2012 wasn’t a good year for corporate responsibility.
As society continued to reel from the effects of the global recession, created by unprecedented corporate corruption, greed and willful ineptitude in the financial sector, we were met with a large, unerring middle finger from most of the corporate world.
In April, WALMART, the world’s third largest public corporation, was found to be caught up in a $24m corruption scandal, paying out to obtain construction permits in Mexico and hushing up the investigation.
In June 2012, the LIBOR scandal broke, emerging from within the same sector that crippled the world’s economies and representing a multi-layered conspiracy to defraud the public and has been described as one of the corporate crimes of the century.
Then, the true scale of the corporate middle finger surprised us all with revelations of huge tax avoidance. It turns out companies like Starbucks and Amazon, have been contributing next to nothing in tax – gaining a massive advantage over the independent coffee shops and book retailers that they put out of business every year.
Its been difficult to estimate the real cost of tax avoidance, but the TUC’s The Missing Billions report puts the annual figure lost from UK tax receipts at £25 billion (or roughly 147% of average annual cuts that the coalition is trying to make each year for next 7 years), half of which is made up of avoidance by the 700 biggest companies and half from individuals. HMRC puts the figure at more like £32 billion.
It all ended up feeling a bit surreal. Starbucks promised to pay £10m a year for the next two years or, more specifically, exactly the amount they felt would make the story go away and much, much less than they would if they totted up actual profits made in the UK and paid standard corporation tax on that figure. Boris Johnson came out in their defence. Very few others did.
Tax avoidance is the perfect example of the corporate middle finger, because its not against the law, the public don’t understand it, the media don’t really write about it and shareholders celebrate it.
So its the ultimate litmus test for two things: first, whether companies actually give a crap about the societies they do business in and, secondly, whether the government actually gives a crap about companies giving a crap. Given how easy it was, in November 2012, for the public accounts committee to make Google, Amazon and Facebook look like they’d made it all up on the back of a fag packet, the failure of the latter test is extraordinarily worrying.
I don’t go in for anti-capitalist ranting. Our work is all about the realities of a modern consumer society and how the powerful behavioural influences of products and services can be harnessed for social change. But if you take one step back from the last few years of corporate history, you can’t help but feel that something properly bonkers is going on.
One place that we look when we take this step back is corporate responsibility policy. At the heart of accepted CR thinking is a truism that these activities should answer to the same criteria as everything in the business.
This approach inevitably makes corporate responsibility pretty meaningless. If social action has to have “business benefits” then it has to be limited to whatever feeds those benefits – good PR, cause related sales spikes, avoiding bad PR, employee engagement, more good PR etc.
Low level social action by companies meets these criteria, so out roll plenty of mediocre environmental commitments (that are PRed to death) and youth opportunities programmes (that are PRed to death).
But really meaningful social impact by companies is not lead by these criteria. Genuine social change is about making less money. And not just in the form of one-off (tax deductible) donations to charity, but making less money every day – deliberately, rigorously and passionately. Its about building in higher costs – to employing people, to the supply chain, to buildings and facilities – and its about substantial investment in R&D that seeks a real understanding of the issues and builds social impact right into what the business does every day.
And where does the appetite for this come from if its not all about the business benefits?
After everything we’ve ever done with companies, we feel that it can only comes from one place: corporate leaders that care deeply about the social impact of their business, that are fascinated by it and that see it as the most important challenge of all.
We go to a lot of meetings and conferences where CR people discuss how a certain social programme can generate good PR, increase customer retention and maintain a happy workforce. I was told recently by someone working for a big ad agency that “good is so hot right now”. Within this bizarre world, where social change sits alongside experiential pop-ups and cross channel optimisation as some kind of marketing trend, it feels oddly naive to be talking about genuine, heartfelt commitments to social change.
But maybe this never-never land of pretending to care and actually not caring at all is starting to crumble? Maybe 2013 is the year of more meaningful CR.
In 2013, we’re going to work with less companies that talk about business benefits and more that talk about the social change that they care deeply about and want to put at the heart of their business. Because these companies really can and do make a difference to the world.