CSR is how we do business

As usual, I got an overdose of sugary good intentions of corporations large and small at last week’s CSR conference held at Crowne Plaza in Ortigas Center. I still get the impression that for many people, good old fashioned philanthropy and CSR is one and the same thing. Yet, I also get the feeling that little by little enlightened CEOs are realizing that CSR is more than philanthropy, more than Public Relations, more than Reputation Risk Mitigation.

Thanks to the global economic crisis, there is now a strong public demand for corporations to behave like upright corporate citizens. Everyone is now talking about corporate values, corporate ethics and yes, corporate social responsibility. One speaker in last week’s conference showed a graph with the disturbing revelation that the trust ratings of politicians are now higher than the trust ratings of corporate managers.

Oh well… the foreign speaker was talking of a survey done in other realms far away from our troubled islands… no way Ate Glue could be trusted more than JAZA or Manny Pangilinan. Politicians in developed economies have the upper hand as they use taxpayer money to bail out free market capitalists from the consequences of their greed. Everyone is crying out for tougher regulations and an end to unrestrained capitalism and the free market as we know it.

I have been attending these CSR conferences for years and the one big difference I noticed this year is the greater public skepticism reported by participants. Boston College Prof. Brad Googins, the favorite guru of the CSR crowd, opened his plenary presentation by citing the protest rally in front of Goldman Sachs on the day the bank announced a $500-million program to provide training scholarships and loans to small business over five years.

The day before, I watched with amusement an otherwise articulate spokeswoman of Goldman Sachs on Bloomberg TV as she announced the feel good program. But it was clear from the thrust of the questions that the Bloomberg anchor was not impressed and kept going back to the issue of outrageous bonuses and pay packages and the reckless risk taking that brought Wall Street to its knees not too long ago.

The New York Times editorialized: “It is hard to take seriously Goldman’s claim that the program was not motivated by its public relations problems. The money will be welcomed by the recipients, but if Goldman wants to make a meaningful contribution, it would have to be in the billions and aimed more directly at taxpayers.”

Financial Times columnist Gillian Tett was also unimpressed. “Yet, the grim fact remains that $500 million is still just three percent of the bank’s bonus pool – and even a non-banker can see that is a small sum. As hedging strategies go, this remains far from sure to work.” Another FT reporter wrote that Goldman is likely just complying with provisions of a law aimed at helping low income communities. Compliance to legal mandates is expected from responsible corporations. It is not CSR.

I had the exact same feeling a speaker from Intel, the chip maker, presented the corporation’s CSR program during the first day of last week’s conference. The package of programs was impressive. But I couldn’t get out of my mind the recent story in the financial press about Intel reaching an amicable settlement with AMD, its much smaller rival, over suits alleging unfair competitive practices of Intel.

Of course the legal settlement has the stipulation that in agreeing to pay AMD $1.25 billion, Intel admits no wrong doing. But Intel has also agreed to abide by a set of business practice provisions. What is an intelligent reader expected to conclude?

If only corporate responsibility is truly ingrained in its corporate DNA, Intel could have saved a billion dollars in settlement damages. It could have used that amount to expand their laudable corporate philanthropy and CSR programs. But no matter how good Intel CSR programs are, Intel is expected to follow laws on fair competitive behavior.

I had the same feeling when it was Coca Cola’s turn to present its CSR programs. Coca Cola’s contribution to CSR literature involves a supplementary nutrition program for Filipino school children. The program was developed with Filipino nutrition experts to address iron deficiency anemia, a serious malnutrition problem that diminishes the ability of the pupils to absorb learning in the classrooms and even stunts their physical development.

When Coca Cola Philippines introduced Nutrijuice it used its core competence on a CSR undertaking with expected positive results. Nutrijuice is basically an orange juice fortified with iron, zinc, lysine and vitamins A and C, and which has been scientifically proven to help reduce iron deficiency anemia. The fortified juice significantly increases the weight and height of the anemic and underweight children.

I would however withhold being totally impressed with this Coke effort because it smacks of tokenism. Why is Coke still limiting the benefits of Nutrijuice to a few thousand children in a few places in the country if the initial tests were so successful? Why deny the benefits of Nutrijuice to the rest of our school age children?

If Coke thinks it cannot afford the costs of introducing Nutrijuice to all public schools nationwide, it should do a full commercial launch and let the market take care of the rest. Or since DepEd seems to have money to spare for overpriced Nutri noodles and other such stuff, Coke can reach a bribe-free deal with DepEd to introduce Nutrijuice to the entire system at cost.

To me, CSR is not a detached form of philanthropy that a company can undertake to assuage the corporate conscience or to respond to its community critics. CSR must be part of the corporate business model, must be a part of the corporate DNA, must be the way it does business. Indeed, CSR could even save a business with an obsolete product or business model.

It should not be alien to Coca Cola that its core soft drink business is fast going the way of cancer causing cigarettes. Sugary soft drinks are linked to a worrisome rise in diabetes and obesity. Any meaningful CSR approach for Coke can actually save the company from certain market irrelevance.

And this is the flip side of the Nutrijuice story I pointed out in an open forum. Coke is negating the good thing they are doing with Nurtijuice when they continue to vigorously market the empty calories in their core soft drink brands to children specially in developing countries. For every kid who benefits from their Nutrijuice project, thousands of other kids spend what little money they have to buy Coke retailed in plastic bags which worsens their malnutrition problem.

If Coca Cola is sincere in its CSR effort, it would redirect its heavy advertising and marketing effort to promote their alternative product, Nutrijuice. But because the kids are still being brainwashed into desiring the sugary Coke, their Nutrijuice CSR effort becomes nothing more than a PR gesture not meant to make a permanent good in the world.

I realize there is just too much money that could still be made selling the old Coke formula (or Pepsi for that matter) for the company to have a strong economic incentive do a dramatic shift that would make them true to their CSR claims. But it is all just a matter of time. As the soft drinks companies see demand starting to shift to their more healthful products away from the old sugary formula, they will see that what is good for people is also good for its corporate self interest.

The fast food industry has seen that and it led McDonald’s among others to introduce more healthful meals. It won’t be long before governments will start to deal with the soft drinks industry the way it is now dealing with the tobacco industry. I wouldn’t be surprised if governments start requiring a warning on every bottle or can of Coke or Pepsi that drinking it is dangerous to one’s health. Even more likely is tax on soft drinks to partly cover the health costs of rising obesity and diabetes.

In a sense, CSR is providing companies a good reason to clean up their act and show government they are responsible enough and need not be subject to tougher regulations. Dato Timothy Ong of Brunei who delivered one of the plenary addresses in the second day warned that unless CSR efforts are integrated into business models and made an enterprise’s way of doing business, CSR will remain a mere public relations tool that makes no difference to the world.

Scary movie

Last Friday’s joke inspired a reader to send this one liner.

The scariest movie I ever saw was where aliens landed on earth, and they were all lawyers.

Boo Chanco’s e-mail address is [email protected]. This and some past columns can also be viewed at www.boochanco.com