
What aspects of CSR does Innocent adhere to and how are these
communicated on the company’s website?
Method
Before being able to answer the problem statement, it is necessary to gain a
thorough understanding of how the focus of the problem is. The aspect of CSR
and the communication hereof, is in focus and first and foremost the type of
research indicates how the report and answer is understood.
Ontologically, it is estimated that according to social corporate responsibility
communication there is certain objective structures of reality, but that
knowledge still is relative and to some extent subjective and value-laden, which
requires that there is an interpretation of observations for understanding. It is
therefore not possible to simply observe communication and the aspects of CSR,
but also necessary to interpret this through the analysis and assessment.
Looking at the epistemological, it is estimated that the researchers values
influences the study, therefore it is difficult for the researcher not to relate to
the study quite objective as for the studies analysis and assessment. Therefore
the researcher’s subjective values and perspectives will have influence. Although
this study analysis and evaluation is based on a consistent set of criteria’s, this
study is completed by other study investigating, which gives this study an
interaction between what is now studied and the former investigated.
Positivism is all about finding the core of reliable knowledge through quantitative
studies, while from a hermeneutic starting point try to understand people and
their actions through interpretation. Since this report does not make a
quantitative study, but instead uses a more qualitative analysis, it is obvious that
this is the hermeneutic approach is used.
This study presents a qualitative research in terms of analysis and assessment of
CSR, communication theory and Innocents sustainability report, exploring the
attitudes and acquired behavior of stakeholders as they are influenced by CSR
communication.
The study is devided in two parts; firstly with a theoretical part where I describe
the framework and a following empirical part, which contains the analysis of
Innocent as a single-case study and analyze of the communication on the of
Innocents webpage, a deductive angle of approach.
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In this context is not possible to identify an objectively correct way to report on
social responsibility, as this depends on many different factors, which are also
mutually influence each other, and when the analysis and assessment will be
influenced by the researchers own values. However, the objectively way can get
closer through subjective analysis and assessment, which is precisely the aim of
this rapport. And as part of getting closer to objectivity the analysis and
evaluation is carried out on a systematic basis, which conclude a consistent
analytical framework.
Within the theoretical part, I will describe my choice of theory. The overall
theory is Carroll’s CSR pyramid and stakeholder communication strategies by
Morsing and Schultz. Stakeholder theory takes its based on Freeman (1984) idea
about the company's value creation process and forms the basis for why the
impact of CSR initiatives to be assessed on a basis other than a direct (pure)
economic. The concept of CSR is diffused (Dahlsrud, 2006), and this report takes
as its starting point Carroll's initial conceptual definition of CSR (Carroll, 1979)
The rationale for the choice of Carroll's is the fact that it is very precisely in the
definition of CSR and is widely quoted for, is because it is open to the continuous
change in CSR efforts. In addition, he is also known for his Pyramid of CSR which
separates CSR into four layers and thereby illustrates very simple and clearly all
the aspects of CSR. Companies can thus be measured according to these layers in
order to determine their level of CSR commitment.
The empirical part contains of a single-case study as the method allows you to
study things in their natural settings, attempting to make sense of, or interpret,
phenomena in terms of the meanings people bring to them and as the goal of
this study is to create a precise description or reconstruction of reality, the case
study is chosen. The limitation hereof can be that the concentration of Innocent
lead to problems of generalization.
As shown above, the rapport does not intend to conduct an empirical study of a
number of companies, to uncover the manner in which communication is
practiced today. By contrast, the rapport intends to prepare a in-depth and
intensive analytical study of Innocents communication of CSR, so as to gain a
thorough understanding of how companies should communicate CSR.
The empirical data used for the analyses is based on relevant material from the
corporate website of Innocent, www.innocentdrinks.co.uk/. For the parts on
Innocent’s CSR engagement, Innocents 2011 sustainable report will be the point
of reference. The report has its own webpage which is linked from Innocent’s
webpage.
The official Facebook page and Twitter profile has been chosen. The profiles can
be found at:
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and twitter.com/#!/innocentdrinks. Innocent
has many profiles, but the two has been chosen as they are official and therefore
represent Innocent’s use of communication.
www.facebook.com/innocent.drinks?ref=ts
CSR overview
Organizations attractiveness is not only measured by economic profitability, but
also on a requirement of responsibility towards their environment and society
CSR has become the term of this requirement. CSR is the moral philosophy
towards corporate performance and has become core values for many
stakeholders of the organization. "Ethics and CSR have different meanings to
different people and situations" (Burton 2009:145) and therefore the right set of
incorporated self-regulated rules and regulations made by managers and leaders
becomes vital. Organizations moral respect of supporting their responsible
appearance in correlation to specific subjects as; climate, environmental efforts,
diversity, work- and precautionary measures, child labour and bribes are all
examples of issues for organizations to address. The outcome of these rules,
attitudes and behaviours towards, all affect their corporate image as the
influence of their environment and this all the outcomes can lead to a
competitive advantage to the organization (Burton 2009:145-147)
Several organizations tend to use CSR to oblige bad publicity, to or communicate
their brand and document their good deeds within their environment. Also it is
important for an organization to conduct and use a CSR strategy that fits the core
business or values, Shuili Du believe that the fit tend to provide a non-sceptical
approach as well as fostering engagement and advocacy behaviors towards the
organization (Du et al. 2010:8-13).
Management, working conditions, improving the environment, business practice
ect. is just a few words that covers the abbreviation CSR; a grey zone in which
words and actions are multiple. The only clear thing is:
Defining CSR is not just a technical exercise in describing what
corporations do in society. Definitional work in CSR is also a
normative exercise in setting out what corporations should be
responsible for in society, or even an ideological exercise in
describing how the political economy of society should be
organized to restrain corporate power (Marens 2004:63-87)
The framework of this phenomenon is not clearly defined, in this context what
and how resembles the blurred approach to CSR although the fundamental idea
behind are much more apparent; "business has an obligation to work for social
betterment". The initiative of CSR is generally about common sense and
respecting people, but also a way to differentiate oneself from competitors while
trying to meet the stakeholder’s expectation both national and global. In reality
the purpose of CSR is often a combination of moral and instrumental approach.
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Although there are numbers of approaches to concept and understanding of CSR
in both an academic and practical perspective, there is no exact definition.
The definitional confusion surrounding CSR might potentially be a
significant problem. If competing definitions have diverging biases,
people will talk about CSR differently and thus prevent productive
engagements. Unfortunately, any attempt to develop an unbiased
definition is challenging, because there is no methodology to
verify whether it is indeed unbiased or not. Even if an unbiased
definition were to be developed, it still would require people
engaged in CSR to actually apply it for the confusion to be solved.
(Dahlsrud 2006:1)
Academic and Practice perspectives of CSR
There are many disagreements on CSR. For instance “Attempts to align
companies or brands with good causes are mere window dressing- companies
should stick to the business of making money”. Of course using CSR within a
business does no harm –it’s good for the company, as it builds brand reputation.
This point of view sees CSR as a tool for trying to gain profit, one could call
Friedman’s vision of CSR. However, many see CSR as a good strategy because it
pays off.
Also disagreements are found within theorists within that field, one academic
perspective which try to cover the essence of CSR is one by Carroll (1979) "the
social responsibility of business encompasses the economic, legal, ethical and
discretionary expectations that society has of organizations at any point in time"
(Crane 2009:201) This definition contains the three fundamental dimensions that
business always had; social, environmental and economic impacts that have
been managed through established patterns developed over many years and
years to come. Furthermore is Carroll’s perspective on CSR is a good base for
proceeding as his terminology is used later on.
The more practical definition is the Commission of the European Communities,
2001
A concept whereby companies integrate social and environmental
concerns in their business operations and in their interaction with
their stakeholders on a voluntary basis
Contrary to the academic perspective the practical definition is focusing
more on voluntary work, and one could run parallels to the ethical and
philanthropic perspective expectations. Carroll’s academic definition on
the other hand sees the dimensions of a business and a stakeholder’s
interest.
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Carroll’s Pyramid
Trying to clarify the concept and approach of CSR again Carroll are well used.
Carroll first introduced the concept of ‘corporate social performance’, made a
synthesis of the basic principle of social responsibility, the concrete issues for
which social responsibility exists, and the specific philosophy of response to
social issues. The model is based on four levels of responsibility: Economic,
Legal, Ethical and Philanthropic.
