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? Conclusions

What is going on? Society

Risk & UncertaintySurveillanceBranding

ConsumerismSpeed of Technology

Risk & UncertaintySurveillanceBranding

ConsumerismSpeed of Technology

Consuming Value&

Consuming Organisations

Why would we think of any organisation as socially

responsible?

Why would we think of any organisation as socially

responsible?

http://www.ccs.dcu.ie

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 CONSUMER CULTURE.

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 CONSUMER CULTURE.

Critics always ‘out’ bad business

organisations!

WatchdogsFly on the wall documentaries

WhistleblowersMovie makers

The public and media LOVE a good SCANDAL

WatchdogsFly on the wall documentaries

WhistleblowersMovie makers

The public and media LOVE a good SCANDAL

Corporation Movie

http://www.ccs.dcu.ie/consumingidentity/resources/docs/Corporation.mpg

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?

SIGN VALUE

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?

SIGN VALUE

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?

SIGN VALUE

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 environment.

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 (1996:220)

Building Corporate Sign Values

“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 Debate

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 ReputationCorporate Citizenship

…complex social processes…

Corporate Social Responsibility

Corporate ReputationCorporate 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 equally.

That paying bribes is/is not acceptable. Even ‘bad’ ethics are ethics!

Doesn’t the law already determine what is right and

wrong?

Ethics and the Law

Ethics

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

Business

Customers

Government

CommunityEmployees

Shareholders

Suppliers

Society

Critics

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 issues.

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 issues

“ 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 business

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 plants”

22nd February 2001

“ BOC hit by US court ruling” 29/10/03

US court verdict links welding fumes to Parkinson's disease.

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. http://www.corpwatch.org

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. http://www.corpwatch.org

A supplier and two employees of the furniture giant Ikea have admitted to using bribes in purchasing deals. Adam Hauxwell-Smith, 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. http://www.corpwatch.org

A supplier and two employees of the furniture giant Ikea have admitted to using bribes in purchasing deals. Adam Hauxwell-Smith, 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. http://www.corpwatch.org

Clean Clothes CampaignClean 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 USA 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 anti-coropration 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 1990s

Blood Diamond in the noughties

To successful 21st century documentaries: Bowling for Columbine

The Corporation Super Size Me An Inconvenient Truth

Football Movie

http://www.ccs.dcu.ie/consumingidentity/resources/docs/Footballs.mpg

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) http://www.fairtrade.ie 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)

Members

Business in the Community Ireland

Core Partnerships:

Conclusion

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.

Conclusions

“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)