Categories: Credit Crunch / Crisis management / CSR reality check

6 February 2009

4 comments

The sustainability which bothers business and PRs

The Financial Times’ management columnist Stefan Stern and others have been assessing the point and meaning of this year’s Davos. Much of it comes to the need for capitalism to express itself differently.

The exodus of Davos Man has quieted the skies above my home office on Zurich lake. I now have the luxury of rummaging in peace through FT.com’s analysis of the World Economic Forum held up the road and over a few hills. Perhaps most importantly, there’s a challenging The hot air of CSR, by Stefan Stern, the FT’s management writer.

Before exploring what Stern says, I note that the FT boiled down the conclusion of this year’s Davos meeting to a few words. It says that the “economic crisis has destroyed many rules the world has been using – the only certainty now is pain”.

Stern begins his report by explaining how the “rediscovered responsibility” at Davos was really an acceptance that firms need to make a profit to stay in business. He then recounts a recent House of Lords closed door meeting at which he found serious PR CSR advocates in a reflective mood:

One executive declared: “I can’t stand writing CSR reports. I hate it. It’s so boring.” Another – in fact our co-host, Michael Littlechild, the head of the advisory business Good Corporation – conceded that, for many business people, CSR was just a case of BDF: “babies, dolphins and forests”.

He highlights that:

There is a mismatch, to put it mildly, between the politically correct rhetoric of a chastened global elite and the reality of what managers have to do every day of the week. It is easy to get confused by these mixed messages. Is it time to embrace the new morality, or to drive the business even harder in search of every last bit of revenue? What should this new era of responsibility look like?

Stern’s right to suggest that mixed messages cause confusion. He’s also right not to back Richard Edelman’s Davos call to put on a par with maximising profits other ideals such as “public engagement”, “corporate mutual social responsibility” or “private-sector diplomacy”. The last by the way is corporate activism on global concerns such as climate change. Elsewhere, Jeff Jarvis usefully describes this activity by its right name, PR.

The PR agencies’ clumsy new vocabulary smacks of old wine in new bottles. One gets the feeling the profession is merely reinforcing boom-time communication practices. One wonders why leading agencies are not properly considering offering their clients a refreshed strategy.

Contrariwise, Stern gets straight to the heart of the issue. He questions whether there really always is a straight-line connection between CSR, reputation and the bottom line. He says:

Customers may decry company X in a focus group or opinion poll. But where do they do their shopping?

He cites as a case study the UK discount fashion store Primark. He describes how its name has been dragged through the dirt in the past year, after worrying aspects of its supply chain were uncovered. Stern points out that its sales figures have risen by 18 per cent (aided by new store openings) in the 16 weeks to January 3, when almost every other UK clothes retailer was struggling.

Of course this does not prove that reputations do not matter. Neither does it mean that Edelman is wrong to advise firms to engage, discuss and find points of mutual self interest with stakeholders.

Stern’s view does, however, add substance to the argument put by Sir Terry Leahy the chief executive of the UK’s leading retailer, Tesco, that do-gooders often do more harm than good.

Stern explains how if Tesco wants to continue competing on price, it will keep up the pressure on its suppliers. He then asks whether this constitutes “corporate social irresponsibility”? He concludes: hardly. Instead, he says, the truly responsible thing to do is to run a good business competently. He concludes:

As the wise CSR practitioners know, it is how you do business that counts. All the rest is just hot air.

In my view, the buzzword that will replace CSR will be sustainability, and business sustainability will be at the front of all the jostling sustainabilities which campaigners and others will suggest. Profit and business models will be at its core. Shareholders will ensure that their interests are put first. They will demand more transparency and accountability from management. They will be more active and less trusting. Traditional values and professional ethics will become highly valued virtues and the true measure of corporate responsibility.

Wider issues such as environmental risk will still be on the agenda to an extent depending on the specific nature of individual risk. Barclays has already acknowledged that point. Others will follow. Watch this space for reports on the new language and development of CSR and corporate responsibility.

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4 responses to “The sustainability which bothers business and PRs”

  1. […] Most companies express a natural desire to be in the business press, but for those companies that have shifted their full attention to getting a shout-out on TechCrunch, let me present a brief example of why it’s so important for B2B corporations to continue investing time (and $ in their agency) in cultivating relationships with key business press targets that may not provide immediate RESULTS, but could bear major fruit down the road. BTW – In my opinion, “results” is today’s PR buzzword, which differs from those who attended Davos. […]

  2. Judy Hammond says:

    Agree. Thanks.

  3. Richard Bailey says:

    I hope you’re enjoying the irony of Stefan Stern’s new appointment.

    As director of strategy at Edelman. http://www.guardian.co.uk/media/2010/may/28/stefan-stern-joins-edleman-pr