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Monday, March 26, 2018

Strategic CSR - Unilever

I don't understand the difference between a social enterprise and a for-profit firm. Take this example from the article in the url below about the founding of Unilever:
"To most of Unilever's customers, the state of the world is probably the last thing on their minds as they push their shopping carts through the supermarket, tossing in Ben & Jerry's ice cream, Dove soap, Lipton tea, Hellmann's mayonnaise, and other Unilever products. It's hard to imagine that eco-disasters might someday lead to those items disappearing from shelves. But to Unilever, which was born as a solution to a crisis, the potential for calamity seems real enough. The company got its start in the 1880s, right here in this picture-perfect redbrick village near Liverpool called Port ­Sunlight—named after the world's first packaged, branded bar of soap and the company's founding product. It was created in an effort to stop rampant epidemics and child deaths amid the grinding poverty and squalor of Victorian England. Nearly 130 years later, there is still an acute sense at Unilever that the world needs fixing."
How is Unilever not a social enterprise? The firm uses market forces to solve societal problems, just like all for-profit firms. In contrast, take this example of TOMS Shoes (see Strategic CSR – TOMS Shoes), which is usually described as a social enterprise. It is essentially the same thing (an organization using market forces to solve a societal problem), but just not as effective as Unilever. At best, the value TOMS is adding seems dubious; in fact, it might be doing more harm than good:
"Did you buy TOMS shoes because you want to make the world a better place? If so, you should be a little mad. TOMS, of course, is an accessory company that markets itself like a charity … When someone buys a pair of TOMS shoes in the US, for instance, the company donates a pair of shoes to a child in a poor country like Haiti. … But TOMS and the many other companies like it are the charitable equivalents of yes men. They're telling you what they think you want to hear in order to get what they want (for you to purchase trendy, pricey accessories), not what you need to hear in order to do what you want (to have your purchase to do as much good in the world as it can)."
CSR advocates talk about the need for companies to "do good" instead of focusing on profit as if economic problems and social problems are independent of each other. However, a simple thought experiment highlights the overly-simplistic nature of this forced dichotomy. Is feeding people a social problem or an economic problem? Of course, there are hundreds of for-profit food manufacturers (not to mention the hundreds of thousands of restaurants) that produce food and distribute it widely (and efficiently) to whole populations of people. What about clothing people—a social problem or an economic problem? A visit to the shopping mall will quickly reveal how efficiently for-profit firms have essentially eradicated the supply of clothes as a challenge for all but the most deprived societies. Or, what about providing internet access to every household in the country—economic or social? Certainly, you could make an argument that, today, a family is essentially excluded from many aspects of society if it cannot get online; yet, internet provision in most developed economies is the sole responsibility of the private sector (as it is for the food and apparel industries).
Strategic CSR argues that for-profit firms are the best hope we have to institute change on the scale and speed necessary to make a difference. I tell my students, if you want to "do good" in the world, join a corporation. So-called social enterprises make us feel good, but are more akin to rearranging the deckchairs on the Titanic.
Take care
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Unilever CEO Paul Polman's Plan to Save the World
By Vivienne Walt
February 16, 2017