Corporate karma

Of all the literature I have encountered on the subject of social responsibility, the most potent encapsulation can be found in the Bible: “You reap what you sow.”

Of all the literature I have encountered on the subject of social responsibility, the most potent encapsulation can be found in the Bible: “You reap what you sow.”
Business needs society. Society needs business. Society is the source of healthy, educated, motivated people. Business is the source of jobs and prosperity. A healthy society creates demand for business. It’s a win-win and a no-brainer.
And yet when one reads the pages of some CSR reports, social responsibility often feels like a perfunctory obligation. Like having to file your income tax.
In fact, a sense of moral obligation is one of a handful of classic arguments in favour of corporate social responsibility. The rest, according to Harvard Business School guru Michael Porter, include sustainability, license-to-operate and reputation.
Porter argues that moral obligation fails as an argument because morality is absolute, while business is about trade-offs.
Sustainability, while undeniably noble and necessary, confounds the spreadsheet and so its costs tend to be postponed until it’s too late.
License-to-operate is the most pragmatic approach, because it is driven by stakeholder concerns, but often results in ceding the agenda to outsiders. And the reputation argument is weakened by its obsession with how one appears to external audiences.
The answer, he says, is to align your CSR objectives with your competitive strategy, thus reinforcing your corporate strategy through the social progress it engenders.
As an example, he cites the opportunity a dance company presents to an elite credit card company. Stands to reason that if you’re competing with other banks or cards for the dollars people spend on high-end entertainment, you should support the entertainers, no? No brainer. The social issue is keeping the arts alive. The whole community benefits, whether they use credit cards or not.
Toyota has been a great example of social progress through competitive strategy. The Prius runs on half the gas and spews out as little as 10% the emissions. Saves the customer money and minimizes pollution – that’s a win-win by anybody’s standards. Judging by what Ford and others paid to license the technology, it was also a great business decision.
Another example of careful alignment between a brand and social responsibility is Becel. In an age of obesity and mounting medical costs, it competes on having 80% less saturated fat than butter. As the company story goes, it was created in 1960 by Unilever in response to a group of physicians who asked for a butter substitute that would lower blood cholesterol.
Naturally, Becel’s CSR focus is heart health. So it supports the Heart & Stroke Foundation, among other coronary causes, and even sports the tagline “Love Your Heart.” Seems like a smart and mutually beneficial arrangement. Yet in March of this year, Canadian director Sarah Polley, whose short film The Heart was made to promote the same foundation, withdrew her name from the project when she found out Becel was the sponsor. She did not want to promote a corporate brand.
Can social progress be tarnished by its dependence on a corporation? This is the question Polley raises. Her action reads like a moral stand against the very idea of CSR. It implies that corporations are inherently bad and their lucre filthy. Ouch.
What about Toyota? How does the competitive advantage and brand equity rendered by its environmental innovation withstand the recall of 3.8 million vehicles due to a faulty fit between a floor mat and an accelerator? The U.S. Dept. of Transportation fined the automaker $16 million (the largest fine allowable) for failing to respond to the complaints of a serious flaw in many of its models.  Toyota may have fallen into Porter’s reputation trap.
CSR is fragile, buffeted as it is by the risks and uncertainties all brands are subject to, as well as the lack of trust some people have in business due to its commercial motives. And little wonder. Look at Google in China. Back in 2004, lots of folks saw the conflict between a company based on freedom of access to information and a country that abhors such freedom. Google, despite its all-American democratic values, saw a business opportunity that it couldn’t resist. Now it has been forced to decamp from Beijing as Chinese authorities aggressively censor customer traffic.
This case simply validates Porter’s argument: align your CSR program with your competitive strategy. If you compete on freedom of access, avoid business opportunities susceptible to censorship.
His approach is just common sense, no morality required.
You don’t do CSR because you should; you do it because you must. Becel’s carefully nurtured support of heart health gives it an authentic and legitimate defense against anti-business sentiment. In other words, its alignment of CSR and competitive strategy allows it to reap what it has sown.

Will Novosedlik is VP brand + communications at Wind Mobile. He can be reached at novosedlik@gmail.com.