Manuel Escudero says:
Dear colleagues,
It is a pleasure to draw your attention to the article by Michael Skapinker on April 21 in the Financial Times on why Corporate Responsibility is a survivor in the current economic and financial crisis.
It is a pleasure because the article clearly manifests that corporate citizenship and sustainability, the values which underpin our efforts to update business education through PRME, will become even a more central concern for companies in the aftermath of the crisis.
Just in case you have not seen the article I copy it below.
Why corporate responsibility is a survivor
By Michael Skapinker
829 words
21 April 2009
Financial Times
Asia Ed1
11
English
(c) 2009 The Financial Times Limited. All rights reserved
It was an easy prediction to make: that the recession would end talk of corporate social responsibility. Faced with the fear, or reality, of losing their jobs or homes, consumers would rush past the Fairtrade shelves and pick up something the family could afford. Companies, meanwhile, would concentrate on saving themselves rather than the planet.
That easy prediction has turned out to be wrong. Mars, the world’s biggest confectionery company, has announced that its entire cocoa supply will be “produced in a sustainable manner” by 2020. Mars will work largely with the Rainforest Alliance , which encourages farmers to preserve their environment.
Mars’s move follows the announcement last month by Cadbury, the UK confectionery group, that all the cocoa in Dairy Milk, Britain’s biggest-selling chocolate, would be certified by Fairtrade , the organisation that works to ensure a minimum price for farmers.
The two chocolate makers were preceded by Wal-Mart , the world’s biggest retailer, which told a meeting of 1,000 Chinese suppliers last year that it would hold them to strict environmental and social standards, the downturn notwithstanding.
Why are these companies acting in a way few expected? First, there are substantial business reasons. When Mars and Cadbury talk about their cocoa supplies being sustainable, they mean it. Chocolate manufacturers are worried about how much cocoa will be available a decade from now.
Worldwide cocoa production fell in 2008 for the fourth successive year. Cadbury says it is worried about how few cocoa farmers’ children intend to go into the business. It is hoping the investment in farms that Fairtrade encourages will persuade them cocoa farming is a worthwhile occupation.
Wal-Mart also has commercial reasons for its stance. The company has been encouraging companies to cut down on packaging. This enables it to fit more goods into each delivery truck, not only reducing its emissions, but also cutting the amount it spends on petrol. Its insistence that manufacturers produce concentrated laundry detergent has allowed it to save on both packaging and shelf space. Cost-cutting is vital to beating the downturn and if companies can boost their green credentials at the same time, why not?
But the companies go further. Not only do their announcements make business sense, they say; consumers, even now, insist on them. Fiona Dawson, Mars UK ’s managing director, says customers expect the company to “do the right thing”, adding that “nobody has to buy confectionery”.
There are many things that consumers do not have to buy, and plenty they can buy more cheaply. As the Financial Times has reported , US families earning more than $100,000 a year are using more discount coupons.
Yet there is little sign of committed consumers abandoning Fairtrade products. A recent report by Mintel , the research organisation, says: “Although a third of shoppers have cut down on the number of premium foods they buy, only one in 10 has cut back on ethical produce.” Justin King, chief executive of J Sainsbury , the UK retailer, said in February that its Fairtrade sales were holding up well.
However, consumer attitudes are complex. Mike Barry, head of corporate social responsibility at rival retailer Marks and Spencer , says consumers are happy to continue to buy what they see as ethically sourced goods – provided they do not have to pay more. M & S ’s research says the number of “green crusaders” – those who buy ethical goods, no matter what, is about 9 per cent of the total, slightly down from the proportion at the start of the recession.
About a fifth of consumers are uninterested in such issues and about a third cannot see what difference their purchasing makes. But the biggest group, about 40 per cent, are those who are prepared to buy ethical goods if companies make it easy, which generally means not making it expensive.
As Fairtrade involves paying producers more, how can retailers keep the prices competitive? Mr Barry says that when, in 2007, M & S laid out its “Plan A” on sustainable sourcing and fair trading, it expected the changes to cost the company £200m ($290m, €225m) over five years. But because, like Wal-Mart , M & S is saving money through its initiatives, it is finding its changes are cost-neutral.
This is the key to companies’ stubborn adherence to corporate social responsibility. They have worked out how to make it pay. Many of their initiatives help to cut costs or sustain supplies. They allow customers to continue to regard themselves as ethical during difficult times. They also help the companies to improve their public reputations at a time when business is widely held to be responsible for the downturn.
A pre-recession argument for corporate responsibility was that it gave companies a moral “licence to operate”. Some sceptics regarded this as a bit of a joke. Few do now.
michael.skapinker@ft.com
