by Naomi Troni, CEO, Havas Worldwide Southeast Asia
Big worries, ineffective politics, powerful corporations
Climate change, environmental destruction, food insecurity, obesity, terrorism, unemployment, mass migration, inadequate healthcare, debt, and pensions…There’s plenty to worry about for anyone in the world who steps outside his or her home or accesses any form of media.
Take your pick of candidates for most-pressing worry. Beyond the problems of its Fukushima nuclear disaster, Japan has a steeply declining population, made worse by young Japanese avoiding relationships. Already, adult diapers outsell baby diapers. Chinese citizens have to put up with massive environmental pollution; the air in Beijing registers as 40 times more toxic than the World Health Organization’s safe level, and choking smog virtually closed the city of Harbin in October. Southern Europe is struggling with deep austerity and youth unemployment, while the French are mired in gloom and depression. The many worries of US citizens include extreme weather events such as 2012’s Superstorm Sandy and the prospect of more extreme weather as cities get a lot hotter. All over the world demand for clean water is outstripping supplies.
This is just a small selection of the world’s worries. Yet just as the problems are starting to reach critical levels, people round the world are losing faith in the ability of politicians and governments to tackle them. With budget constraints, intense media scrutiny, and the prospect of being voted out of power in many countries, politicians’ scope for effective action is limited. Meanwhile, some of the world’s most dynamic businesses are going from strength to strength, prompting the question: Are Companies More Powerful Than Countries?
The shaky record of governments and the growing power of companies have prompted some to wonder whether corporations may be better able than governments to tackle some of those big problems. In fact, a Havas Worldwide survey of 10,219 consumers in 31 countries found 55 percent of mainstream consumers agreeing that when it comes to combatting climate change, corporations have a lot more power than do governments. Tellingly, agreement was a more emphatic 67 percent among opinion-leading Prosumers. In the same vein a solid majority of 61 percent of mainstream consumers (72 percent of Prosumers) think that, in general, businesses are better run than governments, and 56 percent (72 percent of Prosumers) agree that they generally trust the promises that brands make more than they trust the promises of politicians.
At first blush, it looks like corporations have the go-ahead to flex their muscles and show what they can do to help. A majority (57 percent) of mainstreamers and 72 percent of Prosumers think that corporations are going to play an increasingly vital role in addressing the world’s major problems.
Brief to business: Create meaningful solutions
It’s relatively easy for young companies with little corporate baggage to turn their hands to creating solutions that also benefit their image. First impressions count for a lot, and right from the start they can make “good guys” part of their brand. For example, through the private Google Foundation the search giant puts its name to tackling problems such as crisis response and dealing with epidemics. Shoe retailer TOMS, founded in 2006, has a whole array of CSR programs built into its business. Most recently, it has hit the headlines with its One-for-One program; for every pair of shoes customers buy, the company distributes the same number of shoes free to children in more than 50 countries.
It’s more complicated for big, established companies with complex supply and distribution chains built up before the benefits of CSR were widely understood.
Among industry insiders Swiss food and beverage giant Nestlé is recognized as a leader in sustainability and good citizenship. It has integrated CSR deeply into its business, focusing on nutrition, water, rural development, the environment, sourcing, and human rights. Yet the company is still the target of a consumer boycott that started in 1977 to protest its alleged unethical promotion of breast milk substitutes in developing countries. The boycott continues despite the company’s charter on infant formula, centered on the principle that breast feeding is best for babies.
Nike has been impressively committed to improving the CSR standards of its operations following a series of public relations nightmares in the 1990s. Among people who track CSR close up, Nike is now seen as a leader in social responsibility, with programs to improve worker conditions, reduce harmful components in its shoes, reuse factory waste, and recycle plastics into sports apparel. Its Manufacturing Index evaluates every contract factory’s total performance, tracking labor and environmental performance alongside traditional supply chain measures of quality, cost, and on-time delivery. Yet Nike is still dogged by criticism of its labor practices.
As America’s largest corporation, retailer Walmart focuses its responsibility efforts in four key areas: social, local, environmental, and company. Among its many initiatives, renewable energy currently accounts for 21 percent of its buildings’ electricity usage, and the company aims to make that 100 percent by 2020. Yet Walmart’s sheer market dominance makes it vulnerable to claims that it squeezes out small businesses and that its low-price pledge has negative consequences for suppliers and workers.
The upside potential for business
We live in an age of skepticism in which bad news travels fast. People are leery of politicians but, as the examples of Nestlé, Nike, and Walmart show, they don’t entirely trust corporations either—especially not giant multinationals. Most mainstreamers and even more Prosumers (60 percent vs. 67 percent) in our research think that large companies have too much political influence; 59 percent of mainstreamers and 66 percent of Prosumers are suspicious of a lot of companies’ environmental claims; and a substantial 70 percent of mainstreamers and 83 percent of Prosumers would like government to protect people better from unethical businesses.
In short, consumers are ambivalent about business. They have a high opinion of the power of corporations to make things happen, but they fear that corporations may abuse that power.
Fortunately for corporations, they are now a lot better placed than politicians to earn people’s trust by doing good work. Many can access huge cash piles, whereas cash-strapped governments are caught between cutting services and raising taxes. Corporations don’t face dogged opposition parties maneuvering to oust them from power, nor are they subject to constant partisan media scrutiny holding them to account for everything they say and do. Their hold on power doesn’t depend on pleasing voters and pressure groups. Corporations just have to show their shareholders that it makes good strategic business sense to create solutions to some of the issues that consumers care about.
The first iteration of this approach to business was dubbed CSR, short for corporate social responsibility. More recently, business gurus Michael Porter and Mark Kramer have urged businesses to go beyond CSR and embrace a more proactive approach they call CSV or creating shared value. Either way, it’s all about corporations consistently proving through their actions that they can be trusted to look after more than just their bottom lines.
