CORPORATE SOCIAL RESPONSIBILITY

Broadly speaking, proponents of CSR have used four arguments to make their case: moral obligation, sustainability, license to operate, and reputation. The moral appeal—arguing that companies have a duty to be good citizens and to *do the right thing” — is prominent in the goal of Business for Social Responsibility, the leading nonprofit CSR business association in the United States. It asks that its members “achieve commercial success in ways that honor ethical values and respect people, communities, and the natural environment.” Sustainability emphasizes environmental and community stewardship.

A. An excellent definition was developed in the 1980s by Norwegian Prime Minister Gro Harlem Brundtland and used by the World Business Council for Sustainable Devebpment “Meeting the needs of the present without compromising the ability of future generations to meet their own needs.” The notion of license to operate derives from the fact that every company needs tacit or explicit permission from governments, communities, and numerous other stakeholders to do business. Finally, reputation is used by many companies to justify CSR initiatives on the grounds that they will improve a company’s image, strengthen its brand, enliven morale, and even raise the value of its stock.

B. To advance CSR, we must root it in a broad understanding of the interrelationship between a corporation and society while at the same time anchoring it in the strategies and activities of specific companies. To say broadly that business and society need each other might seem like a cliché, but it is also the basic truth that will pull companies out of the muddle that their current corporate-responsibility thinking has created Successful corporations need a healthy society. Education, health care, and equal opportunity are essential to a productive workforce. Safe products and working conditions not only attract customers but lower the internal costs of accidents. Efficient utilization of land, water, energy, and other natural resources makes business more productive. Good government, the rub of law, and property rights are essential for efficiency and innovation. Strong regulatory standards protect both consumers and competitive companies from exploitation. Ultimately, a healthy society creates expanding demand for business, as more human needs are met and aspirations grow. Any business that pursues its ends at the expense of the society in which it operates will find its success to be illusory and ultimately temporary. At the same time, a healthy society needs successful companies. No social program can rival the business sector when it comes to creating the jobs, wealth, and innovation that improve standards of living and social conditions over time.

C. A company’s impact on society also changes over time, as social standards evolve and science progresses. Asbestos, now understood as a serious health risk, was thought to be safe in the early 1900s, given the scientific knowledge then available. Evidence of its risks gradually mounted for more than 50 years before any company was held liable for the harms it can cause. Many firms that failed to anticipate the consequences of this evolving body of research have been bankrupted by the results. No longer can companies be content to monitor only the obvious social impacts of today. Without a careful process for identifying evolving social effects of tomorrow, firms may risk their very survival.

D. No business can solve all of society’s problems or bear the cost of doing so. Instead, each company must select issues that intersect with its particular business. Other social agendas are best left to those companies in other industries, NGOs, or government institutions that are better positioned to address them. The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value— that is, a meaningful benefit for society that is also valuable to the business. However, Corporations are not responsible for all the world’s problems, nor do they have the resources to solve them all Each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit. Addressing social issues by creating shared value will lead to self-sustaining solutions that do not depend on private or government subsidies. When a well-run business applies its vast resources, expertise, and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization.

E. The best corporate citizenship initiatives involve far more than writing a check: They specify clear, measurable goals and track results over time. A good example is GE’s program to adopt underperforming public high schools near several of its major u.s. facilities. The company contributes between $250,000 and $1 million over a five-year period to each school and makes in-kind donations as well GE managers and employees take an active role by working with school administrators to assess needs and mentor or tutor students. In an independent study of ten schools in the program between 1989 and 1999, nearly all showed significant improvement, while the graduation rate in four of the five worst performing schools doubled from an average of 30% to 60%. Effective corporate citizenship initiatives such as this one create goodwill and improve relations with local governments and other important constituencies. What’s more, GE’s employees feel great pride in their participation. Their effect is inherently limited, however. No matter how beneficial the program is, it remains incidental to the company’s business, and the direct effect on GE’s recruiting and retention is modest.

F. Microsoft’s Working Connections partnership with the American Association of Community Colleges (AACC) is a good example of a shared-value opportunity arising from investments in context. The shortage of information technology workers is a significant constraint on Microsoft’s growth; currently, there are more than 450,000 unfilled IT positions in the United States alone. Community colleges, with an enrollment of 11.6 million students, representing 45% of all U.S. undergraduates, could be a major solution. Microsoft recognizes, however, that community colleges face special challenges: IT curricula are not standardized, technology used in classrooms is often outdated, and there are no systematic professional development programs to keep faculty up to date. Microsoft’s $50 million five-year initiative was aimed at all three problems. In addition to contributing money and products, Microsoft sent employee volunteers to colleges to assess needs, contribute to curriculum development, and create faculty development institutes. Note that in this case, volunteers and assigned staff were able to use their core professional skills to address a social need, a far cry from typical volunteer programs. Microsoft has achieved results that have benefited many communities while having a direct—and potentially significant—impact on the company.

G. At the heart of any strategy is a unique value proposition: a set of needs a company can meet for its chosen customers that others cannot. The most strategic CSR occurs when a company adds a social dimension to its value proposition, making social impact integral to the overall strategy. Consider Whole Foods Market, whose value proposition is to sell organic, natural and healthy food products to customers who are passionate about food and the environment. The company’s sourcing emphasizes purchases from local farmers through each store’s procurement process. Buyers screen out foods containing any of nearly 100 common ingredients that the company considers unhealthy or environmentally damaging. The same standards apply to products made internally. Whole Foods’ commitment to natural and environmentally friendly operating practices extends well beyond sourcing. Stores are constructed using a minimum of virgin raw materials. Recently, the company purchased renewable wind energy credits equal to 100% of its electricity use in all of its stores and facilities, the only Fortune 500 company to offset its electricity consumption entirely. Spoiled produce and biodegradable waste are trucked to regional centers for composting. Whole Foods’ vehicles are being converted to run on biofuels. Even the cleaning products used in its stores are environmentally friendly. And through its philanthropy, the company has created the Animal Compassion Foundation to develop more natural and humane ways of raising farm animals. In short, nearly every aspect of the company’s value chain reinforces the social dimensions of its value proposition, distinguishing Whole Foods from its competitors.

