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Wednesday, February 1, 2012

Strategic CSR - Measuring CSR

The article in the url below introduces GoodGuide.com (http://www.goodguide.com/), a website designed to provide consumers with ethical and socially responsible information about everyday products:

Launched in 2008, this is a website and smartphone app that rates 140,000 consumer products (currently only in America) according to their safety, environmental sustainability and the ethics of the firms that make them.

I have heard, read, and thought about ideas similar to this for many years, so it is good to see that someone has finally got around to implementing it. Three factors will determine this website’s success. First, is the information relevant and reliable?

Much therefore depends on the quality of the data, which GoodGuide gathers from various sources, including government reports and scientific studies, and research by its own staff. If the product scores badly, the app will recommend an alternative item which is rated more highly. The app also tracks a consumer’s purchases to see how well they fit with their selected values, giving a sort of personal virtue (or hypocrisy) rating.

Second, is the business sustainable? At a minimum, the business model relies on sufficient numbers of consumers demanding this kind of information. Eyeballs alone will allow the website to raise money via targeted ads. Ideally, of course, consumers will be willing to pay for this information, which provides a more reliable revenue stream and allows the website to remain free of ad clutter.

And, third, will this information change behavior? Ultimately, for GoodGuide.com to mean anything significant, it will need to alter consumption habits in ways that incentivize firms to (a) provide detailed information to the website, and (b) ensure their products are produced in ways that score well on GoodGuide.com’s metrics.

The first concern can be overcome with time and experience. I am yet to be convinced that either the second concern (the business model) or third concern (behavior change) can be overcome:

Consumers rarely change their buying habits, even when confronted with scientific and other data, says O’Rourke [a professor of environmental and labour policy at the University of California, Berkeley and founder of GoodGuide.com].