CSR in controversial sectors. Corporate responsibility or just a smoke curtain?

28/04/2011 at 09:58 17 comentarios

CSR is sometimes just a smoke curtain...

People are not perfect. Companies are created and run by people, hence, companies are not perfect either. Let’s just accept that. As much as there can be irresponsible people there can be irresponsible companies as well.

In January I published a poll in which I asked whether companies in controversial sectors are entitled to have a strategy of corporate social responsibility (CSR).

I also recently read this brilliant post by @JTofTheD in which Altria CSR policy is analyzed: “There’s no smoke without fire – so can a tobacco company demonstrate CSR?”

Back to my poll, 61% of the voters think that companies in controversial sectors have the right to develop their own CSR strategies. Now, would it be real CSR or just a smoke curtain? Are CSR professionals blinded by these controversial companies or should we be able to call things by their name?

Most people think that controversial companies have every right to develop CSR activities because of three reasons:

  • Because that is one important way how important companies can improve and become better organisations
  • Because, after all, companies are human organisations and humans are not perfect
  • Because managers are free to choose whatever strategy to conduct their business

Maybe the right question should have been whether controversial companies develop CSR activities as a part of their long term strategy to become better companies, or just because they want to look better than they really are.

According to the recommendations issued by the World Health Organization (WHO), governments should “denormalize and, to the extent possible, regulate activities described as “socially responsible” by the tobacco industry, including but not limited to activities described as “corporate social responsibility”.

“The corporate social responsibility of the tobacco industry is an inherent contradiction, as industry’s core functions are in conflict with the goals of public health policies with respect to tobacco control.”  This is just not my humble opinion, it is the opinion of the WHO. So, if activities tagged as CSR by the tobacco industry should not be called social responsibility, what are they? The answer is clear: marketing and greenwash. A smoke curtain to hide what they really are: an industry that kills thousands and thousands of people every year, most of them addicts that are not able to quit smoking. The excuse of free individuals does not work here, they are people with addiction problems.

Personally, I think there is no black or white in this issue, but varying degrees of grey (although tobacco companies are very dark grey, black I’d say). Let’s have a look at three examples from different controversial sectors. Tell me if you notice any difference.

  • Diageo is a is a global alcoholic beverages company based in the UK. It has an ambitious CSR strategy and is a regular GRI-reporter. They stress on responsible drinking and state that “creating a positive role for alcohol in society is fundamental to our company purpose and the long-term viability of our business”. Why is it that they seem more credible than, say, Philip Morris? Is it because it is widely recognised that moderate alcohol consumption (wine), has a positive effect on health, whereas tobacco is completely harmful? Is it because they seem to be more transparent about their products and their ingredients? However, I would think twice, or “thrice”, before working for a liquor company.
  • British Petroleum BP was a company once recognised by everybody (CSR experts included) as a champion of sustainability that wanted to go “beyond petroleum”. Until the oil spill happened… Their sustainability was not very solid after all. However, other energy companies are investing in renewable energy as a way to change their strategy and guarantee their long term strategy. Even Saudi Arabia is aware of the fact that peak oil is a-coming and is already looking for alternatives.
  • Tobacco companies do not seem to have such long term strategies to replace their products. Is it because the secret of their success relies on the addictive power of their substances? Replacing tobacco by completely harmless cigarettes would take away the addiction, thus reducing consumption. They even recognise that tobacco is harmful (Philip Morris). At least Philip Morris does not mention the words “corporate social responsibility”, following the recommendations of the WHO.
  • British American Tobacco (BAT) states that if a product is harmful at least do it responsibly. A harmful yet responsible product? Are they kidding us, plain cynical or just trying to pull our leg? BAT does mention the words “corporate social” in their website. They seem to be concentrating on supply chain and climate change actions but they are missing the real point: their products and their completely lethal impact on health.

What I have learnt from these examples is that, for a CSR strategy not to be called greenwashing, following conditions should be met:

  • Longterm strategy to change or adapt their core business
  • Continuous and verifiable efforts to reduce their impact
  • Total transparency about their processes, products and impacts

Maybe this is a very subjective matter, linked to personal values and convictions. Personally, I have made a choice and stay honest and coherent: Tobacco and weapons are a total NO-GO for me. What is your choice?

