Moves to enhance reputation or gain social currency under the banner of Corporate Social Responsibility (CSR) have been labelled a sham by American academic Robert Reich.
Professor Reich cites examples of companies that claim to act “transparently” and with “a commitment to stakeholders” while their actions speak otherwise.
This includes AT&T’s decision to cut more than 30,000 jobs after its CEO Randall Stephenson had promised to use tax cuts to invest in its broadband network and create 7,000 new jobs.
In another case, it took Boeing a full year to sack its CEO Dennis Muilenburg and pay him an estimated $60 million, after a 737 Max aircraft crashed and killed 346 people.
Closer to home, people took to social media to criticise Coca-Cola Amatil’s announcement to donate 250,000 bottles of water to the crews fighting the Australian bushfires, saying the company was using the tragedy to advertise its product.
More recently, BlackRock – the world’s largest asset manager – joined the Climate Action 100+ initiative, causing a stir among investors and activists alike. Sceptics say BlackRock’s investment policy on fossil fuels falls short of the mark when it comes to solving the climate crisis.
Some commentators might label these sorts of announcements “virtue signalling” or “greenwashing” where the action doesn’t match the rhetoric.
For individuals, virtue signalling could include changing your Facebook profile picture to support a charitable cause, offering “thoughts and prayers” in a crisis or sharing a popular activism hashtag for online “street cred”.
If an organisation’s goal is to improve reputation and trust, then the rhetoric should match behaviour. Ideally, organisations would also align their initiatives to their business activities. For example, an industrial manufacturer is unlikely to get much kudos for a policy on reusable coffee cups. This is where organisations are prone to falling in the quick-win trap – and get called out for jumping on the bandwagon rather than making a real difference.
Vague commitments or far-off future promises are also problematic. McDonalds recently said it “aims to have” recycling in stores and make 100 per cent of its packaging from renewable, recycled, or certified sources by 2025. Meanwhile, Keep New Zealand Beautiful found 63 per cent of all branded takeaway food, drink containers and packaging found around New Zealand is from McDonald's – providing free advertising from bins around the nation.
Consumers have wised up to virtue signalling and so should companies. There’s also the threat of regulators who’ve run out of patience with some sectors and are shining a light on others. Time to stop the sham.