Business Respect - CSR Dispatches No 129 - 10 Jun 2008

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An email newsletter with news and discussion focusing on corporate social responsibility globally, looking at the companies in the news and the emerging issues. Linked to the website at http://www.mallenbaker.net and produced every two weeks.

In this issue, we look at companies that use their marketing to influence consumer behaviour towards sustainability.

In the news:

Feature articles on the internet:

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Topics:

Want to read a hyperlinked version of this issue? You can find one on the website at http://www.mallenbaker.net/csr/nl/129.html.

Copyright 2008 Mallen Baker. All rights reserved. For information on how to subscribe, go to http://www.mallenbaker.net/csr/nl/subscribe.html

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Welcome

The sharp-eyed amongst you will note that this edition has been held back a day from when it would normally go out. This is for two reasons - one so that the main feature could focus on the winners of the Marketing Society's Ethical Marketing award without breaking the embargo, since the awards dinner was last night. Secondly, I am looking at moving the day of despatch for the newsletter to Monday anyway, since the practice of sending on Sunday evening stems from the time when its production was fitted around a full time work schedule.

I had the privilege of acting as a judge in the Marketing Society's awards for this category, and it was a fascinating experience. When discussing social responsibility generally, there is an acceptance that a business case is required to show good quality CSR. Funnily enough, when discussing the selections with a panel of fellow judges who are all top marketers, there were plenty there who seemed to feel that unless the company was losing money by doing something, then they weren't really sincere. And this was a group of hard-bitten marketers! All very interesting.

A couple of extra things to note - all of them slightly tecchie in nature, but about trying to help make it easy for people to share information, or keep up to date with new items.

Blog entries and articles / news stories on the website now include bookmarks for some of the most popular social networking sites, such as Facebook, reddit, Digg, etc. I hope that if an article or posting particularly strikes you as dealing with an interesting issue, and you use any of these services, you might share your interest with others by clicking the appropriate link.

For those that use the increasingly popular twitter service, blog entries are now also entered into twitter on posting, so if you want an up to the second notification of new posts, it's the easiest way to get it! You can go to twitter.com and search for mallenbaker to subscribe to the feed.

Finally - some of you use newsreaders to keep up to date with news sources, including news stories from the website, which are collected together every fortnight into this newsletter, and blog entries. These use something called an rss feed. A bug with the default setting for the rss feed for the blog has now been corrected - if you subscribed to the feed there but haven't seen updates for a long time, you might want to go back and resubscribe (use the xml tab on the blog page to do this).

Tecchie interlude over!

On the website - having been neck and neck for a while, those thinking that companies will cut back on CSR-related activity are beginning to slowly pull away from the rest, but still a little time left to make your own views known. The vote currently looks as follows:

In the face of an extended economic recession companies will:
keep CSR as a priority 252 (37%)
cut budgets, but still focus on key issues 291 (43%)
drop CSR as an unaffordable luxury 137 (20%)

Thanks to the 680 people that have voted so far.

Mallen Baker
mallen@mallenbaker.net

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CSR News 10 Jun 2008

Brazilian bank Banco Real named as sustainable bank of the year

Brazilian bank Banco Real was named as the overall most Sustainable Bank of the Year at the third annual Financial Times Sustainable Banking Awards in London, as well as being named as the top Sustainable Emerging Markets Bank.

The company was recognised for its broad commitment to sustainability in financing. In addition to using microcredit loans, the company runs consulting services to guide customers in using their finances to achieve sustainability goals.

Judges said that the bank went well beyond the established sustainability practices encapsulated in measures such as the Equator Principles and applied sustainability practices across every aspect of its business.

Australia: ANZ backs away from controversial pulp mill

ANZ bank has said that it will not provide project financing for a controversial pulp mill project in Tasmania. The company had been due to provide AUD 2bn towards the Bell Bay Pulp Mill.

The retreat comes in the face of controversy over the project's environmental impact, expected to include the destruction of native forests, pollution impacts on local marine life, and disruption to tourism, fisheries and agriculture.

The Mill had achieved support from the federal government and the Tasmania state government. ANZ pleaded client confidentiality in declining to discuss the decision to pull support. However, the company recently launched its policy to not support projects involving the logging of high value conservation areas.

ExxonMobil: Shareholders rebuff Rockefellers

ExxonMobil shareholders have voted down a high profile proposal to split the role of chairman and CEO and to set goals for reducing greenhouse gas emissions. The motions had drawn support from the majority of the descendents of the company's founder John D. Rockefeller.

The vote on separating the role of chairman and CEO drew the support of just under 40 percent of the votes - a strong enough showing to send a strong message although not enough to win the motion.