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  • 1. Jayaraman Rajah Iyer  |  28/04/2011 en 14:47

    I am with you fully. In the current elections in India it is reported some of the tobacco companies, who do proclaim a lot of their CSR initiatives, were supporting some of the selected candidates for the Legislature in the hope of getting sales-tax benefits for a sector prevented from advertising, that I have posted in my blog: http://wp.me/p18MVb-aQ: #CSR the biggest and most dynamic corporate function of 21st Century

    The Bard had said, “be bold, be bold but not too bold, lest your heart’s blood shall run cold.” Will the tobacco companies be ready to survive at any cost or the pharmaceuticals companies be ready to release products knowing pretty well, they could be with dangerous side effects?

    Recently I read the KPMG & EiU Progress report: Q: “The need for common measures and underlying systems that produce credible information, to analyze the impact of sustainability programs.” and later “Deciding how to measure is more difficult than deciding what to measure” UQ

    This is the crux of the problem between reporting of a. Sustainability of operations aka profits and b. Sustainability of Values where b. is directly linked to the expectations of the Society as against a. linked to Wall Street. Both need a solution as KPMG report observes: Q: The need for a clear and rigorous international framework of regulation within which companies can plan with confidence. UQ This needs a measurement methodology in the first instance “deciding how to measure'”. This is the truth that Corporate has to address right now for its business strategy of 21st Century.

    I am happy you have raised these valid points that Corporate has to come to terms lest they find very difficult to come out of the morass they are in.

    Responder
    • 2. Juan Villamayor  |  28/04/2011 en 15:06

      Thank you very much for your reply! We are talking about a combination of values, transparency and coherence here. As you mention, greenwash is a big problem and a great osbtacle towards credibility and trust in CSR actions. And tobacco companies are an important lobby, in India and also in Europe and the States

      I am not discussing whether tobacco companies should be banned or not, that could be a different, interesting discussion. I am writing about the fact that, no matter what they do, what they do is socially irresponsible, no matter how they disguise it.

      Regards, Juan

      Responder
      • 3. Jayaraman Rajah Iyer  |  29/04/2011 en 08:52

        Exactly. Neither I am complaining about the tobacco companies. The contradiction exists and needs to be reconciled if we were to establish CSR as a primary driver of Sustainability of Values in the 21st Century.

  • 4. Julien  |  28/04/2011 en 15:02

    Interesting article Juan, congrats!
    My opinion is that some of these companies have a problem: their core business kill their clients. This is true for tobacco.
    The issue is more ambiguous in other sectors. As you said moderate alcool consumption is possible and can benefit your health.
    When I was working on socially responsible investments, I remember to have read that some of the rating agency would exclude companies that had something to do with abortion. In my opinion, this is about politics, and not about sustainability, and therefore mainly subjective.
    That’s why my opinion is that the question is not so much if it is CR or a smoke curtain, but more likely “what is controversial and what is not?”.

    Responder
    • 5. Juan Villamayor  |  28/04/2011 en 15:16

      Hi Julien,

      I agree with you. However, everybody agrees on the fact that tobacco is harmful and costs millions of lives, while there is not such a consensus about other topics… As you say, the fact that tobacco is harmful is not subjective, but a fact.
      I think that us CSR experts should be coherent and honest with ourselves. Tobacco kills people, it can create jobs, but it cant be socially responsible

      Responder
  • 6. Gareth Kane  |  28/04/2011 en 15:14

    This is a tricky one for those of us in the business of supporting organisations with CSR/sustainability efforts. On the one hand, if you work with controversial businesses you could be accused of legitimising them, on the other hand this is often where significant improvements can be made.

    To take your tobacco example, improvements in environmental performance and labour conditions in this industry will make the world a better place, even if smoking doesn’t. On the other hand, if you restrict your efforts to ethically pure business, then the rest of the world will rumble on as it was.

    We have taken the approach of working with any business that is operating within the law, but will never actively provide a fig leaf for dubious activity. I’m guessing that others are more prescriptive – I was recently called by someone from a controversial industry whose opening line was “do you work with people like us?”.