TV ADDICTION 

A. Excessive cravings do not necessarily involve physical substances. Gambling can become compulsive; sex can become obsessive. One activity, however, stands out for its prominence and ubiquity—the world’s most popular pastime, television. Most people admit to having a love-bate relationship with it. They complain about the “boob tube” and “couch potatoes,” then they settle into their sofas and grab the remote control. Parents commonly fret about their children’s viewing (if not their own). Even researchers who study TV for a living marvel at the medium’s hold on them personally. Percy Tannenbaum of the University of California at Berkeley has written: “Among life’s more embarrassing moments have been countless occasions when I am engaged in conversation in a room while a TV set is on, and I cannot for the life of me stop from periodically glancing over to the screen. This occurs not only during dull conversations but during reasonably interesting ones just as well.”

B. Scientists have been studying the effects of television for decades, generally focusing on whether watching violence on TV correlates with being violent in real life. Less attention has been paid to the basic allure of the small screen—the medium, as opposed to the message.

C. The term “TV addiction” is imprecise and laden with value judgments, but it captures the essence of a very real phenomenon. Psychologists and psychiatrists formally define substance dependence as a disorder characterized by criteria that include spending a great deal of time using the substance; using it more often than one intends; thinking about reducing use or making repeated unsuccessful efforts to reduce use; giving up important social, family or occupational activities to use it; and reporting withdrawal symptoms when one stops using it.

D. All these criteria can apply to people who watch a lot of television. That does not mean that watching television, in itself, is problematic. Television can teach and amuse; it can reach aesthetic heights; it can provide much needed distraction and escape. The difficulty arises when people strongly sense that they ought not to watch as much as they do and yet find themselves strangely unable to reduce their viewing. Some knowledge of how the medium exerts its pull may help heavy viewers gain better control over their lives.

E. The amount of time people spend watching television is astonishing. On average, individuals in the industrialized world devote three hours a day to the pursuit—fully half of their leisure time, and more than on any single activity save work and sleep. At this rate, someone who lives to 75 would spend nine years in front of the tube. To some commentators, this devotion means simply that people enjoy TV and make a conscious decision to watch it. But if that is the whole story, why do so many people experience misgivings about how much they view? In Gallup polls in 1992 and 1999, two out of five adult respondents and seven out of 10 teenagers said they spent too much time watching TV. Other surveys have consistently shown that roughly 10 percent of adults call themselves TV addicts.

F. What is it about TV that has such a hold on US? In part, the attraction seems to spring from our biological ‘orienting response.’ First described by Ivan Pavlov in 1927, the orienting response is our instinctive visual or auditory reaction to any sudden or novel stimulus. It is part of our evolutionary heritage, a built- in sensitivity to movement and potential predatory threats.

G. In 1986 Byron Reeves of Stanford University, Esther Thorson of the University of Missouri and their colleagues began to study whether the simple formal features of television-cuts, edits, zooms, pans, sudden noises—activate the orienting response, thereby keeping attention on the screen. By watching how brain waves were affected by formal features, the researchers concluded that these stylistic tricks can indeed trigger involuntary responses and ‘derive their attention-al value through the evolutionary significance of detecting movement It is the form, not the content, of television that is unique.’

H. The orienting response may partly explain common viewer remarks such as: “If a television is on, I just can’t keep my eyes off it,” “I don’t want to watch as much as I do, but I can’t help it,” and “I feel hypnotized when I watch television.” In the years since Reeves and Thorson published then pioneering work, researchers have delved deeper. Annie Lang’s research team at Indiana University has shown that heart rate decreases for four to six seconds after an orienting stimulus. In ads, action sequences and music videos, formal features frequently come at a rate of one per second, thus activating the orienting response continuously.

I. Lang and her colleagues have also investigated whether formal features affect people’s memory of what they have seen. In one of their studies, participants watched a program and then filled out a score sheet. Increasing the frequency of edits (defined here as a change from one camera angle to another in the same visual scene) improved memory recognition, presumably because it focused attention on the screen. Increasing the frequency of cuts—changes to a new visual scene-had a similar effect but only up to a point. If the number of cuts exceeded 10 in two minutes, recognition dropped off sharply.

J. Producers of educational television for children have found that formal features can help learning. But increasing the rate of cuts and edits eventually overloads the brain. Music videos and commercials that use rapid intercutting of unrelated scenes are designed to hold attention more than they are to convey information. People may remember the name of the product or band, but the details of the ad itself float in one ear and out the other. The orienting response is overworked. Viewers still attend to the screen, but they feel tired and worn out, with little compensating psychological reward. Our ESM findings show much the same thing.

K. Sometimes the memory of the product is very subtle. Many ads today are deliberately oblique: they have an engaging story line, but it is hard to tell what they are trying to sell. Afterward you may not remember the product consciously. Yet advertisers believe that if they have gotten your attention, when you later go to the store you will feel better or more comfortable with a given product because you have a vague recollection of having heard of it.