Yesterday’s lecture on communication raised some very interesting topics. We talked about the seven sins of green washing. I would like to relate these to the aspect of philanthropy in corporate social responsibility. Regarding CSR, many companies decide to do some good. This might be to sponsor an orphanage in Africa or build schools etc. These are often strategic decisions to improve the corporate image. Companies also satisfy customers’ want for a responsible company, from which you can buy without a bad conscience. However, if these philanthropic actions take place “beyond” the core activities of the company, the actual value of them is limited. Companies have to take on responsibility in their core activities to actually contribute, to improve sustainability.
For example, the Deutsche Bank does fundraising in Australia and gives out food to people in need in Japan to establish its CSR. It is obvious that this responsibility is not in the field of banking. Regarding its core activity of banking, Deutsche Bank does not seem to take responsibility as shown by scandals on manipulation etc. To put it exaggeratedly: The money made from irresponsible behavior in banking is used for philanthropic actions, to wash off the “dirt”.
Once the company has established solid responsible behavior in its field, philanthropy can be the icing on the cake. If not, it can easily be used to disguise irresponsible behavior in the core activities. Companies might tend to use philanthropic actions to make up for irresponsible corporate behavior in their actual field of business. By this approach they do not tackle the real problems and do not contribute to a more sustainable value chain.
Another example would be BP and the Deepwater Horizon catastrophe. This catastrophe was due to irresponsible behavior in the oil field, i.e. in their core activity of oil drilling. Several irresponsible decisions to save money and time facilitated the catastrophe to occur. Prior to the catastrophe BP won awards for its well-structured and well communicated CSR strategy. This example emphasizes that communication is not always in line with the reality of the corporate culture and behavior.
How do these aspects relate to green-washing?
In addition to the seven sins discussed in the lecture, green washing is used by companies to add green aspects to products which are not part of the product. These aspects might be completely separate from the product itself, i.e. beyond actual core competencies. One example is an extremely successful campaign by the German beer brewery Krombacher. It added green aspects to its product by running a green campaign: For each case of beer bought by a customer Krombacher would donate an amount of money to the WWF to save 1 m2 of rainforest. This became the most successful campaign of a German brewery ever. Krombacher was able to increase its sales by 20%, which is an enormous portion in the stagnating German beer market.
Thus, it is obvious that customers loved the green idea. But does this actually lead to more sustainability in beer production? Beer is made from malt, hops and water. One aspect regarding sustainability is the water consumption in beer brewing. For brewing 1 liter of beer usually 3.5 to 6 liters of water is needed. To the farming of malt and hops organic standards can be applied. The energy used in production can be sourced from renewable ones. Did Krombacher tackle any of these aspects? It does not seem so. Saving the rainforest is beyond the company’s actual core business. The campaign was only used to create a greener image in consumers’ minds. This image conveyed by the green campaign was not implemented in corporate culture.