Could Less Consumer Choice Be A Good Thing?

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.8

So you buy fair-trade or eco-friendly products, and you think that is a good thing, right? Think again. What if so-called ‘ethical consumers’ are the very ones standing between us a sustainable future?

I’m crazy, right? Maybe, but here is why I say it. By creating a premium-priced, niche market for ‘ethical consumption’, companies have been able to present a responsible front to the world, while leaving the vast majority of their products – which are, by implication, less ethical, less responsible, less sustainable – unquestioned and unchanged. At the same time, a small group of usually well-to-do Western consumers have been able to ease their conscience by feeling that they are making a positive difference.

Now let me be clear. I am not against organic or fair-trade or eco-friendly products per se. That wouldbe insane. Clearly, there are groups of producers – usually poor farmers in the Third World – that have benefited from these initiatives. What I am against is the voluntary nature and premium pricing of sustainable and responsible products. The combination of these two factors has ensured that, with one or two exceptions, these products have never gone to scale. As compared with the total and ongoing impacts of mainstream shopping habits, ethical consumption, laudable as it is, has remained marginal at best and totally insignificant at worst.

The UK’s Sustainable Consumption Roundtable says, ‘we know that there is a considerable gap – the so-called ‘value-action gap – between people’s attitudes, which are often pro-environmental, and their everyday behaviors’. We know the ‘value-action’ gap is partly explained by price and availability of alternatives, but there’s something else. Context matters as well.

To illustrate this, Timothy Devinney, author of The Myth of the Ethical Consumer, reports on a very interesting experiment he conducted while researching his book. The experiment took place at a coffee shop in central Sydney, Australia, over a period of several weeks. This coffee shop displayed a large and prominent sign indicating the products available, their prices and active specials. To this was added, quite obtrusively, another special, indicating: We have Fair Trade coffee! No extra charge. Just ask.

Here’s what he found. Unprompted, with only the sign to notify them of the availability of the ‘ethical’ alternative, less than 1% of customers bothered to ask for Fair Trade coffee, even though it was free. “When they prompted customers with a reminder that the ‘ethical’ alternative was available, the number of customers opting for the Fair Trade option rose to 30%. They then went a step further and took the customer’s privacy away: each time the clerk prompted a customer with the Fair Trade option, we ensured there was someone standing next to that person at the counter. In this situation, the number of ‘ethical consumers’ rose to 70%.”

This is a hugely important lesson: If we want to achieve scalability of sustainable and responsible products and services, we cannot leave it to the passive choices of customers. Context is critical, and a little bit of peer pressure goes a long way. But do we really want to resort to public embarrassment to achieve scalability?

The alternative is the trend towards ‘choice editing’. The idea of choice editing is likely to get free-market fundamentalists all in a tizz, but the fact is that manufacturers and retailers choice edit all the time – for example on quality, price, aesthetics and brand. The only difference is now we are asking them to add sustainability and responsibility to their list of criteria.

So who is doing choice editing? Well, outdoor clothing company Patagonia converted to 100% organic cotton in 1996, frozen foods retailer Iceland banned genetically modified food in 1997 and carpet manufacturer Interface has been using only renewable (green tariff) energy since 1998, so it’s not a new idea. The difference is now some of the big manufacturers and retailers are coming on board. For example, Unilever has committed to sourcing 100% of agricultural raw materials sustainably, Sainsbury’s only stocks Fairtrade bananas and Walmart has adopted an organic cotton and sustainable fish strategy.

Let’s look at Walmart in a little more detail to illustrate the point. Walmart set a target to purchase all of its wild-caught fresh and frozen fish for the U.S. market from Marine Stewardship Council (MSC)-certified fisheries by the end 2011. They are also working work with Global Aquaculture Alliance (GAA) and Aquaculture Certification Council (ACC) to certify that all foreign shrimp suppliers adhere to Best Aquaculture Practices standards in the U.S and by 2009, they were already halfway there.

Speaking to the Wall Street Journal, George Chamberlain, president of the Aquaculture Alliance puts the move in perspective: “The endorsement drew attention; Wal-Mart buys more shrimp than any other U.S. company, importing 20,000 tons annually – about 3.4% of U.S. shrimp imports. With Wal-Mart's nod, we went from trying to convince individual facilities to become certified to having long waiting lines.”

Walmart also made a commitment to phase out chemically-treated textile crops. By 2008, Wal-Mart was the largest buyer of organic cotton, with more than 10 million pounds purchased annually. They are also the world’s largest purchaser of conversion cotton – cotton grown without chemicals, but waiting to be certified as organic. Former CEO, Lee Scott, was under no illusions about the ripple effects when he made the strategic choice-editing decision: “Cotton farmers can now invest in organic farming because they have the certainty and stability of a major buyer. Through leadership and purchasing power, all of us can create new markets for sustainable products and services. We can drive innovation. We can build acceptance. All we need is the will to step out and make the difference.”

The question is, since not everyone has the size and economies of scale of Walmart, should we pin our hopes on voluntary choice editing? Or should we be lobbying for a different, and arguably more effective, form of choice editing, namely good, old-fashioned government regulation? The state regulates to ensure the health and safety of products, so why not for sustainability as well?