The model tries to place both the economic and the legal perspectives together
in this one pyramid, relating them with the social values in the company. The
model refers to the economic values, as it is followed by legal, ethic and
philanthropic values. The hierarchical approach somewhat resembled the
Maslow hierarchy of priorities where organizations, like individuals, has some
different criterias that needed to be fulfilled.
Figure 1 Carroll’s Pyramid
First part of the pyramid is Economic Responsibilities and right away, it might be
difficult to see a relationship between CSR and financial accountability, but the
link is found within the label of a ‘financial institution’. From an economic point
of view, one could argue that the hidden motives within an organization focus on
leadership- and managing styles in an organization in order to maximize profits
and making workers more efficient to reduce costs and risk. But an important
element of economic accountability is to achieve a healthy profit which in the
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long-term could keep business running and to meet the following requirements
in Carroll's CSR pyramid.
The next part of Carroll’s analysis concerns the organizational legal
responsibility. For each industry you will find some legal rules that need to be
followed. These legal requirements are those which the organization is expected
to follow and which are largely reflected by the population’s unwritten code of
ethics. For an organization to exercise fair business, these ethics are expected to
be followed in terms of competition and diversification.
When talking about the legal matters of an organization, it is important to
mention that it does not fully cover the expectations of doing business. Carroll
believes, that there are three important factors that needed to be followed to
cover a full model (Carroll 2009:33).
1. The law cannot possibly address all topics or issues that business
may face. New issues continuously emerge such as e-commerce,
genetically modified foods, dealing with illegal immigrants, and
use of cell phones while driving.
2. The law often lack behind more recent interpretations of what is
considered appropriate behaviour.
3. Laws are made by lawmakers and may reflect the personal
interests and political motivations of legislators rather than
appropriate ethical justifications.
Because "law is essential but not adequate"(Carroll 2009:35), ethical responsibility
is suppose to embrace those activities and practices that are expected by the
society. Contrary to the legal responsibility, the ethical responsibility is not
something that an organization can read from a legal requirement, but it is more
similar to business ethics, where an organization has to surmise what they are
able to do. Organizations deal with the same ethics and regulations as their
shareholders, which means that the organizations, as far as possible, need to
follow the shareholders’ standards and the expectations to the organization.
"Carroll believes that this is a very important point in the analysis, due to the fact
that organizations are asked to navigate the various parts of doing business"
(Carroll 2009:36).
Last part of the pyramid is the organizations’ philanthropic responsibility, which
deals with the issue of being a "good corporate citizen." In general,
organizations’ philanthropic responsibility is not what is expected to the same
extent as the ethical barriers. It is what the shareholders expect of the
organization which typically is an act used to please society. Examples of
philanthropic responsibility could be donation, employee volunteerism,
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partnerships with local governments, or other organizations and other voluntary
involvement of the organizations’ resources. If a company chooses not to
perform some of these actions it is not considered to be unethical due to the fact
that the responsibility is philanthropic. Therefore, the philanthropic
responsibility is a factor that can be used to give the organization a unique status
when they promote themselves.
The CSR Pyramid Pros
Years after this model was conducted, it is still one of the most respected in
today's business. Because of its clear and simple breakdown elements the
pyramid is seen as a tool when creating a CSR strategy. Moreover, the CSR
pyramid is used by organizations to set long-term goals, of a non-economic
standard.
By adopting this approach, organizations are able to give themselves an
advantage of a long-term vision, still appearing "pro active" when facing future
problems. Using this model, many organizations seek for a possible chance to
differentiate themselves and create preferences by telling how well they treat
their suppliers, how they pay a fair price to farmers in Africa, etc. When
organizations use the pyramid for marketing, the consumer might be better
informed about who acts responsible and who does not and the organizations
efforts are often rewarded in today’s globalised knowledge society.
Conclusion on the pyramid
When looking at the pyramid one should not think of the upper levels as the
most important but instead turn their attention towards the lower levels, as they
are the foundation of the upper ones. According to Carroll the two lower levels
are required by society. In other words, being profitable and obeying the law is
required by society if not implications could be legal issues or a bad reputation
among society.
Organizations are encouraged to work with CSR to become "a good corporate
citizen" the upper level of the pyramid, but as in Denmark there "is a statutory
requirement from 2009 that large businesses in Denmark must take a position on
CSR in their annual reports". (www.csrgov.dk) Most academic and practical
definitions of CSR attribute to a voluntary commitment and with this
requirement the implementation of CSR might be referred to as voluntary
enforcement. Herein lays a problem of clarity within the claim and expectations
that society has towards CSR and the connection between the philanthropic and
legal level in Carroll’s pyramid. No one can force a company to engage in CSR,
but as rules and regulations are conducted, the companies have to follow and
the issue which might have been an ethical project of a company turn out to be
legal requirement.
Also Global Compact has based on a “new definition of corporate responsibility,
that moves beyond voluntary engagement and meeting basic legal requirements
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by companies, and emphasizes both the concept of shared value and the "do no
harm" approach. Also significant is the explicit focus of the strategy on human
rights and the close alignment with the UN Guiding Principles, which provide an
authoritative global standard of preventing and addressing the risk of adverse
impacts on human rights linked to business activity”.
This tells of a path where CSR on a longer term can be defined as a voluntary, as
the text says the new definition “(..) goes beyond voluntary engagement (...)”
To conclude on this, one could say that the ethical part often is what gets the
organizations into trouble, since the level represents the society’s expectation of
the organization. Whereas the philanthropic part is where success is fostered.
This part is desired by the organization, which is why the model might be helpful,
as the levels become more visual.
The CSR Pyramid is a good tool when categorising or structuring these four
different aspects of business responsibility. When public acknowledges of an
organization application of CSR, it is because the organization successfully
accordance between thoughts, words and actions within every activity of the
organization, the use of CSR become favourable for the organization and
trustworthy to the public.
As this study focuses on how a company influences their stakeholders with the
use of CSR communication, I will delimit this subject of what and why CSR is and
concentrate on how CSR is communicated.
Communication of CSR
Based on a stakeholders perspective, it is appropriate to involve all stakeholders
and the communication needs to be organized in concordance between
company, stakeholder’s expectations and experience. Corporate communication
is an attempt to produce a connection between brand and organization by
integrating communication to create a good relation between organization and
stakeholders.
The communication is needed when decisions are to be carried out; employees
are to be informed of the organizations vision and strategies, and consumers and
business partners are to be informed and influenced by marketing and from time
to time be involved and engaged within the organization. The outcome of the
CSR communication can be divided into both internal and external goals, like
represented below.
Function of a trustworthy name
Awareness of corporate self-presentations demands a great deal of trust,
although there "Appears to be a contradictory dynamic at play between trust
and understanding. The more trusting a country’s consumers are in business, the
more confused they are by a company’s messages" (Cone Communications
2011:27). The key to this problem is to enter a dialogue between organizations
and their consumers as a natural element of a company’s daily routine. The
communication fulfils some of the customers criteria’s, as explaining actions,
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visions and regulations ect. to profile the organization personality or brand. The
motivation behind CSR is also an important feature as most stakeholders make a
distinction between the incentives of an organisation from engaging in CSR
activities.
The distinction is made between extrinsic and intrinsic motives, where extrinsic
motives are seen as a way of increasing profits, whereas intrinsic motives are
organizations real concern to social responsibility, and therefore puts an effort in
connection to this.
When stakeholders associate an organisation with intrinsic motives, they often
act positive towards the activities; whereas an association with extrinsic motives
would result in a more negative attitude towards the organization (Du et al.
2010:9). It can be difficult to divide intrinsic from extrinsic motives when an
organization engages in CSR, since there in many cases lies a combination of
those two. Many stakeholders are also willing to accept extrinsic motives as long
as they know that an organization is not without intrinsic motives. In other
words, many stakeholders are willing to accept a win‐win situation for both
parties, meaning that the CSR initiative serves good causes in the society as well
as having a positive effect on the company’s bottom line.
In addition one could say that organizations should think carefully when
communicating their motives of engaging in CSR. If an organization decides to
say that they only have intrinsic motives, this is very likely to trigger scepticism
among the stakeholders. However, if an organisation decides to tell both of their
extrinsic and intrinsic motives for engaging in CSR activities this will give the
organisations more credibility and thereby generate goodwill. This shows that
honesty within CSR communication is important and in the long run it fosters
trust. In most cases where CSR scepticism is fostered due to organizations focus
on intrinsic motives, but goes rather quiet with the extrinsic motives. In a
stakeholders perspective an organization intention of ‘saving the world’ becomes
unrealistic, and therefore they become sceptic about the real incentives of the
company.