    Responder
    • 7. Juan Villamayor  |  28/04/2011 en 15:24

      Hi Gareth,

      Very, very tricky. I see your point, but, do their efforts and improvements in environmental performance and labour conditions compensate for the millions of lives they cost? One can say, they are free individuals who have freedom of choice, but it’s not that simple since people who start smoking find it very hard to quit.

      What is ethically pure? Nothing, we are human beings, thus not perfect. What’s wrong? Well, a couple of things.

      “Working with people like them”? Well, if depends on their willingness to really change.

      Regards, Juan

      Responder
  • 8. Gareth Kane  |  28/04/2011 en 15:47

    But as no Government in the world (AFAIK) has ever banned tobacco, who are we to judge? If society really wanted to stop smoking, we’d ban it! Btw I’m personally anti-smoking.

    My attitude is: rightly or wrongly we collectively accept tobacco, so a green tobacco company with good labour conditions is better than a polluting tobacco company that is exploiting its workforce.

    Responder
  • 9. Cathie Guthrie  |  29/04/2011 en 07:01

    What a delicious subject for discussion, Juan! No one ever talks about this sector.

    I don’t believe the tobacco industry has any redeeming qualities; period. I can’t imagine being an employee with such a company and feeling good about a climb in sales (assuming revenue growth is a corporate performance metric).
    You have written about an industry that does kill, but what about the other companies which don’t manufacture the products that kill or do harm directly? Instead, what if it is the corporate policies and practices of the firm that do the greatest harm. I wouldn’t want to work for these companies either.

    By the time I finished commenting on your blog I realized that I probably had a blog entry of my own. So, rather than fill your comments section, I invite you to a game of tag. I have posted the balance of what I said on your blog to my own blog http://company2keep.com/pub/Corporate-Social-Ir-responsibility-smoke-and-mirrors.html. Perhaps someone else will be inspired to pick-up the conversation thread and post an entry to their own blog after visiting mine or comment back and forth between the two entries.

    Thank you Juan for your inspirational entry today!

    Responder
    • 10. Juan Villamayor  |  29/04/2011 en 09:04

      Hi Cathie,
      thanks so much for your comment and for mentioning my post on yours.
      That’s exactly what I meant about the varying degrees of grey. Values and personal convictions play an important role here as well.
      Even if a sector is regarded as “relatively harmless”, say for example the food industry, maybe a very concrete company within this sector is not as harmless as it seems. Very often the public is not aware of a company’s practices, but us CSR experts should… And we engage in such a company, that should be because we really want to change the way they work.

      Responder
  • 11. Jose  |  02/05/2011 en 09:53

    Hi Everyone.

    sorry about my english. I´lll do my best.

    Tobacco kills, but at the same time is a legal industry. this is a real and great contradiction. And this contradictions affects everything we discuss about it.

    To say that CSR in this industry is the same as greenwash or marketing is the same as saying that any employee of this sector have no intregrity, moral o ethic attitude. And this is not fair.

    Transparency & innovation are the key elements to manage this business in a resposable way. No matter about CSR

    Thanks Juan for this great article.
    take care

    Responder
  • […] for negative social impacts. This is the case of PR/Marketing campaigns of companies from controversial sectors. But then we are not talking about social responsibility, but about greenwash and smoke curtains. […]

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  • […] reproach is that too many companies have used CSR initiatives in order to improve their image, as a smoke curtain to hide unsustainable […]

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  • […] reproach is that too many companies have used CSR initiatives in order to improve their image, as a smoke curtain to hide unsustainable […]

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  • […] for negative social impacts. This is the case of PR/Marketing campaigns of companies from controversial sectors. But then we are not talking about social responsibility, but about greenwash and smoke […]

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Juan Villamayor

Consultor en Responsabilidad y Sostenibilidad Empresarial (RSE). Economista y MBA radicado en Barcelona, con un perfil eminentemente internacional.

Es posible generar más valor mientras se aplican principios éticos. Al final todos salen beneficiados: las empresas, la sociedad y el medio ambiente. Eso es lo que yo llamo "Negocios Con Sentido Común".

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