Corporate Social Responsibility 'Why Doing Good is Good for

Corporate Social Responsibility
Why doing good is good for business
Pierre McDonagh,
Wednesday, September 26th 2007
Presentation format
Setting the parameters
Sign value and legitimation
CSR in Society
What’s happening in Ireland?
What is going on? Society
Risk & Uncertainty
Speed of Technology
Consuming Value
Consuming Organisations
Why would we think of any
organisation as socially responsible?
The Centre for Consumption Studies (CCS) is a
new research cluster of people interested in
how people consume IDENTITY such as visual
culture via the creative arts, digital education
and more broadly how we consume within
Critics always ‘out’ bad
business organisations!
Fly on the wall documentaries
Movie makers
The public and media LOVE a good
Corporation Movie
SIGN VALUE -the basics
 What makes a lump of rock
worth a million dollars?
 What makes a $20 dollar
harmonica worth $1000?
 What makes a painting worth
a cool million?
 What makes a lump of rock
worth a million dollars?
 If it is from the moon?
 What makes a $20 dollar
harmonica worth $1000?
 What makes a painting worth
a cool million?
 What makes a lump of rock
worth a million dollars?
 If it is from the moon?
 What makes a $20 dollar
harmonica worth $1000?
 If it once belonged to Bob Dylan?
 What makes a painting worth
a cool million?
 What makes a lump of rock
worth a million dollars?
 If it is from the moon?
 What makes a $20 dollar
harmonica worth $1000?
 If it once belonged to Bob Dylan?
 What makes a painting worth
a cool million?
 If it was painted by Van Gogh?
Where are these values
created or produced?
 Sign value is created in our cultural
 Things (companies) become valuable
because we talk about them, display
them and:
 RE-PRESENT them in a certain manner:
 They become ascribed with SIGN VALUE.
 We can use the terms branding or
‘commodity discourse’.
Legitimation signs
 “Whereas consumer-goods ads help arrange
commodity -sign production, corporate advertising
engages in corporate-sign construction, especially
the construction of legitimation signs.” Goldman and
Papson (1996:216)
Legitimation signs
 “As commodity discourse, corporate image ads and
advocacy ads have contributed to a significant
reshaping of public discourse in terms of ‘soundbites’
and visual ‘sign bites’.” Goldman and Papson
Building Corporate Sign
 “Corporate giants value a stable
(though dynamic) image as part of
their authority and power” Goldman
and Papson (1996:224).
 turning legitimation claims into
corporate sign values locates
questions of legitimation in the
spectacle rather than society itself.
 Abbreviate public discourse.
 Use images out of their original
context to make the corporation
look good.
Corporate Ads & Public
 How free is a free market?
 Discourse governed by commodification.
 Corporate interests have disproportionate access to
the field of discourse. (Goldman and Papson 1996:252)
 Corporate ads muddly questions as to how they use their
power and the public interest.
So lets think of how business
can fight back
Corporate Social Responsibility
Corporate Reputation
Corporate Citizenship
…complex social processes…
“Business ethics?
I didn’t think there were any!”
Business and ethics are
intrinsically linked
 Many business decisions are based on certain
ethical beliefs or values e.g.
 That customers should/should not be exploited.
 That firm resources should/should not be available for
personal use.
 That deception in negotiation is/is not acceptable.
 That fair competition is a good/bad thing.
 That men and women should/should not be treated
 That paying bribes is/is not acceptable.
 Even ‘bad’ ethics are ethics!
Doesn’t the law already
determine what is right and
Ethics and the Law
Grey area
Aren’t social issues the
government’s responsibility?
Business is an important
social actor
 Firms are involved in social activities, e.g.:
Providing employment.
Producing products and services.
Building roads, bridges, airports, etc.
Providing health care, education, security, arts, etc.
Extracting and using resources.
Discharging pollutants.
Giving to charity.
 Business wields considerable power and
influence in society (cf the ‘Corporation’ clip)
more so than many governments.
Business and its
stakeholders in society
Taking away the mystery
 So ethics and responsibility are not esoteric
or far-removed from reality.
 They are about the daily decisions we all
make in organizations.
 They are about fundamentally important
 They are not only about optional extras, but
about core business issues.
CSR is not New
 It is not just a trendy topic that will disappear overnight!
 For example: SRI:
SRI by Quakers in the 1800s.
Early 20th century ‘sin’ products: alcohol, tobacco, gambling.
1940s: unfair labour practices.
1970s: Vietnam war, urban strife, Apartheid.
Today: the environment, weapons production, product
safety, women’s issues, local communities.
 SRI increased by nearly 200% in 1990s in US.
 2003 represented 10% of all investment dollars in the US.
 European market up from €1 trillion in 2005 to €1.6
trillion in 2007.