If this is the case, it this will affect the organization in a negative way. It can
therefore be argued that it is better to be honest about the incentives, instead of
stakeholders having to “invent” the extrinsic motives, and thereby possible
making them worse than what they really are. One final comment to the motives
of engaging in CSR is that if an organization has pure intrinsic motives of
engaging CSR, then there would be no reason to spend money on
communicating their CSR activities. Therefore, one must assume that
organizations communicating about their CSR activities have extrinsic motives as
well as intrinsic motives
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What to expect
Figure 2 Communication outcomes
This is no longer a question whether or not to communicate CSR but how to
reach out to wide set of stakeholders whom have different interests within the
organization. The stakeholder-driven perspective on CSR shows that "individuals
react to company’s CSR activities in multiple ways, by not just buying more
products, but by enacting other stakeholder behaviors, such as seeking
employment with the company and investing with the company" (Sen et al 2006)
Which has to be the communications greatest achievement. The challenges lies
within communicating the corporate values expressed in strategies and every
day procedures to stakeholders with a variety of interests and expectations
(Whitehouse, 2006). When communicating CSR there it is important that the
corporate values and the CSR project have the same ‘headline’ to provide a non
sceptical view to their corporate name, a so called fit or match.
Having a “match” between the organisation and the CSR activities, which it
engages in, means that there is congruence between the CSR activities and the
business, which the company is in. If an organization has a good CSR match, it is
more likely that stakeholders will associate the organisation with intrinsic
motives, whereas a low CSR match is more likely to associate with extrinsic
motives. An example of a good CSR match could be an organisation selling herbal
products, which then decides to sponsor the protection of rain forest.
This does not mean that an organisation should not engage in CSR activities with
a low CSR match. If organisations decide to do so, it is important that they in
their CSR communication elaborate on why they have chosen to engage in this
specific CSR activity. Other researches have actually shown that a low CSR match
under some circumstances can have a positive effect on stakeholders, since this
can help differentiate the company from other companies, due to the fact that
this company is seen as being more sincere in its CSR activities, since they do
good deeds in causes that has no influence on their own company.
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A successful communicator is able to "include the commercial perspective in the
normal communication processes"(Laljani 2009:31), this means that the
communication aimed to customers and future consumers properly is the same,
but B2B costumers or investors has a need for a different type of transparent
d at a.
CSR in Denmark
The Danes are amongst the most sceptical people when it comes to
organisations communicating their CSR activities (www.reputationinstitute.com).
Therefore, it takes more than the ordinary for an organization to be perceived
successfully within this area. The reason could be the Danish jante law, which
negatively portrays and criticises individual success and achievement as
unworthy and inappropriate.
Research has shown that if organizations want to communicate their CSR
activities, the Danes prefer it to be done in a less conspicuous way (Morsing
2008:102). In other words, Danes are not in favour of CSR communication
coming directly from the company. Instead they view it as being more credible
when it comes from third party people or organisations. Ole Daugbjerg, Vice
President of Danfoss quotes:
When an international company makes an advertising campaign on their
corporate trucks explaining how they bring out medicine to the poor and
suffering people in Africa, it makes Danes feel sick. If WHO made a
documentary from Africa where it was mentioned, then it would be great.
(Morsing 2008:107)
This is a perfect example of how the Danes are in big favour of CSR
communication coming from other parties than the company itself. Therefore, a
big challenge regarding CSR communication in Denmark, is how to make
stakeholders talk about the CSR activities. In addition to this, research has shown
that "Danes are more in favour of more discrete communications channels such
as annual reports and corporate websites as compared to advertising and public
relations". (Morsing & Schultz 2006:330) The challenge for organizations is then
how to make the public aware of one’s CSR activities and as Ole Daugbjerg says:
Organizations can make use of a third part to communicate the
CSR message. This could be extern stakeholders seen as brand
and organization ambassadors who engage in activities such as
positive word‐of‐mouth, willingness to pay a price premium, and
more importantly, it is very likely that the loyal consumer will
defend the organization when facing negative news about the
organization or red numbers on the bottom line. It must also be
considered very likely, that loyal consumers are more likely to
either invest or seek employment within a given company (Du et
al. 2010; 9).
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The question is how the organizations need to communicate with their
stakeholders in order to make them understand the message. "Communication is
defined as the process by which information is transmitted and understood
between two or more people" (McShane 2003:324) and for an organization to
create a relation between the organizations and their stakeholders, the process
of giving and taking information shall not be a one-way communication strategy.
Although information is needed, one-way communication will only result in a
"mechanic and deterministic perception of its own role and of their stakeholders
need" (Laljani 2009:25). Today participation and dialogue have become a natural
element of corporate self-presentations, which is why the communication used
need to fulfil some criteria’s which explains an organization or a brands
personality. The type of communication needed incline more to a dialogue, a
two-way communication type. The Grunig and Hunts communication model from
1984, divides communication into four different types: press agentry, public
information, two-way asymmetric and two-way symmetric.
In the Two-way asymmetric model, the communicator gets feedback from the
public and then applies the latest communication and persuasion theories to
persuade the public (audience) to accept the organization’s point of view. On the
other hand, in the Two-way symmetric model, the communicator is the go between
for the organization and its public, trying through all methods of communication
to have each side understand each other's point of view. If persuasion takes
place either way, it's because of information flowing both ways between the
organization and the public. (More give and take because the sender and
receiver are not adversarial)
Figure 3 Grunig’s four models of public relations
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Most organizations are likely to admit to the last model, the two-way symmetric
type which it is the most desired, as it invites to dialogue. Although organizations
are no longer to produce propaganda or spread information, new numbers on a
‘Grunig and Hunt study showed that 15 % of organizations are using one-way
communication, 50 % with public information, 20 % works with the two-way
asymmetric and only 15 % are using two-way symmetric communication type’.
(Laljani 2009:25) The reason why the two-way symmetric type is difficult to
achieve, can be the organizations division and delegation of different tasks. An
example could be the tasks of marketing and communication which are two
different areas, but by focusing on one communication channel like a webpage
those two areas have to comply and support each other, which is problematic to
combine within a large organization. The study tells of a pattern where the
desired achievement doesn’t equate the approach of communication used.
Morsing & Schultz cover the same approach as Grunig & Hunt, but have made
some adjustments which relates to the "processes of sensegivning and
sensemaking" (Morsing & Schultz 2006:326)
In 2005 Freemann defines stakeholders as “(…) groups and individuals who can
affect, or are affected by, the achievement of an organization’s mission.”
(Morsing & Schultz 2006:323) As stakeholders devote more critical attention to
corporate CSR messages and as their expectations continuously change, the
challenge for business consists in understanding their stakeholder and in
communicating CSR while being perceived as credible. It is obvious for
organizations to focus on the segment already interested within the CSR actions
and communications, but having in mind that the organisation has to incorporate
both instrumental and moral aspects in the matter of different stakeholder
perspectives, it requires “(…) more sophisticated and ongoing stakeholder
awareness and calls for more sophisticated CSR communication strategies”.
(Morsing & Schultz 2006:323)
Morsing & Schultz has devided their communication strategies into three.



The stakeholder information strategy
The stakeholder response strategy
The stakeholder involvement strategy
The first strategy is called “The stakeholder information strategy”. The most
noticeable thing about this strategy, is the fact that communication is one‐way,
meaning that it goes from the organization to its stakeholders. In other words it
can be said that the company is just “telling” and not “revising” or “listening” to
their stakeholders. Using this communication strategy, the intention of the
company is to spread out the information as much as possible, and then it is up
to the stakeholder to either support the company in it activities, thereby e.g.
buying the products of the company, or the stakeholder can choose to be against
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the company, thereby e.g. demonstrating against the company. In short it can be
said that the strategic communication task of the company is to inform the
stakeholders of the CSR activities made by the company.
Based upon that, the stakeholder either supports or opposes the company in
what they are doing; however there is no actual communicating between the
company and the stakeholders regarding the CSR activities of the company.
(Morsing and Beckmann, 2006: 142).
