The Idea in Brief
When it comes to corporate social responsibility, most companies don’t become model citizens overnight. Take Nike: When protesters railed against sweatshop conditions at its overseas suppliers, Nike claimed, “It’s not our job to worry about other countries’ labor conditions.” Later it grudgingly hired high-profile firms to verify enforcement of labor codes. But these firms had little auditing experience, and protests persisted.
As Nike discovered, getting defensive or merely complying with public demands for responsible practices won’t protect your company’s brand—or solve social ills. How to do well and do good? Zadek recommends this approach: shift your mind-set from safeguarding your reputation to reinventing your business in ways that make a real difference to society.
By moving beyond defensiveness and compliance, Nike ultimately became a leader in progressive business practices. No longer an object of civil activism, it’s a key participant in major civil society initiatives.
The Idea in Practice
How can your organization become a good corporate citizen? Zadek suggests that every company must navigate through these stages:
Toward Corporate Responsibility
Stage#What Companies Do#Why They Do It#ExampleDefensive: “It’s not our job to fix that.”#Deny existence of problematic practices, or responsibility for addressing them.#To defend against attacks that could affect short-term sales, recruitment, productivity, and the brand.#Royal Dutch/Shell denied its responsibility for emissions created by the production and distribution of its energy products.Compliant: “We’ll do just as much as we have to.”#Adopt a policy-based compliance approach as a cost of doing business.#To mitigate the erosion of economic value in the medium term because of ongoing reputation and litigation risks.#Nestle came under fire for the health dangers of its infant formula: activists claimed that mothers in developing countries would mix the powder with contaminated water. Nestle communicated the hazard in its marketing messages to new mothers—rather than trying to educate them about how to ensure their babies’ overall nutrition.Managerial: “It’s the business, stupid.”#Give managers responsibility for the social issue and its solution, and integrate responsible business practices into daily operations.#To mitigate medium-term erosion of economic value and achieve longer-term gains.#Nike realized that complying with agreed-upon standards in its global supply chains would be impossible if it didn’t also change its daily operations. These changes included eliminating procurement incentives that encouraged buyers to circumvent code compliance to hit targets and secure bonuses.Strategic: “It gives us a competitive edge.”#Integrate the societal issue into their core business strategies.#To enhance economic value in the long run and gain first-mover advantage over rivals.#Automobile companies know that their future depends on their ability to develop environmentally safer forms of transportation.Civil: “We need to make sure everybody does it.”#Promote broad industry participation in corporate responsibility.#To enhance long-term economic value and realize gains through collective action.#Alcohol purveyor Diageo and other top alcohol companies know that restrictive legislation will come unless they involve the whole sector in promoting more responsible drinking practices.
Nike’s tagline, “Just do it,” is an inspirational call to action for the millions who wear the company’s athletic gear. But in terms of corporate responsibility, the company hasn’t always followed its own advice. In the 1990s, protesters railed against sweatshop conditions at its overseas suppliers and made Nike the global poster child for corporate ethical fecklessness. Nike’s every move was scrutinized, and every problem discovered was touted as proof of the organization’s irresponsibility and greed. The real story, of course, is not so simple.
