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Special feature CSR

Doing Well by Doing Good. Are they?

They come, they see opportunities, and they conquer markets. The large automobile companies, the FMCG majors, the banking, insurance, healthcare and even education service providers, the apparel leaders, the electronics and durable giants… all of them are making immense profits by doing business with us. They sell, we buy and consume – sometimes we demand, sometimes they create a need. But we are also social beings with intellect and emotions, and form relationships with the brands we consume.

Ranjan Kaplish, CauseBecause

We want them to have a decent character, a warm personality, a relatable trait, and so on. We want them to be responsible, sustainable and greener. We also realize that the communities that businesses work with or around whom they thrive have the right to ‘expect’, and it is the responsibility of businesses to give.

Here are a few abstracts from routine happenings here and there; it is entirely on you to decode whatever you think is written in between the lines, and then to revisit the character of your favourite brand.

Lahorewale Lalaji

Popularly known as Lahorewale Lalaji, Mahashaya Dinanath was a miser and a mean man. He had come to India from Lahore with hundreds of refuge seekers a few days before Pakistan parted to become another country. His affluent family, which was known for its spices business, had suffered major personal and financial losses in the riots before partition. Left with no option, he migrated and took refuge in a one-room house allotted in the cramped lanes of Kirti Nagar in West Delhi. He started the struggle to get back lost fortune, by starting the business all over again.

Lala started by making spices at his home and selling these through a bedroom window that opened towards the road. Lala’s brand of spices became so popular that half of the population of West Delhi started queuing up in front of his window to buy their regular masalas. To meet the growing demand, Lala soon set up a factory. His miser and mean instinct made him employ cheap labour in the form of children and women. To get cheaper ingredients he engaged with cross-border smugglers, and further saved costs by packing the final product in low-grade plastics. In no time his revenues surged and Lalaji became one of the first few in India to drive around in a Cadillac in the late 1940s.

However, the upward drive, and the business growth, did not last for long. The brand loyalists heard stories of exploitation of children, low wages given to women, and pathetic working conditions in Lala’s factory. Word on smuggling of spices also spread. As a result, people boycotted Lala’s brand and the downfall of the masala king was almost a certainty – except that a last-minute change of heart and business practice turned the story around.

Lala realized that unethical practices were not going to ‘sustain’ his business for long. He invested in reforms. To begin with, he opened a free school for under-privileged children and the first ones to be admitted were the children who worked in his factory. He stopped smuggling the raw spices and, instead, funded the local farmers to grow better-quality ingredients, with surety of buying all their produce. Lala also ensured that most workers in the factory were locals and his company took good care of them and their families. Thereon, in a smart PR move, Lala made all his business practices and procedures completely transparent for anybody’s scrutiny.

This time, the good word spread beyond Delhi. The once local masala king became India’s largest spices company and a proud Lalaji, in his late 90s now, can be seen in TV commercials proudly announcing, ‘I am doing well because my company does good.’

The Present

Well, before you start Googling to find out who this Lalaji is and what is the brand that he created, you must be warned that Lala and his story are completely fictitious. However, the sequences and the fictitious facts of the story are conceivable. Not many of you would consume products manufactured or served by a company that engages people or the planet merely for profits.
At the same time, not many of you are aware (maybe you are not concerned or simply do not have the time) whether the cooking oil in the kitchen, the toothpaste in the bathroom, the shirt in the closet, or the car in the porch is produced by a socially responsible company. And yet, many of you could be regularly discussing/scrutinizing the business practices of large corporate groups.

Like It Happens

Here is an abstract from one of the several five-minute unplanned talks that happen in those ubiquitous corner tea stalls or cigarette-selling joints, or other places of informal congregation—places where commoners exchange their political, personal and emotional views.
Setting: Paan khoka(kiosk) under a large advertising hoarding
An auto rickshaw driver, puffing a bidi: This soda company has paid in lakhs to have their ad on this hoarding.
Paanwala, popping open a soda bottle for a customer: I wonder how many Rs 25 bottles the company will need to sell to pay for this hoarding.
Tea-sipping sales executive: This company has several lakhs similar hoardings across the globe. This actor posing with their bottle charges a fortune. They pay even more for TV ads.
Paanwala: How many crores they must be spending then! And they have competitors of a more or less equal size. I wonder how many bottles the world must be consuming to keep them all in business.
Executive: Imagine how much water these companies are wasting on an everyday basis – not just to make drinks but also to wash these glass bottles.
Paanwala: This drinking water is also from one of these companies only.
Executive: And these plastic bottles are also an environmental mess.
Autowala: These drinks are anyway unhealthy; I don’t drink them at all.
Executive (to autowala): What a caricature! You smoke as if these cigarette makers are doing well to you.
Paanwala: Now you guys don’t decide to quit smoking. This poor man will have to shut shop. If everybody stops consuming, how many people will lose jobs!
In the background is actor Khan yelling from a radio: meri jaan is soda bottle mein band hai. Chaps couldn’t resist laughing in a chorus.

