Closing the gap between the ethical and profitable

Consumers will never believe that a company is socially responsible, whatever ethical noises it makes, if its prime motive is pushing product. By Alan Mitchell

The environment, human rights, potentially harmful effects of product (such as alcohol, fast food and obesity) – the list of arenas where companies are under pressure to prove their corporate social responsibility seems to grow every day.

Pressure groups pressurise, regulators circle menacingly, the media runs endless scare stories. Just how, exactly, are companies supposed to react? Are the knee-jerk reactions of defensive lobbying, plus a bit of reputation management or a cause-related marketing programme enough?

Whatever the industry, whatever the issue, three fundamental themes always seem to pop up in some form or another. Understanding the nature of these challenges – and how they come together – is essential,

What are these three themes?

The first is a shift in the focus of trust from product trust (trust in the quality and value of specific products) to motive trust – trust in the underlying motives of corporations. The hidden agenda driving most pressure group and regulatory attacks on companies is suspicion about their motives. No matter what the actual facts of the case may be – say, about advertising’s actual ability to persuade people to buy more – if regulators or pressure groups think a company’s prime motive is simply to make more money by selling more stuff, then they are inclined to believe that any “fact” which that company comes up with is coloured by its vested interest.

Only when companies convince their different publics that they genuinely want to be part of the solution rather than part of the problem will sniping turn to co-operation. The big question is, how?

Motive trust is almost childishly simplistic: do people believe a company is a good egg trying to do the right thing (whatever that is), or a bad egg simply looking out for its own interests? The stark simplicity of this challenge can be difficult for traditional profit-oriented companies to address.

It also begs the question: what is the right thing? And the problem is, nobody really knows. As soon as we try to answer it, we’re overwhelmed by mind-numbing complexity. Take just a few examples.

One is “externalities”, where one person realises a benefit at another person’s expense. Making a profit while polluting the environment is the classic example. Or, is it right that fast-food and alcohol producers profit massively from selling their products while others such as the NHS have to foot the bill for subsequent health problems? Yet, if the industry does shoulder some responsibility here, who decides how much responsibility, and for what?

Another source of complexity is system effects, where the net effect of many individually rational actions creates collective madness, thereby decoupling individuals’ intentions from effects. Traffic jams, industry overcapacity and advertising overload are three obvious examples of system effects, but there are more subtle examples. Even if we accept the tobacco industry’s claim that tobacco advertising is only aimed at brand switchers, for instance, how can we be sure that the net effect of all such tobacco advertising combined won’t do anything to increase the market?

The point about system effects is that precisely because they are not created by any one individual action alone, it is impossible to pinpoint individual responsibility. In which case, how can individual companies prove they are being responsible?

The same goes for multiple causes. With tobacco it was simple: a single smoking gun of a single, harmful, addictive substance. But with phenomena like fast food and alcohol, we are dealing with multiple social, psychological, physical and economic causes. Even if a company does accept a certain responsibility, how can we disentangle it from all these other issues to pinpoint appropriate levels of response?

Then there’s the wild-card factor of individual attributes. For some people, shell fish are poison. Others are cursed with addictive personalities. What the product does to them is as much an attribute of their own internal physiological or psychological state as it is an attribute of the product. In which case, what exactly is the responsibility of the producer? And so we turn to the debate about choice. Marketers celebrate free choice. But how free are we to make the right choices? Are we open to manipulation (as children, for example), or are our genes, or addictive substances, driving our choices? If so, what is the alternative to choice: a dictatorial nanny state?

As soon as we move away from problems to solutions, in other words, we encounter awesome complexity. And as soon as we start debating these complexities, people question our motives. So how on earth are companies supposed to respond?

Here’s a suggestion: with social responsibility. Companies need to redefine their purpose, to move beyond being in the business of selling “x” (alcohol, oil, cars, burgers, whatever) into the business of selling the benefits of “x”.

Selling the benefits of “x” still involves shifting product, but it adds a new dimension. If net benefit is to be maximised, then every possible harm must also be eliminated. Minimising and eliminating such harm (even if it involves accepting an advertising restriction here or withdrawing a product there) thus becomes as much a part of the core business as “pushing product”.

It takes the heat off motive. (If you are spreading “good”, your growth is “good” and your profits justifiable, whereas if you are spreading harm your growth is not good and your profits are sick). It also constructs a win-win agenda with which to engage all other interested parties.

Enter the third key ingredient: process. In the face of enormous complexity and uncertainty, social responsibility cannot be a position-taking, messaging exercise. It has to be a research and learning agenda. And to achieve credibility in this agenda, it has to involve all concerned. It is this process of engaging, listening, arguing and working with others – both to understand the problems and to fix them – that builds motive trust and opens ways forward.

That’s the challenge of social responsibility: tackling trust, complexity and engagement all at the same time. In this context, the process is the message.

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