CSR or a sticking plaster?

This month, the UK government announced its ‘responsibility deal’ to encourage healthier lifestyles in England.  More than 170 companies have put their names to a series of pledges covering physical activity, alcohol, health at work and food. There were a total of 19 core pledges agreed, such as the introduction of calorie counts on menus in cafés and restaurants like McDonald’s and KFC. Seven major supermarkets and a number of drink manufacturers have promised to increase the proportion of drinks with alcohol labelling from 15% to 80% by the end of 2013. Other employers, including Mars and Unilever, pledged to share their expertise in managing workplace health with small companies.

One company promising to contribute to the initiative is the drinks company Diageo, which has agreed to fund the training of 10,000 midwives who offer advice about the dangers of alcohol during pregnancy.  Diageo’s brands include Johnnie Walker, Crown Royal, J&B, Windsor, Buchanan’s and Bushmills whiskies, Smirnoff, Ciroc and Ketel One vodkas, Baileys, Captain Morgan, José Cuervo, Tanqueray and Guinness. Diageo describes itself as “the world’s leading premium drinks business”. Ironically, one of its core products, Guinness, was once widely regarded as a good source of iron, useful during pregnancy or when breastfeeding.

The announcement of the public-private initiative was overshadowed by the refusal of health groups to sign up to the deal and by criticism of the motives of the companies taking part. Professor Anna Gilmore, a public health expert from Bath University, says there is a fundamental conflict of interest:

“These large corporations, whether they sell tobacco, food or alcohol, are legally obliged to maximise shareholder returns. They therefore have to oppose any policies that could reduce sales and profitability – in other words, the most effective policies.”

Companies should be responsible about how their consumers use their products, but what might be next; McDonald’s sponsoring doctors telling consumers not to eat junk food? Indeed, the cynic may well ask what these organisations gain from their involvement. Are these genuine commitments by caring, concerned and altruistic corporate citizens or are their motives rooted more in a marketing philosophy to maximise sales and enhance corporate and brand image? One motive may to sidestep government legislation by operating a form of self-regulation or embedding corporate social responsibility in their business operations.

Responsibility is always a good thing; but how does this scheme fit with Diageo’s brand or customers? Clearly it eminently responsible for Diageo to explain safe portion sizes to drinkers and not market their products in an irresponsible way to encourage excessive consumption or binge drinking, but do midwives really need this training – they already tell expectant mothers to avoid alcohol altogether?

However, is Diageo’s pledges counter-productive since it has already brought about the wrath of groups including the British Medical Association and Alcohol Concern.  Indeed, is Diageo’s involvement different in essence to cigarette companies sponsoring sports on the premise that these are healthy pursuits? Can financing the training of midwives absolve Diageo from their responsibilities, when it comes to the sale of potentially dangerous (but legal) products to the general public?

Health groups say the corporate pledges are not specific or measurable and there is no evidence they will even work. They believe that alcohol should be made less affordable. Don Shenker, chief executive of Alcohol Concern, said:

“It’s all carrot and no stick for the drinks industry and supermarkets. By allowing the drinks industry to propose such half-hearted pledges on alcohol with no teeth, this government has clearly shown that, when it comes to public health, its first priority is to side with big business and protect private profit.”

Of course, this is not the first, nor will it be the last venture by private firms into the public policy arena. Previous ventures into the health field have resulted in mixed outcomes and have not necessarily enhanced corporate image.

In April 2010, the breast cancer charity Komen joined forces with KFC to sell specially designed pink buckets of grilled chicken.  As part of the campaign, the charity received 50 cents from every sale, with a minimum $1 million donation from KFC. However, the alliance raised eyebrows with the decision to place the pink breast cancer awareness ribbon symbol on a bucket of fried chicken.

The American Institute for Cancer Research said that there is convincing evidence that excess body fat increases the risk of postmenopausal breast cancer and studies published by the International Journal of Obesity concluded that obese women had an 80% higher risk of cancer compared with normal weight women

In 2007, health groups and teachers condemned the UK government Sports for backing a promotion, by Cadbury’s, which rewarded children who bought their confectionary with sports equipment vouchers. Initially this was well received until it was calculated by some observant journalist that a child would have to eat 170 chocolate bars costing £71 to get a £10 basketball in the promotion. These snacks would contain 38,463 calories and just over 2kg of fat – which would take 90 hours of playing basketball to work off.

A Cadbury’s spokesman defended the promotion suggesting most vouchers would come from adults:

“We’re very proud of this. It’s a very positive attempt by Cadbury to address childhood inactivity. We have £9 million worth of free unbranded sports equipment to give to schools and we deliberately made the redemption level low.”

IB Class Assignment

Students working in groups:

• select three well-known multinational companies
• examine the websites of these companies and identify how they believe they act ethically and responsibly – almost all large companies will have web pages highlighting their ethics and values, e.g. McDonalds
• identify core value and ethical messages from each of the websites
• identify a corresponding charity (NGO) or public welfare campaign for each of these companies that reflects the stated values of the company
• identify a ’cause’ that the company can support and suggest what each company can offer or pledge to that cause
• develop a promotional campaign and prepare a press release to send to the media

Extension activity: each group pitches their idea to the other groups. At the end of the process, every individual in the class, comments (in writing) on the strengths and weaknesses of each of the campaigns and selects the one that they believe will be most effective in:

• raising awareness of the issue or cause
• enhancing the corporate image of the supporting firm

with a short summary of their reasoning.

IB style written questions

1.   Distinguish between Corporate Social Responsibility and a firm’s Ethical Policy.

2.   Explain the nature of public-private partnerships.

3.   Analyse the value of social and environmental audits (sustainability reports) to different stakeholder groups.

4.   Using issues from this post, and from other examples you have studied, evaluate whether being socially responsible creates competitive advantage.