Business Review Meeting at a Five-Star Hotel Lobby in Seychelles 

Here is an abstract from a conversation between marketing and sales heads and the group head of a multinational consumer goods and apparel company.

Sales head, showing some coloured graphs meticulously arranged in his leather file folder: I’ve got the brand’s annual progress report for the US market. In the first quarter, it saw a major downfall because our public relation (PR) guys could not cover up the stories of child labour at units of our sourcing partners in India.

Group head, looking for something in the pockets of his premium blazer: Fire the PR firm. Doesn’t a child in a developing country need to work to uplift his standard of living? The US consumer should realize that we are creating jobs in India. These new-generation consumers are somewhat weird. They want all that fashion and quality at the cheapest price and point at our business practices at the same time.

So what’s the strategy? How are we recovering? By going to China?

Marketing head: No need to fire the PR guys. After all, they cannot entirely hold bad news when it’s all there in the open. Anyway, we started ‘creating’ some good news and did better in the subsequent quarters.

Group head, pulling out his cigar from a silver case: Is it safe?

Marketing head, lighting his cigarette: We are actually doing good, and it is automatically being reported in a positive light.
Group head, clipping his cigar: What is that ‘good’? I don’t want the business to become a charity.

Marketing head, clearing the smoke from his throat: I used a fraction of our marketing budget to rehabilitate children who worked at our sourcing agents’ factories. We tied up with an NGO, paid for the children’s education, health and nutrition, with the commitment that these would continue until they are adults. I also took a commitment from our ancillary units to hire these kids when they are eligible. The PR guys have got some great stuff with which to flaunt a brand name – and the media is showcasing us as fashion(l)able reformists.

Group head: And sales?

Sales head, showing another page from his file: The good news helped. Most customers genuinely believe that we care. We are being regarded as a responsible and concerned brand. Look at this query on our customer feedback form: ‘Apart from buying your stuff, how can we help more to support your cause?’

Group head, puffing out the swirling smoke: Great, it is starting to make sense. How about a global social marketing campaign – something along the line of ‘buy our products and we’ll have the world develop’?

Marketing head, stubbing his cigarette in an ashtray: That could have worked in the ‘80s, sir, when we had a right to call ourselves young. We are dealing with a population that is making cigarette quitting fashionable and is willing to move around sporting banana leaves to protest against the fur trade. This new creed of consumers is questioning everything – they prefer being cynical. They believe that what we have done is our social responsibility. Your idea may give out the message that we will be responsible only if you buy our products.

Group head, uninterestingly reading something on his cigar’s label: What’s in your mind?

Marketing head, pulling out another cigarette: Set aside an exclusive budget for social activities, set up a corporate social responsibility (CSR) department, engage in real developmental activities, and come out with a transparent social report that will let people know how we help in making a difference.

What do you think will happen if the world wakes up to the news that Apple is humiliating its workmen or has employed children in China? I am sure we’ll see at least a million Facebook updates with ‘RIP my Iphone’…

Group head, smirking: I thought you were a hardcore marketer, but you are talking more like an activist.

Marketing head: Well, this’ll make business sense. Firstly, the separate budget that I am referring to is not a small amount, but a considerable share of our net profits.

By the way, while I am still sounding insane to you, let me share another bit of news. We are postponing our India launch for some time. We have to reconsider our marketing plan because CSR has become a law there. The Indian Government is the first in the world to have mandated it for large corporations to spend two per cent of their profits towards CSR.

Group head, with wrinkles on forehead: Are you serious? Of all the countries, India does it? And what if we do not spend?
Marketing head, smiling: No penalties there. The companies will only have to give a reason for not doing so. They can even say that they are not interested. But which brand will dare to say so!

Group head, looking at the cigar case: Understood. So I’ll have to meet the cost-cutting team to fund your charity experiment in India?

Marketing head, picking up the menu: I am seeing it the other way round. I see more revenues coming through – our pilot project has proved that we can do well by doing good. Cost reductions will not be required. We’ll only have to branch out our PR and marketing budgets towards CSR till we set out a separate budget for the same.

Group head, pointing at the menu: Seafood is their speciality. Why don’t you order it with something French?

So, do we have research numbers to justify this CSR fad? I doubt if people will ditch their iPhone as a result of poor labour practices, and…

Sales head: Sorry to interrupt, sir. What do you think will happen if the world wakes up to the news that Apple is humiliating its workmen or has employed children in China? I am sure we’ll see at least a million Facebook updates with ‘RIP my Iphone’ from India alone and some thousand activists will march to their factories and offices.