The climate change resolutions aimed to require the company to develop emissions reductions targets, to investigate the consequences of climate change on how it does business in emerging markets, to report on new technologies and expand research and development into renewable energy.

The company's CEO Rex Tillerson has said that the world would continue to require substantial fossil fuels to meet its energy need into the future.

Salesforce.com CEO Marc Benioff noted as Corporate Responsibility CEO of the year

Marc Benioff, the chief executive of salesforce.com, the customer relationship management software company, has been named as Corporate Responsibility Officer Magazine's 2008 CEO of the Year award.

Benioff was credited for having provided leadership in corporate responsibility whilst delivering financial performance for the business. Salesforce.com is just eight years old, and now delivers revenues approaching $1bn.

He has been an active advocate of the so-called 1/1/1 Model, where a company commits 1 percent of profits, 1 percent of equity and 1 percent of staff time to the community.

The CRO Magazine will announce other award winners at the annual CRO conference on June 18th.

Burma: 50 companies added to target list

The Burma Campaign UK produced a list of 154 companies that it accuses of helping to finance Burma's military dictatorship through a presence in the country, which includes 50 companies that are new to the campaigns 'dirty list'.

The new companies, including Toyota, Tata, BBC Worldwide and Kuoni, were accused as having commitments to corporate social responsibility that were "a hollow sham".

However, a number of the companies protested the severity of the charge.

BBC Worldwide found itself on the list because it has taken a stake in the Lonely Planet guidebooks. Lonely Planet said that the act of producing a guidebook about the country was not the same as supporting the regime there. Toyota said that it sold around 40 vehicles in Burma, mostly to embassies.

South Africa: Mining companies criticised on social responsibility

Platinum and coal mining companies operating in Africa have been criticised for failing to match up to rhetoric on corporate social responsibility in a new study launched in Johannesburg.

In particular, companies in South Africa were accused of having lobbied to reverse control by the department of environment and tourism of mining operations. Many mining operations were held to operate without water-use licenses.

The survey by the Bench Marks Foundation also criticised approaches taken in Zambia and Malawi.

Japan: Government considers carbon labelling

The Japan government is considering mandating the introduction of carbon labelling for food and other products early in the next fiscal year.

The labels would give a figure for the amount of carbon dioxide produced during production of the product, and would follow some of the learning created in the UK by some of the trials by the Carbon Trust working with companies such as Alliance Boots, Tesco and Innocent drinks.

The Ministry of Economy, Trade and Industry is due to set up a panel to look at details, aimed at producing a framework early next year.

Japan: Senba Kitcho K.K. closes after scandals

The upmarket restaurant chain Senba Kitcho has been forced to close after customer numbers plummeted following recent scandals over labeling and the serving of leftover food.

The company had reopened at the beginning of the year after a two month closure following the discovery that it had sold expired sweets and mislabelled beef. The second chance came to an end when the company was found to have sold left-over food, and companies and other customers deserted it in droves.

India: Blackberry spy demands resisted

Research in Motion, the maker of the popular Blackberry phones, has rejected demands from the Indian government to provide keys to help it to decrypt text messages it deems suspicious.

The company has said that it is a deliberate design feature of its technology that it does not allow anybody, even the company itself, to read information sent over its network. A 'master key' requested by the government that would give blanket access to all text messages does not exist.

The government has said that it fears that militants may take advantage of the secure system to better co-ordinate activity.

CSR FEATURES from the Internet

Foxconn's China earthquake donations turn public perceptions 180 degrees - 29 May 2008 FROM CSR Asia

A couple of days ago the Southern Metro Daily (Nanfang dushi bao) published a very interesting article on how Hon Hai/Foxconn boss Guo Taiming (aka Terry Guo) has gone from been seen in China as "arrogant and domineering" to being perceived as a generous friend.

Read full story

Recent entries from Mallen's blog

Did you want a smoothie with that? - 4 Jun 2008

It's a tricky old thing, being an ethical niche brand. Ask Richard Reed, at Innocent Drinks. Read more

When is big profit too much profit? - 2 Jun 2008

It's always fun, if a little bewildering, trying to work out attitudes towards profit. On the one hand, profit is good. Our pension funds and savings largely depend on profitable businesses doing well. On the other, well, we seem to think that there is a limit to what is reasonable profit. We can't quite define where the line is, but we think we know when we see 'excessive profits'. Read more

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How to make friends and influence customers

Article by Mallen Baker

We all know that a company is responsible for the safety of its product – and for making sure it sells such products in an honest, non-exploitative way. But five years ago, nobody would have suggested that the company was responsible in any way for influencing consumer behaviour for the better. But that is now beginning to emerge as a theme in what might be described as responsible marketing.

