Consumers expect corporate 'perfection'

Consumers expect corporate 'perfection'

One corporate responsibility expert says consumers are increasingly demanding even more social and environmental responsibility from more companies.

IN the wake of Monsanto's recent troubles, including a global protest against the company and the alleged detection of unapproved genetically modified wheat, one corporate responsibility expert said consumers are increasingly demanding even more social and environmental responsibility from more companies in the global marketplace.

In an editorial in Forbes, Impakt founder Paul Klein said Monsanto's own focus on corporate responsibility might actually be partly to blame for the recent backlash against the company.

"Monsanto's crisis illustrates a challenge that faces every large corporation in the world," Klein wrote. "It's not enough to be continually improving social and environmental performance; today, you are expected to be no less than perfect."

Klein, whose firm counsels companies on becoming "social purpose leaders," argued that Monsanto's commitment to corporate responsibility likely worked against the firm as its mission of "producing more while conserving more" might have seemed opportunistic to some consumers and investors.

It's no surprise that, in a social media-driven society where consumers are increasingly interested in where their food comes from and how it is produced, those consumers are also interested in the overall actions and activities of the companies behind their favorite brands and products.

One popular application for smartphones and tablets is "Buycott," an app that allows shoppers to simply scan barcodes to prevent "funding causes you oppose."

Developed by Los Angeles, Cal., programmer Ivan Pardo, the free app debuted last month for iPhone and Android mobile devices. By scanning any product's barcode, it traces the product's ownership to the top parent company.

Users can then join a variety of campaigns to boycott specific companies or business practices. Among those campaigns is one to "Demand GMO Labeling," which purports to prevent buying products made by any company that contributed to the political campaign against California's genetically modified organism (GMO) labeling initiative during the last election cycle.

After news of the app's debut broke online in late May, the company said it was signing up more than 10 new users per second. The popularity of the fledgling app and the dogged public focus on Monsanto illustrate a broad challenge for major companies in the social-oriented market.

 "The movement toward greater corporate social responsibility (CSR) has been matched by an increase in consumer advocacy, and it doesn't seem likely that the performance of business and the expectations of the public will ever align," he concluded.

Recent research appears to support his observation. A 2013 study by researchers at the University of Oslo published in the journal Environmental & Resource Economics found that the relationship between a firm's CSR reputation and employee wages was actually very negative: A firm with a strong CSR reputation (a score of one), on average, paid 38% lower wages than a firm with a poor CSR reputation (a score of zero).

The authors hypothesized that firms associated with CSR enjoyed a cost advantage in terms of lower wage payments compared to other firms, suggesting either that workers were willing to earn less money to work at a firm viewed as more responsible or that firms were investing savings from lower wages into various responsibility initiatives.

One potential example of such an investment was Starbucks Coffee's March announcement that it was expanding its $70 million "comprehensive ethnical sourcing program" by acquiring a 240-hectare farm in Costa Rica. The new farming research and development center will "help coffee farming communities around the world mitigate climate change impacts and support long-term crop stability," the company said.

Starbucks said it opened its first "farmer support center" in 2004 in San Jose, Costa Rica. Four additional centers — in Rwanda, Tanzania, Colombia and China — also provide local agronomists and quality efforts to help farmers produce Arabica coffee according to the terms of the company's ethnical sourcing program.

With the public's interest in social responsibility at an all-time high, such an investment might be called smart business.

Volume:85 Issue:23

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