A gallant company will encourage car sharing for commuters, pour
FairTrade coffee for staff, print its diversity stats on recycled
paper and switch off the lights after hours. It might even brag
about these worthy deeds in a press release – after all, being a
responsible corporate citizen has become good for business. What is
sometimes overlooked is that being a good corporate citizen is
about more than shrinking your carbon footprint: it is about all
aspects of business.
What good is an ethical supply chain if you cheat customers in
your small print? Blue chip companies detail eco-friendly water
conservation and battery recycling policies on their websites; yet
some of those same companies publish policies on how they deal with
customers that verge on hostile.
One manufacturer says its green policies have diverted more than
half of its waste away from landfills. Yet its terms of sale say
that its products come without a guarantee of “fitness for any
particular purpose”. The company adds that in no event shall it “be
liable for any damages whatsoever.” Such side-stepping of basic
customer expectations is surely bad for business, particularly in a
Web 2.0 world where aggrieved individuals so easily become an angry
mob.
Until recently, a mobile operator made consumers agree to all
terms in all documents produced by the company, including those it
will conceive in the future – i.e. you sign up to the unknown. On
the other hand, the company is a big donor to wildlife conservation
groups.
It is not just customers that suffer neglect. A retailer that
pours millions into child welfare is also criticised frequently for
low pay and bad conditions, and predatory pricing that squeezes
both suppliers and local competition to the point of economic
suffocation.
These companies may not be acting illegally, even if some of the
contracts might not stand up in court. But that could change. A
recent survey says that 82% of Americans want Congress to ensure
companies meet pressing social issues, according to research by
consultants Fleishman-Hillard. They also found a substantial
majority saying that companies do not act responsibly.
Lawmakers have already intervened in Europe. Working time and
anti-discrimination laws have been followed by new environmental
obligations. Right now the UK Government is consulting on the
Unfair Commercial Practices Directive, a law that closes perceived
loopholes in today’s consumer protection and bans sharp marketing
practices. What’s unusual about this law – which may indicate a
new, cover-all-bases approach – is that a huge list of specific
examples is written into the legislation. Thus, it becomes a crime
to advertise a bargain product when only a few are available, in
the hope of persuading customers to buy an alternative, more
expensive product. It becomes a crime to lie about geographic
origin. The display of a kite mark on false pretences is also a new
offence, as are about 30 other practices that, until now, were
merely unscrupulous.
The trend surely will continue. Lawmakers will continue to
codify ethical practice and, in the meantime, corporate
responsibility will continue to evolve beyond an exercise in public
relations.
A company will struggle to become a genuinely good corporate
citizen if the effort is steered by a corporate affairs or
marketing department. That is a path on which it surely will
stumble on hypocrisy and trail behind compliance. Instead, a board
must take the lead, to make corporate responsibility an integral
part of the company’s culture. Social and regulatory pressures are
converging. The smart organisation will foresee their intersection
and get there first.
This opinion piece has been reproduced from
Rob McCallough's Rough Diamond column in
Issue 16 of OUT-LAW
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