The next strategy is called “The stakeholder response strategy”. This strategy is
based on a “Two‐way asymmetric” communication model, and as the word
suggest, there is actual two-way communication between the company and the
stakeholders regarding the CSR activities. What one should note here is that the
communication is said to be asymmetric meaning that the largest part of the
communication goes from the company to the stakeholders. The way the
company communicates with their stakeholders is e.g. through opinion polls or
market surveys. However it can be argued that this form of CSR communication
is close to being one-way communication, since the companies often conduct
these polls and surveys in order to convince the stakeholders of the
attractiveness of the company. The polls and surveys are also often conducted in
such a way that the company asks stakeholders questions within a certain
framework, thereby affecting the stakeholders in such a way that their answers
correspond to what the company wants to hear. In addition to this, the company
does not change based on the response they get from the public relations, but
instead the company tries to change public attitudes and behaviors’ in their own
favor.
To conclude on “The stakeholder response strategy”, one can say that this
strategy could be seen as some sort of “media stunt”, that a company uses in
order to give stakeholders the impression that they are interested in the
stakeholders’ attitudes towards the CSR activities of the company. (Morsing and
Beckmann, 2006: 143‐144).
The last strategy is called “The stakeholder involvement strategy”. What
characterizes this strategy is the fact that it demands a dialogue between the
company and its stakeholders. When working with the dialogue both company
and stakeholders are affected by each other. Therefore this form of
communication is also said to be a two‐way symmetric communication model,
meaning that there is as symmetry between “listening” and “telling” between
the company and its stakeholders. In addition to this, it can be said that the
company is seeking to influence their stakeholders and at the same time, the
company is also seeking to be influenced by their stakeholders.
Using this strategy the company is continuously involved in negotiations with its
stakeholders, thereby using the dialogue to explore mutually beneficial CSR
initiatives. A crucial condition for this to work, is that both the stakeholders as
well as the company are willing to change, since it is the mutual understanding,
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which gives a good result. A final comment to attach to this strategy would be,
that it is really important for the company to build up relationships with their
stakeholders, since success in this case depends on the stakeholders’
involvement in CSR messages. (Morsing and Beckmann, 2006: 144‐145).
Innocent Juice
Innocent Juice is the history of three young men with an idea that later resulted
in a massive success. Adam Balon, Jon Wright and Richard Reed where fellow
students who spotted a hole in the market for healthy drinks and together they
started a company in 1998 and in 2007 Innocent went from 3 employees to 196
and a turnover on £100 million. Innocents vision is to be the Earth’s favorite
little food company.
One day they discovered that is was hard to get a healthy ’snack’ in a hurry and
decided that maybe they were able to produce a natural, healthy fruit drink and
in the summer of 1998 they bought fruit for 500 pounds, blended fruit for
smoothies and took them to a small jazz festival to test their idea. They put up a
big sign and on it stood, "Shall we quit our jobs to make smoothies?" They put
one bin up which said "YES", and one which said "NO". So they asked people to
taste their smoothies and then throwing the empty bottle in the "YES" or "NO"
bucket. When the weekend was over, the "YES" bucket was full and the next day
they went to their work and resigned.
To go into detail Innocent is based on naturally, healthy and sustainable
ingredients. From the start Innocent based their vision on CSR and sustainability
and today they can proudly represent that innocent is business partners with
Rainforest Alliance (2006) Innocent are all set on doing for the environment what
is best. Electricity comes from green renewable sources. Fleet vehicles are
powered by bio fuels. They have a bottle, which is 100 % recyclable. Also
Innocent donates 10% of its profit to community projects through the Innocent
Foundation, which administers grants for communities in fruit source countries.
Excess stock goes to the homeless and knitting mini-hats for drinks raises
additional cash for charity. (www.innocentdrinks.co.uk)
Innocent’s reaches out to consumers with a combination of using light-humored
communication cohesive with the brand's values in a unique combination. The
communication is open, warm-hearted and present, and in the same time it
invites all types of stakeholders to be a part.
Innocent’s CSR
A business has to be successful to be able to conduct CSR, the underlying
benefits of CSR are reciprocal; companies conduct CSR because they believe it to
be the right thing to do, but they also see the advantages of using CSR, a balance
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of sustainable communication and sustainable business. Looking at
innocentdrinks.co.uk, Innocents webpage, the first ting to notice is the
aggressive promotion of their CSR in matter of their products and activities
where Innocent with catchy pictures describe the involvement down to detail.
Basically I have focused on the ‘us’ part, which content subjects as ethics, press,
trade and foundation.
Even though Innocent is from 1999 they have a long tradition of CSR, the
timeline first mention a CSR activity already in 2000. Here Innocent tells of their
charity. We give 46% of all profits to charity and nearly bankrupt the business.
Then we start thinking that we should start a proper, organized charity".
(http://www.innocentdrinks.co.uk/us/our-story - Innocent timeline year 2000)
but precisely what type of charity, is not to be told at the timeline.
Figure 4 (http://www.innocentdrinks.co.uk/us/our-story)
Ever since Innocent has put an effort to CSR efforts, issues are environmental,
social and caring of the innocent’s environment. In 2004 Innocent started its
foundation to organize its charity and “since its registration in 2004 it has
supported 37 projects, committed almost £1.3 million to community projects and
used its funding to leverage an extra £5.8 million from major public grant givers
such as the EU and DFID. The foundation’s projects have so far helped 505,000
people (the equivalent of 100,000 families)”. Examples of projects:
Figure 5 (http://www.innocentdrinks.co.uk/us/being-sustainable/legacy)
This is just giving a short idea of what these projects is all about, these projects
mirrors Carroll’s perspective, in matter of how the concept of CSR is build op,
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and that all projects underlie the levels of the CSR pyramid. Economically, legal
and certainly ethical aspects of these projects are followed.
Another area where Innocent puts an effort is at the ‘production’ of their
ingredients and their packaging, since 2005 Innocent has been a member of
Rainforest Alliance, the first ones to have a 100% recycled bottles and latest Rain
in Spain partnership with Unilever. Transportation of fruit also need to be low on
carbon and Innocent has therefore in 2006 maid a ‘carbon footprint’ followed up
with a ‘water footprint’ in 2009
All of these CSR activities can be categorized as social responsible business
practices as they are incorporated at Innocent. Also project and issues, cause
promotions and corporate philanthropy are a part of Innocents engagement.
Innocent’s approach to CSR
As theories argue for a non existing definition of CSR I would compare Innocent’s
CSR effort with Carroll’s model for CSR. As the pyramid illustrates in a simple and
clear way the aspects of CSR as some ethical and philanthropic expectations for
the company, this model will come well in hand. CSR is thus beyond the
economic and legal requirements for the company. The philanthropic
expectations of the company, is important for Innocent as it is able to provide a
contribution and participation among stakeholders and foster loyalty.
Innocents sense of purpose are clearly articulated, the sense of what they are
here to do is beyond the financial perspective. You cannot have ‘making money’
as a purpose for your business strategy although it is generic, everyone needs to
be profitable, the economic level within the pyramid. In order to stay in business,
it is important to have something beyond the economic level, a motive as it
leads, directs and motivates people.
From the webpage it is hard to see any transparent data which indicates of a
solid economic basis, related to the pyramids economic level. Even though, one
can have an idea of, or some history from ether media or statistic, which show of
a healthy economic stability within the company, it is not visible in the website.
Since Innocent has been on the market 13 years one should believe at Innocent
has the economic background for their ethical performances. The charity is build
up as a foundation, which only uses 10 %
(http://www.innocentdrinks.co.uk/us/being-sustainable#/us/being-sustainable/legacy)
of
Innocent’s revenue, and therefore stakeholders might find themselves having a
precautionary measure by the Innocent foundation. As Innocent are able to
conduct and fulfill the legal, ethical and philanthropic projects the economic
criteria have to be reached. Even though the annual report is no were to be
found, the 2011 sustainability report tells that in 2010 the Innocent foundation
donated £1.3 million. Although there for some stakeholder is a need to go over
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the accounts, one can still have an economic view of Innocents economic
accountability.
This is a web-shot from Innocent’s sustainable legacy, where they announce their
foundation accomplishments.
The legal requirement within the pyramid is not as spotless. Innocent works with
a number of alliances, which sets the legal standards for suppliers and
production in general and as innocent say entering the Rainforest Alliance:
Whilst it is important for us to have our own set of standards - to document
what we feel is really important and what we want to work towards - we also
need to recognise that there are some existing certification programmes out
there that are achieving great results, and we don’t need to recreate the
wheel. After visiting banana plantations in Costa Rica in 2005 we committed
to only buying bananas from Rainforest Alliance certified plantations.