 Co-op Ethical Fund topped UK all companies growth
league in 2006.
 Fair trade sales in Europe in 2004 worth €560 million.
Many companies continue to be targeted
on social, ethical and environmental
 “Nike admits abuse at Indonesian plants”, 22nd
February 2001.
 “Consumer boycott to 'stop Esso’”, 8th May 2002
 “McDonald's targeted in obesity lawsuit”, 22nd
November 2002.
 “Tobacco giant urged to leave Burma”, 2nd July 2003
 “BOC hit by US court ruling” , 29th October 2003.
 The Economist 2006 – suggests sales of Danish goods
in Muslim countries will fall by DKr10bn per annum.
Poor CSR is bad for
Managerial and empirical evidence that corporations with poor CSR records will
have negative consequences:
Large scale consumer boycotts (eg boycotts of famous brands in UK cost companies £3.2
bn in 2006)
Reductions in brand images
Temporary drop in sales
Drop in share price
Recent research by Gfk NOP consumers in both US and Europe feel business ethics
have declined in past five years.
New evidence which suggests there is positive correlation between purchase
intention and positive image, and consumers do discriminate when making
product/brand choices.
If you do a half-hearted job you will get caught out:
“Why, until two years ago, were Nike and Gap’s codes available only in English? Why
weren’t they distributed to workers in the factories?” Naomi Klein 2000
BUT not all doom gloom in same Gfk study business is trusted more than
governments and the media!
“Nike admits abuse at Indonesian
22nd February 2001
“BOC hit by US court ruling”
US court verdict links welding fumes to Parkinson's
GlaxoSmithKline provides research funding to doctors
who write favorable opinions of depression drugs for
children, despite evidence from clinical trials that the
medication can cause anger and even suicide.
A supplier and two employees of the furniture giant Ikea have
admitted to using bribes in purchasing deals. Adam HauxwellSmith, of Chipping Norton, Oxfordshire, pleaded guilty to 18 charges
of corruption when he appeared in Birmingham Crown Court. He
paid up to 」648,000 to John Brown, a buyer, and Paul Hoult, a sales
leader with Ikea, to overlook store rules.
Clean Clothes Campaign
While customers continue to demand
more social responsibility
 Millennium Poll (2000), first ever European-wide survey
on consumers attitudes to CSR:
 70% said that a company’s commitment to social responsibility was
important when buying a product.
 1 in 5 willing to pay more for products that were environmentally and
socially responsible.
 Nearly 60% believed that business did not pay enough attention to
social responsibilities at present.
 CSR Monitor (2004) Domestic cos have adv when it comes to TRUST
 People trust NGOS most to operate in best interests of society
Continued discontent in EU re CSR, more trusting in Canada and
 People give -ve assessment of CSR performance of large cos (less so
in Asia/Africa)
And newspapers continue to
criticise poor behaviour
“Too many companies are failing to grasp
the extent to which they are at the
receiving end of a sharp increase in social
expectations about the role of
corporations in society.” (FT, 2002)
 Bad business dealings will make it to the
front pages as well as the business pages
(cf Enron, Martha Stewart etc).
Authors continue to write anticoropration best sellers
 Naomi Klein “No Logo” 2002.
 George Monbiot “Captive State: The
Corporate Takeover of Britain” 2000.
Film Makers continue to produce critically
acclaimed movies and documentaries
criticising business practices
 From Silkwood in the
1980s to
 The Insider in the
 Blood Diamond in the
 To successful 21st
Bowling for Columbine
The Corporation
Super Size Me
An Inconvenient Truth
Football Movie
What’s happening in Ireland?
Lagging behind on CSR reporting etc.
BUT also proactive in Europe and globally:
 Protection of employees via smoking in the workplace.
 New code for advertising to children introduced in Jan 2005.
 Plastic bag tax.
Rise of Fair Trade and new markets(cf FairTrade Mark Ireland)
 More than 60 farmer’s markets in Ireland (north and south)
Consumers are trying too:
 Recycling for household waste up from 4.3% in 1995 to 9%
in 2004.
2007 Responsible Competitiveness Index for business – Ireland
ranked 8th! (Scandinavian countries top 4, UK 5th, USA 18th)
Business in the Community
 Core Partnerships:
 Ethics and responsibility are integral parts of any
business BUT be cautious; seek advice.
 Defining specific responsibilities and obligations
is crucial but complex.
 There is a major social and ethical challenge
facing business that offers both opportunities
and dangers.
 This affects different companies in different
ways, but few will be immune.
 Management tools are emerging, but can only
ever be partial remedies. POOR CSR can
devastate share price.
“The constantly challenging goal is to
ensure that responsible business is
integrated and embedded in the decision
making culture rather than confined to a
progressive individual, area or division.”
(Business in the Community, Ireland)