Originally published by The Washington Examiner on March 22, 2017.
Visit the website of any large corporation and the majority of its message will be how it gives back to communities or helps the environment. These companies not only provide you with an essential product, but you are assured that you are doing your part because you purchased a good or service that will make a difference.
But what if, under the sheet of corporate responsibility was a company’s dirty laundry and wrong doing? What if a company was writing UN Sustainable Development Goals while at the same time denying for ten years that it had dumped toxic waste outside their plant in India? Or what about a company that boasts about its local produce but at the same time is responsible for a variety of food poisoning cases, including E. coli?
Corporate social responsibility is no longer what is best for the company – it is a CEO unilaterally deciding what to do with both the consumer’s and shareholder’s money.
While giving back to the community and corporate responsibility are important, consumers should also be cautious and ask questions to ensure that CEO’s are held accountable if they are hiding behind a wall of philanthropy and feel good awards. According to a study done by researchers at the University of California at Riverside, and the London School of Economics, it was found that “… prior corporate social responsibility was related to subsequent corporate social irresponsibility. More specifically for roughly every five positive actions that a firm takes, this gives them license to commit one negative action.”
Let’s take Unilever for example. This company makes and sells products that are used by two billion people on any given day. If you go to the Unilever website, you will be greeted with “A Bright Future: A better business” followed by “Why we’re unstereotyping to unleash women’s potential.” While that all sounds nice, most people would be surprised to hear that In The Real Price of a Cup of Tea, an exposé by the Irish Times, investigators found that female Unilever employees in Kenya, who were being paid about €3/day, “were having to use about a quarter of that to bribe supervisor” not to sexually harass them.
The CEO of Unilever, Paul Polman, has been called a leader in sustainability. So much so that despite grumblings from shareholders, both he and the press repeatedly reaffirm his business acumen. Polman seems to define sustainability quite loosely: In India, for example, he’s called for a near tripling of royalty fees to be paid by local partners in what is still a poor economy, cost savings which are then funneled back through developed world headquarters in the form of poverty alleviation programs.
Unfortunately for Mr. Polman, the clock is ticking on his eight-year tenure as shareholders grow impatient with his vanity projects. Amid rising criticism in the wake of the failed Kraft Heinz takeover bid and charges of collusion against its South Africa business, the company is undergoing a wide-ranging strategic review that concludes at the end of March.
Another company that has fallen into this trap is Chipotle. Their website is filled with slogans like “Food with Integrity,” “Responsibly Raising the Bar,” and so forth. Who doesn’t love the idea of fresh fast food coming from local farms? But like many things, it was too good to be true. Scandals of E.coli and other food poisoning cases came out, and it became evident that safety and inspection were second to making the company appear to be a do-gooder corporate citizen. CEO Steve Ells, who is now desperate to get consumer’s trust back, promises that Chipotle will now “be the safest place to eat.” As investors worry about the future of the company, there is a lesson to be learned about what happens when corporate social responsibility is valued above the quality and integrity of a product.
Last but not least, we have Honest Company. Co-founded by Jessica Alba, this company vows to remove toxins so that mothers can feel safe using their products on small children. Just last year, The Wall Street Journal reported that the company’s laundry detergent contained an ingredient they had sworn to avoid. Shortly after, the company changed its wording on its website, and in 2017, recalled its organic baby powder due to possible contamination. Sustainability evangelism and supply chains can’t always co-exist in the way some CEOs may wish for.
Consumers must hold CEO’s accountable. We cannot pat these people on the back because their sustainability mantras are heartwarming and their charity checks are populated with zeroes. If they set the bar high for themselves, they should truly be held to a higher standard.