(www.rainforest-alliance.org) (Innocent sustainability report 2011, p 4
http://www.innocentdrinks.co.uk/us/beingsustainable#/us/bein
g-sustainable/production)
One can only presume that this is Innocent’s attitude towards legal
requirements, they achieve a membership of different alliances which assure
that one is not interfering in illegal offences.
An article from the guardian critiques Innocent’s handling of their donation run
with ‘due diligence’ to the Innocent foundation. “Innocent has held on to
£520,000 pledged to its charitable foundation in 2007, and has not donated a
penny to that foundation since 2008.” (guardian.co.uk, Thursday 26 May 2011
22.01, appendix 1) In this article James Ball states that Innocent has been holding
money back from 2008 to 2010 although parent company, Fresh Trading Limited,
paid out £12m in dividends to Innocent's directors and other shareholders.
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In 2007 Innocent had a profit on £8m and made a total contribution of £750,000
– a little short of the promised 10% (...) “However, £520,000 donated to the
foundation was retained in Innocent's bank account in the form of a loan from
the charity” (guardian.co.uk, Thursday 26 May 2011 22.01, appendix 1) The
problem is that the Innocent maid money from loaning money from the charity
foundation.
At innocent’s blog this scenario is discussed and generally there is a disappointed
outcome from people, herein one will also find an apology from Innocent.
Within this blog a post by Dave Dawes tells that there are 2 major governance
failings within this situation:
1) The Trustees who were also Directors of the Company should
never have been allowed to be part of that decision as there is a
clear conflict of interest. Charity Trustees should never make a
decision which financially benefits the Trustee or any company
that they have a controlling interest in. Linda Perry should have
flagged up the conflict of interest, insisted that you leave the
room and minuted all of this.
2) Depositing Charity money into a current account of a legally
seperate Company is extremely dodgy and possibly illegal. If you
simply wanted to increase the interest earned, then there are far
higher rates at deposit accounts for charities than are available
to corporates. In any case, of all the bank accounts to deposit it
in, the bank account of the Trustee's own company should have
been the last on earth you should have used! Your Charity is not
a slush fund for your Company!
(http://innocentdrinks.typepad.com/innocent_drinks/2011/05/a
rticle-in-the-guardian.html - appendix 2)
It can therefore be discussed if Innocent seems to be a company that will fall foul
of the law eventually, although there is no evidence that Innocent has failed the
level of legality at Carroll’s CSR pyramid, which then I would say, Innocent has
achieved.
As mentioned earlier "law is essential but not adequate"(Carroll 2009:35), the
ethical responsibility is needed to embrace those activities and practices that are
expected by the society. This means that Innocent has their own set of minimum
standards for their suppliers to achieve, covering all the relevant social and
environmental issues. They set the standard for paying minimum wage, no child
labor, no land clearing and protecting watercourses form pollution ect.
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At Innocent, as in many other organizations the challenge is how to make the
supplier meet these standards and regulations corresponding to Innocent’s own
minimum standards. In matter of the collaboration with other alliances, the
standards for how the suppliers reach the standards and the documentation
hereof is put in the hands of the alliances. At Innocent’s ‘own’ suppliers (all type
of suppliers outside the alliances), the conduction and achievement for the label
of ‘approved’ demands and require Innocent to check if the performance of their
suppliers stands the standards requirements. When Innocent seek new suppliers
outside alliances, it might be possible, that the supplier cannot meet the
requirement in time of delivery. Innocent’s has therefore agreed to conduct a
realistic timescale for the suppliers to reach these requirements. Innocent check
the performance of our suppliers against the standards in one of three ways:



Innocent visit - someone from innocent getting out to the supplier to
check their performance.
Formal audit - get out the clipboard and go through each requirement
point by point. Audits are conducted by an innocent staff member or an
independent third party.
Self assessment - we have a lot of suppliers who source from even more
farms, and there is no way we are going to be able to go and visit them
all. In some cases we are going to need to rely on our suppliers to
conduct a self-assessment of their own performance. We do this for
suppliers that we deem to be low risk, or who we have already visited.
www.innocentdrinks.co.uk/us/being-sustainable#/us/being sustainable/ - production –
sustainable report p.5
All these requirements that Innocent has set up for themselves and for others
are all fulfills the level of ethical criteria within the pyramid.
What can seem as an open and understanding developing plan, can for critics
become an invite. There is nowhere to see such an example of a develop plan
and one can only imagine the time-horizon for meeting all requirements.
Therefore one can be in doubt, that the fruit juice from Innocent meets the
ethical standards, which Innocent is a label of.
Innocent’s commitment to philanthropy activity is their foundation, which in
2010 donated 10% of their profit, £1.3 million on philanthropy projects within
their local environment. CSR develops over a period of time and so does the legal
and ethical responsibility; the law gradually changes and ethical responsibilities
might turn to become legal responsibilities instead. Innocent has the same cycle
in the matter of transportation of supplies and as they engage with other
alliances some of their ethical points can become a legal requirement.
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Innocent seems to have a caring approach to most things, not only caring
for business, but also caring for others, and to give something back to
society.
Innocent’s world wide web-page
Innocent has by entering Facebook (268.996 likes), Twitter (62.845) and Flickr
(689 items) raised the opportunity to gain much more attention to themselves.
Since several of these services actually have far more traffic from external
systems which display Innocents content, far more than users of old-fashion
moves
into
the
‘Innocent
webpage’.
These services websites obviously play an important role when new users must
register, pay, etc. But actually not that significant as they are just one
standardized way among many to access the content of the company.
Innocent has not (yet) adorned their website with a small orange RSS icon, which
adorn most modern websites, for with RSS you can see/read/hear the Web
content completely detached from mother-website, which corresponds
approximately to say, "Spare me for your design and value added services, and
give me only the content, thank you." Innocent would therefore be compelled to
do something that engages people to interact with their content universe only
existing on their mother-webpage.
Also Innocent has a blog at their webpage, which is a relational tool where
Innocent talk about what they are doing and where the comment space is open
to dialogue. Innocent uses the blog as a live communication channel where they
can regularly tell what happens. On their blog Innocent is open and share their
knowledge and skills, which also affects potential customers to see that they
should buy Innocent and their products.
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Transparent communication such as annual reports are not to be found on the
website and the sustainable report are found after a closer look at the website.
Curious to see if the Danish website was similar, I found that it was close, but
there is a bit more information in the ‘press’ which tells of sales numbers from
1999 to 2007, this seems a bit outdated. It seems that the webpage is a channel
for deepen Innocents CSR initiatives’ more that being a tool to seek transparent
information. Sadly the website is unable to give a clear picture for all types of
stakeholders, to the business related stakeholder, which could have used the
annual report or an overview of their certification or memberships entering.
In the sustainability report from 2011 Innocent states that we sure aren't perfect
but we're trying to do the right thing.
In general it seem as Innocent has a open and honest in spite of negative
comments on their blog (haven’t seen anyone on their Facebook or Twitter) but
since Facebook and Twitter have far more traffic, Innocent can have decided to
delete negative comments on their wall and kept them on the ‘mother webpage’
which properly is less visited. If people want to dig deeper into Innocent, they
will seek the ‘mother webpage’ and by having the negative response on their
webpage, Innocent will seem more credible. Innocent is quite good at
responding at their Facebook site, within 60-90 minutes there will be an answer,
this have an enormous effect, as Innocent will feel more present. Not always it is
about answering, but also listening.
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Here is an example from Facebook, where Innocent is listening to ‘Matt’ and
takes time to explain and answer his question, in a tone which is personal, caring
and humorous. This example is also useful when talking communication
strategies.
To give another example stakeholder participation is the Innocent’s ‘the big knit’
project, which is a cooperation between stakeholders and Innocent. For two
weeks Innocent sell their smoothies with little knitted hats, these hats is send to
Innocent from private people all over UK. “For each behatted bottle sold, 25p is
donated to Age UK” (http://innocentdrinks.co.uk/bigknit/what_it_is/index.html)
which support elderly people.