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

The Long Tail of CSR

I recently read The Long Tail, by Chris Anderson and it started me thinking: What is the Long Tail of CSR? 

The Long Tail – named after the extended tail of a statistical distribution curve - is the idea that selling less to more people is big business. It’s the business model that has spawned the most successful companies of the Web 2.0 age. The Long Tail questions the conventional wisdom that says success is about generating ‘blockbusters’ and ‘superstars’ – those rare few products and services that become runaway bestsellers.

Anderson sums up his message by saying that: 1) the tail of available variety is longer than we think; 2) it’s now within reach economically; and 3) all those niches, when aggregated, can make up a significant market. He also notes that this Long Tail revolution has been made possible by the digital age, which has dramatically reduced the costs of customised production and niche distribution.

There are three enablers of successful long tail businesses, according to Anderson: 1) democratising the tools of production (e.g. digi-cams, content editing software, blogging tools); 2) democratising the tools of distribution (e.g. Amazon, eBay, iTunes, Netflix); and 3) connecting supply and demand (e.g. Google, blogs, Rotten Tomatoes).

So how might this apply to CSR? To me, the Long Tail of CSR is all about extending the reach of CSR, and improving its ability to satisfy specific social and environmental needs. Let’s use Anderson’s enablers as a framework for thinking about this ...

Democratising the tools of CSR production

This is about breaking CSR silos and extending CSR beyond multinationals. At the early stages of CSR adoption, it is often confined to Public Relations, Corporate Affairs or Marketing departments. As CSR implementation matures, responsibility tends to migrate to specialised CSR departments of various descriptions (environment, health & safety, accountability, corporate citizenship, etc.). However, these versions of CSR are like the Hollywood model of blockbuster films. They suggest that CSR is about a few, high visibility programmes that are designed by CSR experts and delivered by big companies.

By contract, democratising CSR production would be mean firstly embedding CSR across the organisation – making it the responsibility of operations managers, financial managers, shop floor workers, basically everyone. This is only possible if CSR becomes part of the culture and incentive systems of an organisation. Secondly, CSR would need to be extended beyond the usual suspects (i.e. the high profile, branded multinationals) to the less visible B2Bs (business to business), to national (rather than multinational) organisations, to SMEs (small and medium sized enterprises), and down the supply chain (as WalMart is now most famously doing).

Democratising the tools of CSR distribution

To date, CSR has mainly be ‘distributed’ via a few select projects – typically philanthropic or charitable activities – in which the company offers its help to the ‘less fortunate masses’. Usually, the nature and scope of CSR activities is determined top-down and offered as a fairly undifferentiated ‘service’, e.g. Nike might decide to focus on sponsoring sports teams, events and celebrities and Coca-Cola might choose water as its key CSR issue. The most common delivery mechanisms are money (sponsorship and other forms of charity), or for the more advanced companies, adhering to generic CSR codes and standards.

By contrast, democratising the tools of CSR distribution should include allowing staff to participate in CSR delivery through volunteer programmes, and developing more geographically tailored and sector-specific CSR codes and standards, such as the Roundtable on Sustainable Palm Oil, or the Global Reporting Initiative guidelines for HIV/Aids reporting. Beyond this, embracing Bottom of the Pyramid (BOP) markets and supporting social entrepreneurs will allow the reach of CSR to be extended so that the needs of formerly unserved or underserved people can be met.

Connecting CSR Supply and Demand

Traditionally, CSR has been offered in the form of grants by multinational head-offices, who control the budget and set the criteria by which prospective philanthropic projects should be selected. For the more advanced companies, this has been extended to adherence by their operations to corporate codes of CSR practice and communicating this through CSR reports. Demand has typically come from community groups applying to corporate foundations for funding, or NGOs taking an activist approach to demanding improved CSR practices.

By contrast, connecting the Long Tail of CSR supply and demand will rely increasingly on cross-sector partnerships and multi-stakeholder groups. For example, Rio Tinto may work with the Word Conservation Union to identify biodiversity needs and satisfy them through appropriate CSR activities. Companies may also use extended stakeholder networks of community groups, social entrepreneurs and microcredit enterprises to better match their capacity to make a positive impact among those who can most benefit, as BP is doing with smokeless stoves in India and SC Johnson is doing with cleaning products in Kenya.

Conclusion

 To conclude, applying the Long Tail concept to CSR requires a different way of thinking about how CSR is generated, delivered and managed. It means making CSR a more inclusive and embedded process within the company, and a more diverse and far-reaching set of activities outside the company. It also means creating meaningful stakeholder partnerships to ensure that the right kinds of CSR benefit the right groups of people, where and when they need it.

The Long Tail in a nutshell, according to Anderson, is: “culture unfiltered by scarcity”. By extension, the Long Tail of CSR in a nutshell is: “responsibility liberated by collaboration”.

To download this think-piece as a pdf, go to: 

http://www.waynevisser.com/article_waynevisser_csr_longtail.pdf