3 reasons why ethics makes good commercial sense
Over recent years a great deal has been written about the importance of Corporate Social Responsibility. Many businesses have invested significant sums of money in CSR.
More recently, thanks to Michael Porter, there has been a lot written and said about Corporate Shared Value. A number of businesses have invested significantly in CSV.
CSR is most often defined as – ‘the way business takes into account the financial, environmental and social impacts of its decisions’ while CSV is defined as – ‘enhancing the profitability of a business while simultaneously advancing the economic and social conditions in the community’
In theory both are important and both contribute to the business and the community. In theory both are about behaving ethically. In practise however, both tend to be about -‘implementing strategies that enhance the image of businesses’. In practise both CSR and CSV strategies do not directly address the ethical practises of the business – and indeed may well be in place to mitigate damage caused by behaviour the is being questioned by the community.
Here are three high profile examples of this:
- Coca Cola sponsoring children’s sport while filling those same children with dangerous amounts of sugar.
- Mc Donald’s sponsoring community health initiatives while selling foods with little if any health value.
- Nike sponsoring sport around the globe while having shoes made cheaply in countries that pay workers at rates below a living wage.
I would argue that in many cases strategies designed to paper over behaviour that might be deemed unethical in the broader community by indulging in CSR activities has been very successful.
I would also argue however that:
- Such strategies will become less effective in the future.
- Focusing on ethics can be more cost effective.
- There is real marketing potential in focusing on ethics.
Strategies designed to distract attention away from unethical behaviour will become less effective in the future largely due to:
- Increasing consumer awareness in part driven by social media.
- Increasing consumer sophistication in part driven by traditional media.
- Increased consumer social consciousness driven by all media.
Social media has increased awareness of the behaviour of high profile businesses. Traditional media, with programmes like THE CHECKOUT and publications like CHOICE are highlighting issues and alternatives. All media are helping to make consumers more conscious of a range of issues including obesity, climate change, child health and the effects of savage labour practises.
Put simply, it is becoming more difficult to paper over poor ethical practises with CSR activities.
The fact is making the environment, economy and community priorities and reflecting this in ethical practises can also be cheaper that investing vast amounts in CSR. Consider:
- The savings that can be made from reducing waste, as demonstrated by INTERFLOOR CARPETS.
- The efficiencies that can flow from working with indigenous groups and employing local indigenous workers as demonstrated by BHP and some other miners in Australia.
- The improved sales that can be achieved from setting aside the hard sell and replacing it with ‘delighting’ the customer as demonstrated by APPLE.
Put simply, it is becoming more economic to focus on ethical practises ahead of investing in CSR.
I am not arguing against CSR or CSV. They are both important and need to be encouraged. I am simply arguing that ethics practises are more important. I am however arguing that focusing on ethical practises will become more important than CSR.
The marketing potential of focusing on ethics is addressed in the next article in this series.
- Ethics can be more important than CSR or CSV.
- Ethical practises can save time and money.
- Poor ethical behaviour will become more difficult to get away with.
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