Innocent is quite different when it comes to their communication. Notice the
open posture and moral caring that Innocent has for their stakeholders when
communicating their CSR, gives one reason to make similarities to Morsing and
Schultz (2006) communications strategies. Since Innocent want to interact with
their stakeholders it all indicates a two-way communication strategy. Innocents
open dialogue and involvement of stakeholders tells of the stakeholder
involvement strategy, since the organization want to learn from their
stakeholders and values dialogue and feedback. In matter of inviting, responding,
and establish a frequent, pro-active dialogue, that build a relationship. “the
stakeholder involvement strategy suggests that companies engage frequently
and systematically in dialogue with their stakeholders in order to explore
mutually beneficial action”(Morsing & Schultz 2006:328)
Conclusion
From the above theory, method and analyses of Innocent, the answer of the
research question.
What aspects of CSR does Innocent adhere to and how are these
communicated on the company’s website?
From the analysis above, it can be concluded that Innocent success when it
comes to achieving the multiple aspects of Carroll’s definition of CSR because of
the extensive coherence between the many dimensions. Today many
organizations, including Innocent are encouraged to work with CSR to achieve
the expatiations from consumers, the expatiations are high and the goal is to
display the profile of "a good corporate citizen". When Innocent quotes things as
“What we all eat do not only impact our own health, but also the health of the
planet” and ”We want to leave things a little bit better than we find them”
www.innocentdrinks.co.uk/us/being-sustainable It tells us, that Innocent takes
pride in their social and environmental responsibilities.
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The issues in which Innocent cares for is prepared thoroughly and systematically,
no project is by chance, the projects match the grounds of Innocent.
Innocent, health and pure is a caring approach for which they have for their
philanthropic responsibility based on an ethical, legal and economical
foundation. Also, those quotes show no intention of conducting CSR just to make
a profit, but rather because they believe, that it is the right thing to do, which
proves of a social actor with ‘good citizenship’, which is the ‘right’ motive for
organizations to have.
Although CSR tend to be a costly and time-consuming affair, Innocent still
manages to make a beneficial profit, a good reputation, press coverage and are
able to build up a strong relationship to their stakeholders by dialogue and
involving them. The overall impression of Innocent is that the CSR is deeply
incorporated and are very structured, when working with CSR, with the
exception to the transparent data. By transparent data, I mean the economic
documentation for the business foundation, as Innocent chooses to leave out the
data of how the business runs, they leave out the transparency of the business.
This, I believe could have been that key to one of Innocent’s problems. By
holding back these data, stakeholders are to believe that Innocent’s motive for
CSR is intrinsic and as mentioned earlier this can trigger skepticism among
stakeholders.
Often an overlooked problem in the matter of CSR communication is that the
company does not live up to what it says, it does or is. In the case of Innocent,
the opposite is in evidence as the dimensions of CSR are all fulfilled, some,
however, to a larger degree than others.
Looking at innocent’s webpage, the legal dimension of CSR has a greater focus on
this responsibility in relation to the others and focusing mostly on the legal
responsibility of enterprises show that they follow the adjustments, which can
enhance the credibility. Regarding Innocent’s legal dimension of CSR, Innocent
omit the communication of direct transparent data, the annual report, a lack
when it comes to showing an accurate picture of the company. As mentioned in
the discussion, Innocent was accused of withholding an amount of money, which
belonged to the Innocent foundation. A media scandal which might could have
been avoided, if Innocent was more transparent in their economic information.
The information given on the webpage, is not suited for all types of stakeholders,
the business orientated, B-2-B etc. especially are in need of an annual report. In
the scenario of being accused of withholding money, I believe that even more
people, not whit an business perspective, but of curiosity would have felt if
would be nice to have the opportunity to go over the accounts.
As someone at Innocent’s blog mentioned “the key to this problem is
transparency” (appendix 2), which might also had helped lower the scientism
among the stakeholders.
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To conclude on this, it seems like Innocent does not just ‘talk the walk’ but ‘walks
the talk’ when it comes to What aspects of CSR does Innocent adhere to and
how are these communicated on the company’s website, although they have
had bumps along their way. In the other hand, the bumps might have proven
Innocent more personal, as many stakeholders are also willing to accept extrinsic
motives as long as they know that an organization is not without intrinsic
motives.
Perspectives and limitations
From the analysis and conclusion above, which show how a company usefully
can involve their stakeholders, in their effort of developing a communication
strategy, and how the right communication strategy is able to involve their
stakeholders. When companies communicate their company values and involves
their stakeholders the company has the ability to inspire stakeholders, who then
is able to inspire the company. This CSR strategy process is used practically above
by applying this process to Innocent.
The results are sought to be universal, but since it is are based on a broad
theoretical study and a narrow empirical basis, there is fertile ground for
extending quantitative research in order to confirm the validity of my
conclusions. Yet, I find them useful and the report can become an inspiration for
other companies.
I have analyzed CSR with a view of how Innocent communicates CSR, but CSR is a
manager discipline and how CSR is conducted within the company does not
figure in this report. With this much focus on the surrounding one could easily
forget the internal CSR efforts, but this is not the case at Innocent. Innocent have
their own scholarship and different courses that enhances and develop skills,
knowledge and behavior that Innocent represent. This type of CSR, engagement
in employees and developing of their skills also has an effect the at the bottom
line, this perspective is also interesting to investigate
Within the previously discussed scenario, where Innocent withholds foundation
money, it is not discussed, who is to blame, and who is responsible. If poor
management, arising from the board or senior management, like this example, it
triggers skepticism, loss of position and seen from the blog, it also to is to blame
for the loss of value. This is no doubt, that this is an issue of leadership.
As theory and practice write for work- and precautionary measures, child labour
and bribes as CSR, then maybe it should be discussed if not leadership behavior
is constituted as a CSR effort under way and it would be interesting to investigate
whether management behavior should be top of the list of CSR.
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A limitation of this report is that the findings is build upon qualitative analyses f
only one company, which makes cannot be generalized and therefore this report
is not able to show the patterns sensemaking processes. However is the finding
and Innocent able to inspire other companies working with CSR as well as
learning from their mistakes in order to find out how they themselves can
perform and communicate their CSR activities.
Another source of uncertainty lies in the delineation in to examine only a single
company, which a comparative research method where the Innocent’s strategies
is put in relation to other companies, either within the same industry in other
sectors would be preferable.
Bibliography
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Internet:
2011 CONE / ECHO GLOBAL CR OPPORTUNITY STUDY
www.coneinc.com/news/request.php?id=4064
www.csrgov.dk/sw51190.asp
www.facebook.com/innocent.drinks?ref=ts
www.innocentdrinks.co.uk/
www.reputationinstitute.com/international/articles/Kom_27ED13.pdf
www.reputationinstitute.com
www.twitter.com/#!/innocentdrinks
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But perhaps proving that charity
begins at home, Innocent has held on
to £520,000 pledged to its charitable
foundation in 2007, and has not
donated a penny to that foundation
since 2008.
Appendix 1:
Society
Most of the company's charitable
giving, which is also promoted on its
website, is channelled through the
Innocent Foundation, which funds
development projects in the countries
where Innocent sources its fruit. The
foundation funds other charities
working on sanitation, health care
and microfinance.
Innocent
smoothie maker
says charity cash
bottled for best
interest rate
The charity has received no funding
from Innocent in recent years as the
company's expansion drive across
Europe, coupled with wider
economic downturn, meant it
delivered no profits between 2008
and 2010.
• £ 5 2 0 ,0 0 0 i n d o n a ti o n s
fo r fo u n d a t i o n h e l d b a c k
• Charity's projects run
'with due diligence'
James Ball
Analysis of documents filed at
Companies House and the Charity
Commission reveal that Innocent
also clung on to the lion's share of
the donation pledged to the
foundation from 2007, a year in
which the company made record
profits and the parent company,
Fresh Trading Limited, paid out
£12m in dividends to Innocent's
directors and other shareholders.
guardian.co.uk, Thursday 26 May 2011 22.01
BST
Richard Reed, one of the three directors of
Innocent, all of whom are also trustees of the
firm’s charitable foundation. The company
pledges on its drinks bottles to donate 10%
of its profits to charity. Photograph: Dwayne
Senior/eyevine
Innocent made a profit of £8m in
2007 and assigned £650,000 of this
to its foundation. An additional
£100,000 was given to Age UK,
making a total contribution of
£750,000 – a little short of the
promised 10%. Innocent had,
however, in other years, donated
more than 10% of profits.
