Businesses in less developed economies prefer cutting a cheque for a cause rather than adopting greener practices in their quest to be perceived as good corporate citizens.
In advanced economies, consumers are demanding corporate social responsibility (CSR) to be a must, not an option. Shoppers in these developed markets are of the opinion that firms bear the responsibility to improve society and the environment. Some even count on brands to help them be more environment-friendly in their own daily lives.
Meanwhile, in less developed markets, governments often play a larger role than consumers in pushing companies to be responsible corporate citizens. Some countries, for instance, are using CSR as a means to address rising social problems, such as environmental pollution.
The problem with this model, however, is that such pushed firms tend to engage more in corporate philanthropy, and less in environmentally friendly practices, compared to those who do it on their own volition.
As such, coerced businesses tend to maintain good CSR optics while mostly avoiding the heavier costs and constraints associated with the more practical forms of green CSR.
They just seek to meet government’s CSR demands, mostly bare minimum.
For them, engaging in philanthropy—cutting a cheque—is a convenient one-off deal. It creates no need to change production processes, nor to retrain staff or buy new (greener) equipment meant to reduce water pollution, gas emissions or noise pollution.
In addition, as philanthropy is easy to measure, enterprises may simply feel that writing a cheque is easier to display than more environment-friendly practices, which may be hidden as internal processes. Studies indicate that firms that feel compelled by the State machinery display this kind of convenient CSR more than the average.
To this end, when government agencies issue CSR guidelines, they should be very specific in terms of the behaviours they wish to see.
So long as government expectations remain general, firms may find an easy way out. They may conveniently ignore the real purpose of the guidelines or postpone taking critical actions.
Essentially, pushed companies are less incentivised to do good environmental-wise than to impress government officials. This, therefore, warrants stronger monitoring of the firms’ actions to make sure they are not merely symbolic and ceremonial.
Multinationals operating in less developed economies must keep in mind the fact that local companies most often participate in CSR chiefly to please government officials and derive benefits from such connections. As such, they should make sure to let the local government know about their sustainable CSR efforts. As far as their supply chain is concerned, they should do proper checks to ascertain the sincerity and practical application of their local partners’ green CSR practices.
There’s always a high temptation to engage in green washing campaigns. This is where firms mislead the public into believing that their operations are eco-sustainable just to score brownie points with their customers.
With mounting pressure on businesses to embed sustainable practices in their value chains for the greater good of people and planet, communicating such measures has taken a central place in promoting brands as responsible. Whether it’s through product labels, advertisements, company websites, public relations campaigns and sustainability reports, brands want to look good in their clients’ eyes.
Firms, however, often get tempted to paint a more glamorous picture than the reality on the ground, making such a move a purely public relations exercise, otherwise known as green-washing.
This corporate skullduggery should be desisted at all costs, since sooner or later the truth would catch up with them. It’s only by being transparent and honest that businesses can be mindful of the impact their operations have on the society and allow for incremental improvement.
The biggest takeaway should the fact that it’s easy to be misled by the halo effect, which is when one salient, positive attribute influences the overall impression we have of something. Firms that act righteously in one aspect (e.g. generous philanthropists) may have looser standards in other, more practical aspects.
For instance, some companies may offer flashy employee wellness programmes, all the while imposing gruelling working hours or scrimping on employee training.
As long as CSR is defined in broad terms, firms will be able to focus on the more visible aspects of it, such as corporate philanthropy. But good corporate citizenship should pertain to all that they do. It should be reflected in the corporate governance practices, the quality of their products and even their impact on the fabric of society as a whole.
This article was originally published by the Business Daily