As far as research numbers are concerned, I collected some India-specific reports while planning the launch. A large section of consumers in India is more conscious than we think. According to a Nielsen study, seven out of 10 Indian consumers prefer to conduct business with companies that have implemented socially responsible programmes. Nielsen’s Global Corporate Citizenship Survey shows that about 55 per cent of Indian consumers surveyed are even willing to pay extra for products and services from companies that have implemented programmes to give back to society and to our planet.

Marketing head: I have better figures. A survey that was conducted on MSN India by Cross-Tab says that Indian consumers have no illusions. About 93 per cent of the respondents believe that corporates in India should be socially responsible and 57 per cent trust corporates that do CSR more than those that do not.

Group head, waving at the waiter to come and take order: These numbers will do for me. I trust you guys will justify spending the group’s hard-earned money.

Waiter, after noting the order: Sir, the proceeds from all the sushi we are serving today will go towards meeting the nutrition needs of underprivileged children. Should I add that in your order?

Group head, smiling this time: Sure, gentleman, being ‘responsible’ is in vogue. I’ll eat your live fish since it is helping feed a hungry stomach.

Turning to marketing guy: Is this helping the hotel?

Marketing head: Well, if a few visitors post ‘sushi for a cause at XYZ hotel’ on their social networking platforms, it’ll be silver for them. And if some journo writes about this initiative, it’ll obviously be gold at the price of sushi.

The Crux

Fortune often favours the bold – be it consumers or the companies they deal with or the brands they buy. The last decade or so has seen more and more corporates supporting the idea that ‘it is okay for brands to use social initiatives for marketing’. On the one hand, the need for corporates to be seen as socially responsible is growing in India and companies are decoding the actual meaning of CSR—as much as they can. On their part, consumers want the country to change and are willing to reward brands for their socially responsible behaviour.

The mandate for marketing has gone beyond increasing sales; it is now about hearing the voice of the consumer. Brands who can understand the wave of consciousness that is welling up across the country are busy setting up cause-related branding programmes to get the first mover’s advantage. Unfortunately, very of them actually make sense. With regard to the other majority (who are not making much or any sense), it becomes their consumers’ responsibility a) to decode their relation with the cause, and b) to question the brand if anything ‘unexpected’ or ‘unacceptable’ is found. Here’s how they may do that.

Make Your Brand Accountable, Responsible and Sustainable – 7 Points to Remember

1. Track your product; do background check: It is made by whom, how and for what purpose? Is it required at all? It is about going a few steps ahead and doing backwards tracking of the product. Yes, checking the price tag, expiry date, ingredients is a must, but how about also keeping track of its manufacturing and marketing company and, of course, its social activities? Spend a few minutes to find out how ethically the company operates, and what its CSR policy is.

2. Read the company’s sustainability or CSR report: The new Companies Bill, which has been passed by the Lok Sabha and awaits Rajya Sabha’s nod, has made it compulsory for large companies to spend two per cent of their net profits towards CSR and report the same in an annual CSR report.

3. Differentiate between cause marketing and CSR: In the recently concluded Indian Premier League (IPL), a non-banking finance company was giving out Rs 6,000 for every six and Rs 4,000 for every four – hit by players of the company-sponsored team – to an undisclosed charity. Is this CSR? You are to decide.

4. One-day social events are not enough: Planting trees on Environment Day, without caring who’ll nurture them, or feeding the hungry once in a while… is this CSR?

5. Environment conservation is basic hygiene: Conserving natural resources and not polluting the environment is basic hygiene—quite like brushing teeth and bathing. Crying aloud that I am clean is not CSR.

6. CSR during crisis: When a crisis comes along, ad budgets go down and CSR budgets vanish. The ones who continue to play like the Titanic’s brass band are the heroes.

7. Communication focus shouldn’t only be emotional buying: ‘If you buy my product, I will give a share of the profit to the needy.’ Many of them speak this language, and no one can be sure what it really means. The brands with the philosophy of ‘I support the ones in need and help them become self-sustaining’, and does not ask you to help through purchase, are the ones who make sense and gain credibility.

Well, it is quite an intimidating fact. About 90 per cent of branded products – from FMCG to electronics to apparel to home appliances – are marketed by or are manufactured by a handful of companies. These brands are either wholly/partially owned subsidiaries of large corporate groups or large groups are investors/shareholders of these companies. Hence, following the practices of these groups as well as those of similar smaller groups in your own country can give you an idea of how responsible, sustainable and green your brands are.

Consumer VOICE

Consumer VOICE

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