The glowing image of Innocent,
Britain's biggest smoothie maker, has
survived most knocks, including
exploding bottles in 2007 and a
Coca-Cola buyout last year. The
company's blend of natural
ingredients and chatty branding,
helped by a pledge printed on its
bottles to donate 10% of the profits
to charity, have seen off all comers.
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CSR – Ethical Communication
£425,000 – less than the sum held on
behalf of the foundation – at the end
of 2008.
However, £520,000 donated to the
foundation was retained in Innocent's
bank account in the form of a loan
from the charity, whose trustees are
Innocent's three directors: Adam
Balon, Richard Reed and Jon Wright.
Innocent received a welcome cash
boost in 2009 by selling an 18%
stake of its business to Coca-Cola. At
the end of year in 2009, Innocent had
a very healthy £32m in the bank.
Coca-Cola increased its stake in the
firm to 58% last April, in a deal
valuing the company at around
£180m.
Innocent says the money is owned by
the foundation and was held by the
company because it could garner
twice the rate of interest offered by
commercial banks. It accepts that if
the company went bankrupt the
charity would become one of its
creditors, but says there has been no
point where the company could not
or would not pay that money if
needed.
A spokeswoman for Innocent said
the company's commitment to
charity was "true and decent". She
said the foundation benefited by
allowing Innocent to look after its
money, explaining that Innocent's
bank account accrued more interest
than that of the charity.
The loan was interest-free for all of
2008, but the charity charged an
interest rate of 2% in 2009, accruing
£10,400 of interest. Innocent
acknowledges that the arrangement
financially benefits the company, but
says this benefit is small, shared by
the charity, and was not the
motivating force. The Innocent
Foundation has substantially reduced
its spending in recent years. In 2008,
the charity had pre-committed to
spend £274,000 funding
development projects. By 2010, this
figure had fallen by more than half,
to just £129,000 of planned
spending.
She expressed regret that an
"oversight" had led to no interest
being paid to the foundation in 2008,
and said the charity would be
invoicing Innocent for the £5,000,
which would have been accrued were
interest charged at 2%.
Innocent also announced it would be
making a voluntary contribution to
the foundation of £250,000 for 2011
– despite the firm not being expected
to turn a profit – so the charity could
continue its current "optimum" level
of work. This would continue as a
running pledge, the spokeswoman
said, adding that if Innocent turned a
profit, more would be donated. The
remaining £520,000 would be
transferred to the charity over the
next three years, she said.
Innocent was hard hit when its
European expansion in 2008 failed to
quickly deliver profits amid a
financial crisis and slumping
smoothie market. Sales fell sharply
and the firm made an £8.6m loss in
2008. It has failed to make a profit
since then.
Reed also told the Guardian last
night that the firm had donated
The company was left with £1.3m in
cash at year-end in 2007, and
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CSR – Ethical Communication
£473,000 directly to Age UK
between 2008-2010.
Smoothie operators:
The Innocent story
Linda Parry, who manages the
Innocent Foundation, said: "We want
to run efficiently and with due
diligence. One of our mottos in doing
that is to keep things simple.
Innocent was founded in 1999 by
Richard Reed, Adam Balon and Jon
Wright, three Cambridge graduates
working in management consultancy.
"We try not to manage more than 15
projects at one time, as more than
this would require a team to run the
project, and, at present, it can be
managed be me, part-time, with
volunteer support. If spending has
dropped, it's as a result of our
funding more pilot projects, with a
maximum of £20,000 over three
years rather than our absolute cap of
£60,000 over three years per project.
They launched with a charming tale:
in the summer of 1998, the trio set up
their smoothie stand at a music
festival, and planted a sign with the
question "Do you think we should
give up our jobs to make these
smoothies?" Customers were to
respond by throwing their empties in
a bin marked either yes or no. By the
day's end, the yes bin was full, while
the no bin contained just three
bottles. Six months later, Innocent
was born.
"We placed the money concerned in
the Innocent bank account as we
received a better rate of return this
way. We looked at balancing the
time and cost-benefit of looking into
more options, but at the time this
really felt like it was the best deal.
It's just the way we chose to manage
things. If we had spent all of the
money in one go, what would we do
now to fund future projects?
The company rapidly became the
market leader in the fast-growing
smoothie market, aided by £250,000
of angel investment from US
financier Marcus Pinto. By 2010,
Innocent was selling more than 2m
smoothies a week, with a 77% share
of the £150m UK market. The
company also diversified into ready
meals through the veg pots range,
and recently launched an orange
juice.
"Whether our trustees being the
directors of Innocent is a conflict of
interest is on the risk report we
produce. But we do have two
[Innocent] staff members who also
take an active role on the board. I
don't see any conflict of interests."
However, Innocent was no longer a
standalone business: after being hit
by punishing inflation on the cost of
fruit, overseas investment and the
financial crisis, it needed new
money. Coca-Cola was the white
knight, taking an 18% share of
Innocent in 2009, and expanding that
to a 58% stake a year later
A spokeswoman for the Charity
Commission said: "We are looking at
concerns raised regarding … the
Innocent Foundation to see what, if
any, role there is for the commission.
This does not mean that we are
investigating the charity."
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APPENDIX 2
There was an article published in the Guardian today that we’re pretty disappointed with. We want to make a few
things absolutely clear.
The innocent Foundation exists to fund rural development projects in some of the world’s poorest countries. Since it
began in 2004 it has achieved an incredible amount, supporting 37 projects, committing almost £1.3m in funding,
which in turn has allowed our charity partners to leverage a further £5.8m from other funding sources such as the EU.
There are many things we’ve achieved over the years, but helping more than 340,000 people to live a better life, is
probably the single thing we’re most proud of.
The Foundation is a professionally run charity that meets all the relevant legal requirements. The finances of the
Foundation are managed conservatively, always maintaining sufficient funds to meet all our NGO funding
commitments whilst making sure we have enough funds in reserve to mean the projects do not suffer if the business
has lower or no profit years.
As we promise on our packaging, we donate 10% of our profits to charity (sometimes more than 10%). Like many
businesses, the last few years have been tough but despite not making a profit in 2008 and 2009 we still donated a total of
£273,000 to charity (most of which went to Age UK – a charity we’ve supported through the Big Knit).
It’s not likely we’re going to make a profit this year. We’re trying to grow our business, and we’re investing in this, but
nevertheless we made a decision a few months ago to donate £250,000 to the innocent Foundation to make sure that it can
continue to support new projects going forward.
The innocent Foundation is something that everyone who works for innocent is immensely proud of. We are committed to
supporting the work it does and committed to running it professionally. To suggest otherwise, and infer that the Foundation is
run half-heartedly or without proper care, is simply not true, or fair.
Posted by Joe at innocent on May 27, 2011 at 11:53 AM in the innocent foundation | Permalink
Comments
The Guardian article at http://www.guardian.co.uk/uk/2011/may/26/innocent-smoothies-charity-cash stated that the Charity
passed charitable funds into the bank accounts of the Company and that the Trustees of the Charity are also the Directors of
the Company. This is no different from the kind of "money laundering" that Robert Maxwell did and even he didn't use
charities.
I can't believe that your response made no mention of this extremely serious governance failure and possible breach of
charity financial regulations.
Posted by: Daniel | May 27, 2011 at 12:16 PM
Hmm, the key here is transparency and money in a firms bank account does not LOOK as it it's in the charity bank account
does it? As a young business perhaps you need to take a tip from older more established businesses about how they run
their charitable affairs e.g. The Co-operative, where external auditors look in detail through their activities every year and
publish a comprehensive (not glossy) report, sometimes including criticism. It's called "warts and all" reporting and in my
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experience it improves business practices.
Posted by: Gwyneth Brock | May 27, 2011 at 12:37 PM
Hello Dave, just to clarify, in 2007 our donation to the Foundation was over £670k. The Foundation took £150k and left the
remainder in our account, as the interest rates were double what the commercial banks were offering and we could offer the
Foundation instant access to the funds whenever it required. The Foundation legally owns that money and we would never
hold back or spend any of those funds. The Foundation accounts are audited annually (previously by Ernst & Young, and
BDO in 2010). The audit procedures comply fully with legislative requirements and are submitted annually to the Charities
Commission. Linda Perry, who runs our Foundation, has over 30 years experience in the voluntary sector (formerly working
at Oxfam). She runs the charity professionally and with the highest standards of best practise. In short, Linda does whatever
is in the best interests of the Foundation. To suggest otherwise is 100% incorrect and completely misguided.
