Considering
this week’s readings on responsible communications of both financial
information as well as a company’s activities in corporate social
responsibility (CSR), one question posed by Franklin (2008) in The Economist, this week I decided to
further ruminate on the role of CSR in a company’s strategy. Franklin’s
question, “Is there really competitive advantage to be had from a
green strategy?” is one certainly worth considering.
Smith (2007) addresses this question for
consumer-oriented businesses, succinctly describing the current of CSR as a
response to consumers’ environmentally-friendly tendencies: “In the end, companies' behaviors change
when consumer preferences change. Social responsibility will exist to the
extent that the consumer is willing to pay for it” (p. 190).
We see this effect
in the modern marketplace, in a variety of arenas. If we look at food, for
example, a variety of organic and more “earth-friendly” products exist, but
often carry a higher price tag. Companies have found markets for these
environmentally-friendly products, but often only with consumers for whom these
products carry a status symbol. In other words, you’re going to usually pay
more for the “green” products.
This gap is
narrowing, though, with the combination of decreasing costs for green products,
an increase in environmentally-oriented consumers and the proliferation of
companies seeking to reap the benefits of green strategy. Smith addresses the
difference between a company’s initial implementation of CSR strategy and the
long-term effects to a company’s perceptions and the value the company
demonstrates to effectively serve the markets and communities in which they
operate.
“Initially,
adoption of CSR burdens a company financially. But, investing resources in charity,
environmental protection, and education pays dividends in corporate reputation.
Distribution of short-term gains increases the reliability of long-term returns
through CSR. A relationship with employees, competitors, consumers, and
suppliers is invaluable.” (Smith, 2007, p. 193)
Even a short review
of current market trends can see businesses pointing in the CSR direction, but I
look forward to hearing other students’ thoughts on this question. How do
investors tell the difference between companies whose CSR strategies are fully
integrated into the corporate culture and those who are simply “green-washing”
the public? As communicators, how do we approach the ethics of telling these
CSR stories ethically?
References:
Franklin, D. (2008). Just good business: A special report
on corporate responsibility. The Economist, January 19, 1-14.
Smith, A.D. (2007). Making the case for the
competitive advantage of corporate social responsibility. Business
Strategy Series, 8(3), 186-195. Retrieved June 30,
2012, from ABI/INFORM Global. (Document ID: 1374488611).
Andrew, you mention that a company's behavior changes when consumers demand that change, but does an organization have a responsibility to provide healthy/environmental-friendly service even if the consumer only demands lower prices? For example, we read about the obesity epidemic earlier this semester. Do you think organizations in the fast food sector need to change their strategy in order to respond to this societal problem, or should they wait until individual consumers request different food?
ReplyDeleteHi Andrew,
ReplyDeleteSince Dr. Pade mentioned fast food and you discuss the quality of "green" products and organic products, we'll say food, what would you say about a company that is built on CSR like Chipoltle? I don't think Chipoltle is "green washing" possible investors or customers and I don't know if in comparison its food is that much more expensive than other fast food (if we of course take Taco Bell out of the discussion). Other companies that we have read about and have been discussed (AutoZone and Toyota by Nik, Amex in our readings) have been around longer than Chipoltle. So I wonder what the difference in established organizations embracing CSR vs. up-start organizations is? In this day and age, I'd imagine if you are starting a company you will take CSR much more into consideration than a company that started decades, even 100 years ago.
Dr. Pade and Justin,
DeleteIt's interesting that you both bring up the fast food industry, as I think this is one where CSR has made some of the greatest strides. Yes, I do think organizations have a responsibility to provide more environmentally-friendly options, if only to stop themselves from eroding consumer trust, but also to help stem the tide of consumers going to other outlets that might offer healthier options. The number of environmentally-aware consumers (like Paul) looks to be on a continual growth pattern, so it's a wise choice to meet these consumers' needs.
Chipotle is one example of an organization embracing this trend successfully, outlining the origins of their meats and produce, and I think it is because CSR was built into their DNA originally. Their competitors who are trying to "retrofit" their culture to be more environmentally friendly will face a greater challenge in turning their ship around. It's not impossible, but it will likely take more time.
I really like how you put the question back to us, as professional communicators. It's hard to live in the "grey" zone of moral issues. One personal example is that one client is an auto dealership chain in Denver. One of their dealerships sells very expensive and fuel-consumptive vehicles. I consider myself to be environmentally-aware and also concerned about the needs of the poor in other parts of the world. In light of those concerns it can be hard for me to "push" their product. But I also have to "put food on the table."
ReplyDelete