2012-03-08

Co.Exist

The Three Ages Of Socially Responsible Business

From 1990 to today, the idea of what businesses have to do to be responsible members of society has changed rapidly. We started in the Age of Image, where businesses only had to appear to be doing good. Where are we now?

While business is starting to take seriously the need to behave according to a different standard, it wasn’t always so. Previously, a company’s image was often its key concern rather than its reality. Words spoke larger than actions. If we examine the path that led modern business to this new reality, it can be broken down into three ages, which fit broadly into three consecutive decades.

The Age of Image, 1990–2000

The first age—the Age of Image—lasted from around 1990 to 2000. Businesses used the growing interest in how companies went about their affairs and what they stood for, especially in an environmental context, to create new communications strategies.

These were, on the whole, designed to establish or alter the image of their businesses in the consumer’s mind, rather than genuinely change how things were done. As the Dilbert cartoon says: "We didn’t do it to help the planet; we did it to look like the sort of company that cares about that sort of thing."

The terms "greenwashing" and "nicewashing" were coined during this period to describe cynical attempts by companies to mislead the public about their environmental performance and ethical commitments.

In 1992, Greenpeace published a ferocious report entitled "The Greenpeace Book of Greenwash," which eviscerated companies including DuPont, General Motors, Shell and Dow Chemical, among others, for co-opting environmental terms and using them for their own ends. Despite this, some companies continued to cosmetically enhance their images with claims and marketing campaigns that did not necessarily reflect reality.

The Age of Advantage, 2000–2010

As consumers grew more and more vocal, and more digitally empowered, some of the smarter and more progressive companies realized that there could be genuine competitive advantage to be gained from really delivering on the promises of the Age of Image. And hence we saw the arrival of the second age—the Age of Advantage.

Here we saw companies setting about to genuinely make their business more socially responsible, in order to gain an edge. Walmart transformed its business during this period. Others, such as Marks & Spencer and Toyota, leapt ahead of their competitors by genuinely tackling their impact on the world around them. New companies that placed better business as a central tenet, such as Whole Foods and Burt’s Bees, began to make a significant impact, delivering on consumers’ expectations.

In the Age of Advantage, many business leaders recognized and accepted the need for business to change. In fact, almost three quarters of business leaders (73%) questioned in a global study in 2010 believed in the edge corporate social responsibility gave them and even more (79%) accepted it as a business cost. These findings underline the sound instincts of the business leaders who have led the way during the Age of Advantage.

The Age of Damage, 2010 to the present

I believe we are now heading into the third age—the Age of Damage. If the first age was about creating an image but not delivering on it, and the second age was about the genuine delivery by the few, then the third age is poised to be an era during which businesses that are not socially responsible will suffer damage as a result of this failure. Consumers now know more about companies and expect more of them. Not only that, they will now act against those that do not come up to their standards.

Unilever CEO Paul Polman is well aware of this: "Those companies that wait to be forced into action or who see it solely in terms of reputation management or CSR will do too little too late and may not even survive," he warns.

Polman is committed to improving Unilever’s sustainability performance, but not at the expense of growth, and intends to double the size of the business whilst halving its environmental impact.

Polman’s goals are seen by many to be ambitious, but they are also the symbol of a new era in which companies focus on both their results and the impact of those results. Other companies that have occupied this space in the past decade have seen clear benefits. General Electric says it has spent $5 billion in the first five years of Ecomagination, its programme to develop clean technologies for the future, but adds that a staggering $70 billion has already been generated. General Electric CEO Jeffrey Immelt says: "Ecomagination is not an advertising ploy or marketing gimmick. GE wants to do this because it is right, but also we plan to make money while we do so."

Marks & Spencer launched Plan A in 2007, making 100 commitments to tackle climate change, waste, raw materials, fairness throughout its supply chain and health issues over five years to 2012. The retailer anticipated investing £200 million over the period to achieve these targets but, according to its "How We Do Business" reports, the plan has already broken even; in 2010 it added £50 million in profit and in 2011 a net benefit of £70 million. This in addition to an energy efficiency improvement of 23%, 94% of all waste from stores, offices and warehouses recycled and major progress in terms of sustainable sourcing.

Many smaller, and often more niche, companies have been successfully delivering on the growing desire from consumers for products sold by businesses with a conscience. U.S.-based outdoor clothing company Patagonia has had a pioneering approach to sustainability, employee care, and social responsibility and is considered a model of ethical business.

Patagonia has become a heavy-hitter in its sector but could easily aspire to grow faster. Its inspirational founder, Yvon Chouinard, says: "Everybody tells me it’s an undervalued company, that we could grow this business like crazy and then go public. Make a killing. But that would be against everything I’ve wanted to do. It would destroy everything I believe in.”

The attitudes of leaders like Chouinard strike a chord within consumers that echoes their own concerns. These companies prove that ethical manufacture is possible and the evidence strengthens consumer demands that other companies do likewise. Their growing scale places further responsibility on established companies to put their own houses in order, which they will have to do if they are to prosper in the Age of Damage.

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2 Comments

  • gregoates

    While this is a compelling story, it's a story being told over and over among many media and corporate platforms engaged in the evolution of CSR. The companies showcased always seem to be the same: Patagonia, GE, Whole Foods, etc., and everyone especially loves to mention Walmart's 180 on corp responsibility... It would be interesting to learn about other lesser known companies outside the Fortune 500 realm that are changing their business model. Companies perhaps that aren't mandated by their global exposure to create strong sustainability platforms, or whose very identity isn't shaped around sustainability. Like a large car parts distributor in Phoenix, for example. If a company such as that initiated new CSR measures and those measures significantly increased profitability and employee engagement, then that's new news... and a story more people could relate to.

  • Sarah Danielle Stephens

    Hi Greg,

    I am new to this site, but I would have to agree with your post.

    This is why I plan to focus my Masters thesis on socially responsible companies in my community that are not well known on a global scale.

    I plan to interview businesses in my area that are still open and have stood up to the competition of the big box stores.

    In my opinion, companies that have small budgets, still stay competitive, and are socially responsible deserve to be recognized because they face insurmountable odds just to operate everyday, yet they manage to stay in the game.

    Thanks for your comment!