When I come across commentary on the role of corporations in delivering social change it takes me back to several decades ago when I was a politics student. Back then we were encouraged to recognise the clear demarcation between the role of the state and the role of the private sector. At one extreme citizens relinquished control over almost every aspect of their lives to the ruling party in totalitarian regimes and at the other we had democracy – consensus government through elected representatives based on debate and the rule of law. I wonder if the current debate on the role of corporations in global social and environmental issues needs to be so polarised. Should this really be commented on as a zero-sum game where a victory for one side is automatically considered a loss for the other? Surely if there is one winner, it should not be governments or global corporations but society as a whole.
As a student in the early 90s, the greatest level of corporate interaction we could hope for was a return letter of apology from a company to an issue of complaint. If you were extremely lucky, they might send you some product as compensation should your complaint centre around a product defect. I recall a friend receiving a small box of Kit-Kats about two months after sending a letter complaining that his recent purchase contained no wafer. Jackpot! We rejoiced at this victory but I am sure this corporate response would not create the same level of abject joy among today’s Millennials. Now customer care is carried out via very public forums such as Facebook or Twitter and more immediate responses are required.
In today’s multimedia environment, expectations of interaction with corporations have shifted as dialogue and conversation has replaced straightforward information provision. A generation has grown up with the ability to positively or negatively shape the reputation of a brand or corporation in seconds using online and mobile technology and companies have reacted by investing more in engaging with consumers on and off line. Society has evolved, expectations are more sophisticated and relationships between the public, corporations and government are more elaborate. Successful multinationals need to earn and maintain their licence to operate and their contribution to solving broader social and environmental concerns is one way of doing this.
Leading global food companies are pioneering social and environmental initiatives. Nestlé’s “Good Food, Good Life” seeks to enhance the quality of lives through nutrition, health and wellness and Unilever, through the Sustainable Living Plan, seeks double their size while reducing their environmental footprint and increase their positive social impact.
Is it fortuitous that global ‘purpose led’ corporations are overtly using their expertise to tackle issues they feel they have the credibility to address through their activities? Almost certainly not and the private sector doesn’t have all the answers but for many reasons they are often well placed to address those ‘big’ questions that Government cannot so easily find a solution to. Multi-nationals have well developed infrastructure which can be used effectively, for example, to reduce their environmental footprint or to ensure uniform safety standards and conditions for their employees. They have a good grasp on the scale of the challenge because their experience of operating across borders means they are less harnessed by national perspectives. They also have a good understanding of the realities of the life in more underdeveloped regions where they operate, parts of the world who often feel the impact of climate change more readily.
Successful multinationals understand that their actions and behaviours in developing countries often have a big impact on their reputation in their home market. Improving livelihoods helps them to build respect among opinion formers and consumers at home whilst also building connections with the next generation of consumers. This activity is not entirely altruistic.
At Millward Brown Corporate, we regularly talk to opinion formers and consumers about what constitutes successful corporate partnerships. Thought leaders from the Media, Corporate, Government, Academics and Financial communities talk about the need for authenticity because without a direct link to their core business then how can companies really use their expertise to help. Related action needs to be integrated with all aspects of commercial activity to be credible.
They focus on playing the long game and demonstrating a commitment to seeking solutions that will out-last current management. Social and environmental initiatives should embody the purpose of corporate leadership but become risky when they are seen as the preserve of one person. Their departure could quickly spell disaster. Companies should demonstrate the brand values they espouse and truly embed these within the organisation.
Third party verification, among the NGO community, acts as a check and balance to ensure efforts are guided in the right direction. NGOs seek to ensure that initiatives are sustainable and can be carried on by the local community once the initial funding dries up. Some NGOs are known to target multinationals over high profile issues such as palm oil, deforestation, obesity, precisely because they know that companies of their size and stature cannot be complacent and absolutely must respond in a meaningful way in order to retain the confidence of consumers and stakeholders.
These partnerships do not necessarily signify a transfer of power away from elected governments with a popular mandate and towards corporations motivated only by profit. Corporates often point to the lack of financial return related to socially responsible activity. It has the potential to differentiate and increase competitive advantage, improve recruitment and retention, and increase loyalty but the financial returns on CSR activity are not so easy to quantify.
Corporations would soon lose their license to operate if they acted in a solely self-serving way and such activity is not expected to be purely philanthropic; most accept the commercial realities. Of course, potential exists for abuse but there are codes of conduct in place to ensure private concerns don’t have undue influence over the direction of policy.
Partnerships between governments and business on social issues do serve to fill a void and are an alternative vehicle to protracted inter-governmental proceedings and they are credible if they are mutually beneficial. If the net result of co-operation to solve mutually agreed goals with social purpose actually benefits society – for many, this is a worthwhile trade-off.
In 2001, I was in New York to meet with an intergovernmental organisation. I was conducting research on, the relatively embryonic term, ‘Corporate Social Responsibility’ and the sponsor was a global energy company. The IGO representative was co-operative but generally rather tetchy and once he had grilled me on my credentials remarked, “What on earth is someone with your background doing working on behalf of this organisation?” to which I replied, “If you want to affect change don’t you think that it will be easier to do so by working with them rather than against them?” I think this still holds true today.
Anna McAvoy, Director – Millward Brown’s Corporate Practice.
Millward Brown Corporate Practice 