Posted by: Joel Kelly | May 27, 2011 at 12:44 PM
Joe - In 2008, according to the Guardian piece Innocent as a company did not have enough cash retained to pay the
outstanding balance to the Foundation.
Had the Company failed (and thank goodness it didn't - not sure what I would do without my regular intake of Innocent
Smoothies), the Foundation would have been left high-and-dry as a creditor, probably an unsecured one at that.
Regardless of where the best interest rate could be achieved, that was an act of poor financial management on the part of
both the Foundation and the Company - another reasons why you need separation of the two to ensure good governance
and transparency.
I would hope that most of us posting here, myself included, are not wishing to attack Innocent. However, as loyal customers
we feel that the activities detailed in the Guardian piece - if accurate - are inappropriate and are not wholly inkeeping with
our expectations of both parties based on their public statements and perceived image.
Instead of just complying with legislative requirements - do better than the requirements expect to ensure that the Company
and the Foundation are free from the risk of questionable financial conduct.
Posted by: Nicktemple1 | May 27, 2011 at 01:36 PM
Hi Joe, thanks for your response but this doesn't answer the key issue. If the Company gave £670k to the Charity then it
should have been transferred to the Charity. If what you are saying is that the £670k went to the Charity and £520k was
loaned back from the Charity to the Company then there are 2 major governance failings:
1) The Trustees who were also Directors of the Company should never have been allowed to be part of that decision as
there is a clear conflict of interest. Charity Trustees should never make a decision which financially benefits the Trustee or
any company that they have a controlling interest in. Linda Perry should have flagged up the conflict of interest, insisted that
you leave the room and minuted all of this.
2) Depositing Charity money into a current account of a legally seperate Company is extremely dodgy and possibly illegal. If
you simply wanted to increase the interest earned, then there are far higher rates at deposit accounts for charities than are
available to corporates. In any case, of all the bank accounts to deposit it in, the bank account of the Trustee's own company
should have been the last on earth you should have used! Your Charity is not a slush fund for your Company!
I have been the Trustee of two large national charities, set up five of my own social enterprises and have advised dozens of
organisations about board governance. I am really familiar with charity law, the legal duties of directors and the legal relationships
between companies and charities. It is very clear that you made 2 big mistakes but I am more worried by your response which
suggests that you genuinely think you did nothing wrong.
If you had come out and went "we are relatively inexperienced directors and we think we may have made a mistake",
apologised, appointed an independent team or body to transparently investigate everything that happened and pledged to
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fully reimburse the charity for any shortfall, then you could actually have come out of this looking better. We all make
mistakes and the main thing is how we act when we get found out and what we learn.
What you have done is come out with the standard legal/PR approach that any large private company would and certainly
makes me wonder about the real values and ethics of the company and it's leadership team. I am personally disappointed as
I had been holding you up as an example of a private company trying to act in an ethical way even though you aren't a social
enterprise. In 24 hours, you have now become a case study in how not to respond to the media/customers and a great
example of a poorly-handled conflict of interest of a board of directors.
Posted by: kevin | May 27, 2011 at 03:39 PM
Thanks for all your comments guys. We are truly, truly sorry if the article or our response to it has left anyone feeling that
the way the Foundation has been funded or run is not completely above board. We want to reassure everyone that the
financial security (and legality) of the Foundation and our ability to honour funding commitments to project partners has
never been compromised in any way. There was no transfer or loan of funds from the Foundation to the business. At the
Foundation's request, payment of the remainder of 2007's donation from innocent was delayed as the money was not
required at that point in time by the Foundation, and it could obtain a higher rate of interest if reserved within the business.
There was no other agenda at play.
We have always remained true to all of our charitable commitments and in some years we have donated more than 10% of
our profits. Charitable donations have been made every year despite no profits from 2008 - 2010 (we donated on average
£160k per year), and when we recognised that 2011 would again be a no profit year we committed to an ongoing annual
donation of £250k to protect the activities of the Foundation.
To work here at innocent is to know just how incredibly proud we are of the Foundation, and just how much it means to
each and every one of our employees (many of whom work on a voluntary basis for the Foundation). To know our
Founders personally is to know just how much it means to them too. I can't think of too many companies that commit to
donating 10% of their profits to charity, and to have had the integrity and value of this commitment questioned has left us
very upset indeed.
Posted by: Hannah | May 27, 2011 at 04:45 PM
Thank you Joe for your further comments but some of what you have said does not stack up with the figures in the Guardian
report which they say are based on documents from Companies House and the Charity Commission.
You claim that the £520k was given by the Charity to the Company because it could earn more interest. According to the
Guardian article, the Company paid no interest back to the Charity for this money in 2007 and then only at 2% for the year
after. In 2008, there were many deposit accounts offering 4% for this level of funding and so "the higher interest rate" was
dramatically less than you would have got putting it in a standard deposit account. So whatever the reason for having the
money in the Company bank account, it certainly wasn't to generate higher levels of interest for the Charity.
Also according to the Guardian's figures, the Company only had £425,000 in cash at the end of 2008 which is less than the
£520k you were supposedly "holding" for the Charity. In other words, Innocent Smoothies was technically insolvent and had
used the Charity money to bail itself out. Given that the Directors of the Foundation are also the Directors of the Charity,
using Charity funds to keep a separate Company solvent seems pretty inexcusable morally and legally.
You say that "at the Foundation's request" there was no transfer of funds from the Company to the Charity but in the
article an Innocent spokesman said that this was the Charity's money that had been lent to the Company and was still
the Charity's money even though it was sat in the Company bank account.
The more details that emerge, the worse this whole situation appears.
I really wanted to believe that this was a mistake and had held your brand and your products in really high esteem, both
for flavour and for your quirky humour and ethical stance. This now looks exactly like the sort of dealings that emerged
about how Robert Maxwell ran his companies, by siphoning off cash from one to another to juggle cash-flow and the fact
that you have done this with a registered charity seems really low.
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Until I see the results of a genuinely independent investigation that shows you really didn't move money from a Charity to
bail out the Company (which may well come from the Charity Commission) I am sorry to say that I won't be buying any
more smoothies from you.
Posted by: Dave Dawes | May 27, 2011 at 06:03 PM
Dave Dawes: A company does not become insolvent when it has less than 0 cash in its account. The vast majority of
companies (especially while they are still growing) would be "technically insolvent" under your definition, since they usually
borrow cash to finance their growth, and secure it against the assets they purchase (property, factories) and the future
revenue of the company.
If Innocent (without its charitable arm) had run out of cash, they would normally have done what any other company
would do in the same situation: go to a bank, or to investors (such as Coca Cola) and either take a straight forward loan,
or sell some portion of their company for cash in order to provide the liquidity they needed to expand. In their case
however, they were able to skip out the bank, and borrow directly from a charity with a surplus of cash.
It's worth remembering that if they hadn't been giving some portion of their profits to charity in the first place, then there
would have been no need to borrow anything since the money would have been sitting in their account anyway! Is that
really a better situation?
It seems clear that the morality of the underlying actions has been net positive. The charity benefits perhaps a little from the
arrangement, and the company benefits a lot. But without the company, the charity wouldn't even exist!
Having said that, it's a tricky case, because on the surface of it, there is huge potential for conflicts of interest between a
charity (with its tax breaks, charitable status, and 'ethical marketability') and a private company ultimately run at least partly
for profit (however noble the intention of the founders, Coca-cola now has a large stake in the company).
Clearly the way forward would be to bring about a greater degree of separation between the charity and the commercial
arm of the company, and ensure that both are subject to rigorous independent audits. It sounds like Innocent are at least
partly moving towards that, which is positive.
Innocent are clearly doing far more than most other companies to give to charity, and even if it's helped them out with
marketing and financing on the side, it's still also helped out the people whose lives who are improved by the charitable
work that they do. And that is by far the most important thing.
On a side note, why does the Guardian persist in deliberately misunderstanding anything to do with finance and casting any
sensible financial arrangements as somehow being unethical and cheating? Not least when the paper itself is run as an
offshore fund not subject to usual UK accounting laws and which pays no tax! It justifies this financial sleight of hand and tax
avoidance by saying that it wouldn't otherwise be able to compete with the other papers, and that the world is better with it
than without it. Seems a reasonable defence of Innocent too.
You can see the Guardian's defence of their own tax avoidance here:
http://www.guardian.co.uk/help/insideguardian/2011/feb/22/blogpost
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