Who cares wins, but is there a hidden agenda?

Many companies boasting about how socially responsible they are have one eye on the poor image and falling profits of their brand

From the food people eat to the clothes they wear and the coffee they drink, consumers are becoming more aware of the origins of the everyday things they buy. As a result, the line between corporate social responsibility (CSR) policy and marketing strategy is increasingly blurred. With pressure from consumers, lobby groups, regulatory bodies and the legal system, the need for a voluntary CSR policy continues to be at the top of the agenda for many American companies.

The food industry is a case in point. According to the Centers for Disease Control and Prevention, more than 15 per cent of children in the US aged between six and 19 years old are classified as obese, three times the levels seen in the Seventies. Many allegations have been levelled at the food industry that this is a result of the huge sums of money spent advertising food products directly to children. Last month, Democrat senator Tom Harkin issued a challenge to the food industry to clean up its act and limit the amount of junk food advertising aimed at America’s children. It has been estimated that more than $3bn (£1.6bn) is spent annually on the advertising of fast food alone, while according to the Institute of Medicine, food and beverage companies spend between $10bn (£5.2bn) and $12bn (£6.3bn) a year marketing their products to children and adolescents, primarily on television.

A 2004 report by the Kaiser Family Foundation found that the typical American child watches more than 40,000 television ads a year – twice as many as in the Seventies. Furthermore, according to a recent study carried out at Berkeley University in California, the average child in the US witnesses an estimated 10,000 food ads per year, 95 per cent of which are for confectionery, fast food, soft drinks or sugared cereals.

A number of North America’s most prominent companies are changing the way they are managing the relationships between their suppliers, products and consumers. This has undoubtedly had a significant impact on their marketing strategies and how they aim to be portrayed in the media. Kraft Foods has stopped advertising its less nutritious products in publications and programmes that target six- to 11-year-olds. Instead it will advertise a range of products that are to be labelled “sensible solutions”, and will feature healthier food options such as wholegrain cereals and low-fat meat products.

Another company making changes in its marketing strategy to children is Coca-Cola. In a highly significant move, Coca-Cola has stopped advertising its fizzy drinks brands in programmes whose targeted viewers are predominantly under the age of 12. Both of these moves come hot on the heels of a youth health initiative launched through the Boys & Girls Club of America, to which Coca-Cola and Kraft Foods committed $12m (£6.3m) in 2004.

McDonald’s has also been feeling the pressure. The company is facing a reinstated lawsuit from 2002 that seeks to claim liability for the company in relation to the obesity and subsequent heart problems of two teenagers who ate its food. It is undoubtedly also still reeling from Morgan Spurlock’s 2004 documentary Super Size Me. Last month, McDonald’s launched a global campaign entitled “It’s what I eat and what I do… I’m lovin’ it”, aimed at helping consumers to “better understand the keys to living balanced, active lives”. Chief executive Jim Skinner says: “We will use our size and strength to set an example.”

Wal-Mart, the world’s largest retailer, has also been trying to set a better example through socially responsible actions. The Asda parent company continues to face a constant barrage of criticism from lobby groups. After years of allegations that it is a poor employer, with sexually discriminatory hiring and employment practices, as well as being a destroyer of local businesses, it is on the receiving end of the largest class action lawsuit ever filed – with more than 1.5 million present and former employees taking part in the suit. To add to its woes, last week the Center for Community and Corporate Ethics ran a full-page ad in the New York Times that accused Wal-Mart of costing US taxpayers some $1.6bn (£836m) a year. The ad said that Wal-Mart’s low pay and benefits forced tens of thousands of employees to seek government aid in the form of Medicaid, food stamps and housing assistance. The group includes union leaders, environmentalists and academics among its directors and says on its website that it aims to “fight Wal-Mart on the streets, in the media, and in the customer’s mind”.

Wal-Mart has made a number of strong pledges in recent years to portray itself as a positive, responsible corporate citizen. In January the company ran ads in newspapers across the country, trumpeting its employee benefit package, the diversity of its workforce and the jobs it plans to create this year – a move that may well have gone some way to further stimulating the anti-Wal-Mart feeling.

Meanwhile, in the $800bn (£418bn) worldwide footwear and apparel market, Nike and Gap have come under attack during the course of the past ten years in relation to the use or exploitation of contract workers in so-called sweatshops in less developed countries. Gap maintains its silence on where exactly these factories are located, arguing that it has to conceal their location in order to protect its intellectual property. The company has, however, been helping unions and factory owners to come together and set up independent factory monitors, a policy that was extended to Central America in January. Nike, arguably more damaged by allegations in the past, has gone some distance further by releasing a 108-page corporate responsibility report this month that details the location of all of its contract factories and gives a critical assessment of the degree to which the company is achieving its CSR goals.

Starbucks has long attempted to cultivate its CSR image and was ranked sixth in this year’s Fortune Magazine list of socially responsible companies. However, it cannot afford to rest on its laurels. As a company that avoids TV advertising, word of mouth is important for the maintenance and development of the Starbucks brand image. This month, the company announced the purchase of Ethos, an ethical bottled water company that donates a proportion of its income to clean-water projects in developing countries. Having sold fair-trade coffee in its US retail sites since 2000, the company bought 4.8 million pounds of fair-trade coffee in 2004, and has stated its intention to buy 10 million pounds next year. However, as a company that has sold almost 300 million pounds of coffee in North America over the past year, it is under pressure from lobby groups to increase this amount.

It will certainly be interesting to watch the development of more socially responsible company strategies over the coming years, both in the US and across the globe. CSR continues to be a buzzword in the industry and, while some people simply view it as marketing by another name, there is no doubt that this debate and these demonstrations of good corporate citizenship have only just begun.

Polly Devaney is a former Unilever executive now working as a freelance business editor

Additional research and reporting by Paul Hargreaves

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