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Properly integrated and fully funded corporate social responsibility programs are becoming a requirement of doing business and, even in tough times, can be utilized to gain competitive advantages.
This story first appeared in the April 28, 2009 issue of WWD. Subscribe Today.
A panel of CSR executives from Phillips-Van Heusen Corp., Avon Products Inc. and L.L. Bean Inc. acknowledged that investing in programs designed to improve labor and environmental standards presents a challenge in an environment where orders are being slashed and cost cutting is a priority. However, consumers increasingly expect companies to be actively engaged in these issues, while revealing more about the processes involved in bringing their goods to store shelves.
“Corporate responsibility should not be an island off the coast of your business,” said Susan Arnot Heaney, director of corporate responsibility, public relations and communications at Avon. “It is how you do your business, and people in the area of supply chain and sourcing are really on the front lines.”
It’s a tall task. Avon’s operations, for instance, span 16,000 suppliers in 50 countries, said Heaney. She warned that focusing on one or two issues, like human rights and working conditions, rather than the entire scope of issues under the social responsibility umbrella leaves companies vulnerable.
“Consumers, advocates, activists, NGOs [nongovernment organizations], the media, legislators — they are all really paying attention to this,” said Heaney. “It’s no longer just nice to do.”
Companies are likely to face mounting pressure to disclose more of the where, when and how of their manufacturing process.
“ ‘Transparency’ has become a buzzword,” said Laura Commike Gitman, director of advisory services with Business for Social Responsibility. “There’s a lot of people talking about the need for more transparency, but they’re not really sure what they’re actually asking you to be transparent about. I think we’re going to see a lot of further explanation and clarification of that.”
Withering economic conditions have slowed the implementation of some programs, but has also exposed companies that had approached CSR as a marketing tool rather than a true business initiative.
Mike Sheehy, senior manager of global monitoring at L.L. Bean, believes smaller CSR programs have been jeopardized by economic conditions, and trying to get factory owners to embrace new programs when they’re losing business is difficult.
“It’s a really tough environment to come talk to them after they’ve just been through a price negotiation with our sourcing people or told by our inventory management folks that they’re only going to get 30 percent of the order they thought they were going to get,” said Sheehy.
Collaboration among brands has also slowed as companies train their focus on their own operations, according to Sheehy, who added a number of joint CSR programs are losing budgets and participation. Gitman believes this is the opposite of what should be happening in a difficult environment.
“There’s no way that you’re going to be able to solve some of these huge societal issues on your own as an individual company,” said Gitman.
She also touched on the negative perceptions the public associates with corporate culture of almost any kind at the moment, due to the Wall Street and banking meltdowns.
“There’s been a general loss of trust in the corporate sector — regardless of what industry you’re in,” she said. “The only way to gain back that trust is to be more transparent around what you’re doing.”
Taking it a step further, Avon’s Heaney said, “There is no trust in corporations. Any organization with ‘Inc.’ at the end of it loses trust with the consumer by the very nature of its name.”
Heaney believes companies must find ways to associate themselves with something more positive, holding up Ben & Jerry’s ice cream as a brand that generates that kind of “instant-emotion reaction” from consumers.
Marcela Manubens, senior vice president of global human rights and social responsibility for PVH and the panel’s moderator, acknowledged the lack of a universal compliance program among brands and retailers has overloaded factories.
“There has been a very inflexible, independent view of these compliance programs,” said Manubens. “Many companies believed they were doing the right thing and there was a lack of trust in the programs that someone else was doing.”
Manubens encouraged focusing on providing factories with the tools to achieve compliance and to sustain proper practices.
“We need to prove the business case to them,” she said, which will require shifting the focus from auditing to coaching and facilitating. “It’s not an easy process.”
Gitman said companies that haven’t made earnest efforts to incorporate CSR practices into their operations will fail to realize benefits that could ensure the survival of their companies in down times.
“Regardless of where you sit in the supply chain, when we come out on the other side of this, you’re going to see organizations that are able to achieve a more competitive advantage based on their investments [in CSR],” said Gitman