Please click on the link below to read the article this blog post refers to.
http://www.economist.com/business/displaystory.cfm?story_id=13648978
Corporate Social Responsability or 'CSR', its a mouthful, but its one that marketers have been attempting to make their counterpart accounting departments swallow for quite a while with varying degrees of success.
As the Economist article indicates, CSR campaign budgets assigned to marketing departments amongst the blue chips remain relatively well insulated in comparison to many other marketing related budgets such as those assigned to create advertisements and purchase adspace. Pre-crunch CSR was taking off, reaching critical mass having passed the early adopter stage with a decent momentum, even though it was clear many companies, certainly those whom were not at risk of losing marketshare in the short term if they did not diminsh the scope of their rivals first mover advantage, seemed dubious as to how CSR expenditure would benefit them financially without sinking into the unprofitiable 'noise' area of many other such promotional activities thus preferring to bide their time for the next round of investment defined by subsequent fiancial quarters, waiting to see if CSR became more than just a stakeholder approval seeking publicity stunt and rather upgraded to a key success factor, a benchmark accross sectors that would yield either brand appreciation or depreciation based upon level of perceived investment and committment from each company.
Crunch time hit, the recession occured, and CSR as a paradigm for capitalism 3.0 was left dangling over the side of a cliff having tripped on a tangle weed of media propounded corporate panic regarding the financial apocalypse and failed to make the leap to reach critical mass and gain much greater cross-sector diffusion.
So what are firms doing now with their relatively well insulated CSR budgets, and where do we go from here?
The Economist article, alongside many other similar articles that have been published over the last few months in reputable business pages, indicate that a compartmentalisation regarding what constitutes effective CSR has occured amongst the blue chips, the then and current key proponents and standard barers of CSR. There was always the fear that such initiatives would not be taken seriously by consumers and other stakeholders, especially in the case of the traditionally less morally concerned companies. However, whilst there appears to have been consensus on the importance of perception of CSR activities, there exists currently a fundamental disconnect within many companies between that realisation and their choice to shift CSR budgets toward such activities which present a short term return, such as investing in tele-conferencing systems isntead of far greater expenditure on corporate travel, which just happens to also reduce a companies annaul carbon footprint. In and of itself this short-termist approach to CSR, in comparison to other companies approach such as 'Tripple Velvets' new initiative to plant 3 trees for every tree it cuts down which constitutes a more long term commitment to CSR, are not and should not be perceived as lesser attempts to become a socially responsible company. However, the benefits accrued in terms of brand appreciation through positive differentiation from competitors in the short term and consumer incentivising benchmark creation in the long term in the context where such activities as actively reducing carbon emissions and purchasing more fairly traded cocoa beans where farmers are paid more for their yield, are paltry in comparison to the context where the same activites are occuring and a decent amount of ad money is earmarked for in-tandem expenditure to promote to stakeholders, especially consumers, that such activities are going on.
As the majority of CSR's initial proponents and detractors noted the key success factor for such initiatives toward building brand appreciation was and is perception, specifically gaining the trust of stakeholders and informing them of such activities so that they may recognise the genuine nature of effort CSR companies are putting into such activities. Consequently, those activities such as 'Tripple Velvet's which represent a greater (harder to wiggle out of) committment to CSR in the long term are far more effective at inspiring such appreciation and trust from stakeholders than short term initiatives which are quite clearly designed to cut costs in the recessionary climate and just happen to be constituents of good CSR practice.
Not every company can undertake such an initiative as planting trees/investing in stock to the extent that its primarily a socially responsible expenditure (though one could argue the toilet paper company is merely investing into stockbacks to avoid the volatility of resource price fluction), however, when in doubt there's always the tried and test 'Ben and Jerry's' approach; giving a percentage of your profits to a sequential list of charities. Such a move would constitute possibly the greatest, most long term committment to CSR, however, it also cuts down consumers cognitive expenditure in cutting through the marketing noise and rationally assessing which company is more ethical and from whom to purchase which product, by creating a set of substitute products/services and experiential goods that instantly attest to their own socially reponsible natures with a simple packaging point that says 5%...
Whether Capitalism 3.0 manages to pull itself back onto the ledge, take a running jump and learn to fly is moderated by many variables, some national economy specific, some global, some politically determinable some determinable by the private sector, and some mutually determined through co-operating and long term thinking, but whats certain is CSR shall play a large part in determining whom within the market is the fittest post crunch, be it in the form of adapting to the revenue poor recessionary climate by growing a fur coat; changing operational expenditure in the long term, or adapting to the current climate to the extent that constitutes evolution of the species, one with a far healthier, far safer, far more alltogether profitable appraoch to this brave new world.
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