Take Procter & Gamble, for instance, who have just carried away the UK Marketing Society’s Ethical Marketing prize. Their winning campaign for their Ariel washing product encouraged consumers to ‘Turn to 30’ – ie. Wash clothes at a lower temperature.

The company had researched its carbon footprint, and identified where in the production and sales process the most carbon was embedded for their flagship product. But they noted at the same time that the vast majority of carbon was emitted as a result of the product in use – and not because the product emitted the carbon, but simply as a result of using the hot water.

This is no surprise – Alliance Boots came to the same conclusions when they looked at the carbon imprint of one of their shampoos. 93 percent of the impact of the act of washing hair with shampoo was made up in the use of hot water, and a hairdryer. Just 7% was actually the carbon footprint of the shampoo.

P&G identified that the biggest barrier to consumers switching to lower temperatures to wash clothes was that they believed that you had to wash at higher temperatures to achieve genuinely clean clothes. This obvious and intuitive belief is now wrong. With the more advanced washing formula in Ariel (but not unique to Ariel) clothes would be completely clean at a lower temperature. So the company launched a ‘turn to 30’ campaign to communicate this, and to seek to get customers making what should be a sustainable switch.

Once you’ve turned your machine to 30, you will probably leave it there. Most people do.
The campaign was successful – the number of people in the UK washing clothes at the lower temperature rose from 2 percent of the population to 17 percent, and research showed that the significant majority of the shifters associated the message with the Ariel brand. It is good for the company, of course, since it has been a distinctive marketing campaign that has made the company stand out as a leader, and it has helped it to defend market share whilst reducing the environmental impact of its product in use. It has been good for customers as well, because as the price of energy soars to new heights, this saves them money.

But it is interesting because rather than following customer demand, anticipating behaviours and simply seeking to meet the need, the company has moved onto the territory of seeking to shape behaviours around a common interest agenda. This kind of campaign is not the last word on such an agenda, but it was interesting and well implemented – sufficient to win an award, in any case.

To underline the point, the runner-up in that award was another example. B&Q, the do-it-yourself retailer, was commended for its campaign to encourage customers to improve the energy efficiency of their home. Of course, it was a good commercial campaign – B&Q sell the products to help you to improve energy efficiency – but it was another example of seeking to provoke action by customers on the environment rather than simply following demand.

If anyone should be unsure that the company is committed to the agenda, B&Q made news earlier this year when it decided to discontinue the sale of outdoor patio heaters – a perfectly profitable line for them – because they felt that they were just too far outside the zone for the company’s commitment to sustainability. Now that is the real test of commitment – we want to promote the existence of a sound business case for action whenever possible, but every now and then it is the action that a company will take where it may endure a short term hit that will really tell you how serious they are.

There are limits to how much businesses can do in this area – but the fact is that companies with imagination are pushing those limits. Nobody will do tremendously well trying to market an impoverished, hairshirt approach to life – but practical changes that meet people’s aspirations for quality of life whilst moving towards a reduced impact – these are well within the marketers reach.

Contrast that with what happened to the car companies in the US. Ford, for instance, that spent years wringing its hands about how impossible it was to address the fact that its customers preferred SUVs, even though the company knew it needed to address environmental impact. Rather than anticipating and leading the trend, the current preference was seen as an impassable barrier to progress – and of course we know what happened next.

Indeed, as GM talks up its all-electric rising star whilst making rumbles about selling off the Hummer brand, there is little doubt that the rising cost of fuel is bringing about a new world in the mind of the consumer. Such a shame the companies have trailed the trend rather than trailblazed it to date.

This is now the central challenge for the marketer in the next decade – selling sustainability in order to remain viable.

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In the news from the latest issue

Nepal: Relatives of killed workers sue US firm KBR for trafficking

US: Proposed Alaskan mine survives people's vote

Merck accused of dressing marketing up as science

Australia: Business lobby group warns over carbon trading

India: Tata Motors threatens pull-out from West Bengal

US: Climate change resolutions making impact on companies

Japan: Details of carbon labeling confirmed

Canada: Wal-Mart has union contract imposed

India: Rising protests against factory building

US: Fraud will cost firms $994bn this year

US: American Airlines accused of safety breaches

Ghana: Call for companies to help clear up electronic waste

US: Disneyland demonstration over hotel worker benefits

Uzbekistan: Major retailers call for end of child labour in cotton

... more news stories

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Business Respect - most recent edition added on 17th August 2008