Mac Observer columnist Bryan Chaffin recently wrote an impassioned and well-informed retort to an accusation of greenwashing leveled against Apple CEO Tim Cook. In it he explains how Cook's business rationale for greening Apple's supply chain is perfectly logical and a clear win for shareholders. Chaffin is right and any results-oriented activist should read his piece and rethink what they want from social and environmental responsibility (SER).
Shallow SER -- the kind that won't last
Back in 2006, Michael Porter and Mark Kramer published an influential Harvard Business Review article exploring the link between competitive advantage and corporate social responsibility (CSR). In it they articulated the four primary arguments then offered in favor of CSR:
- Moral obligation
- License to operate
Notably missing from this is anything promising to make more money for business, with most of the rationale for CSR falling into one of two categories: duty and fear. The authors go on to say that CSR should instead be viewed through the lens of opportunity to create new business value, offering examples from DuPont, McDonald's, and Nestlé to prove the point. In the seven years since this article was published, many have found the premise to be true -- value, not fear, is a better basis for social responsibility.
SCM World research over the past three years has consistently found that the top reason supply chain executives believe their boards invest in SER is enhancing brand equity. It is clear that we worry about looking bad. And yet consumer behavior doesn't exactly toe the line of rewarding such moral behavior. Last year's Bangladesh factory collapse, for instance -- among the worst industrial accidents in modern history -- not only failed to kill Primark, the UK retailer most visibly linked to the disaster, but seems to have actually sparked sales.
Less spectacularly, big brands from SER pioneers like Clorox and Procter & Gamble, built around green promises, were generally met with a shrug from consumers who tended to buy big, cheap bottles of detergent rather than smaller, concentrated bottles with better carbon footprints. The lesson many have taken is that SER won't earn a premium in the marketplace, so it better pay for itself upstream with cost avoidance.
Deep SER -- the kind that is sustainable
The good news is that this is exactly what seems to be happening. Our survey data shows more modest expectations about the value of green or socially responsible products in driving new revenues, but a steady and robust gain in the role of cost savings.
The big buckets of savings are energy efficiency, packaging materials, and fines or penalties avoided. And as for Apple's greenwashing rap, take-back, tear-down, and reuse of components and materials in mobile devices is among the most successful recycling sectors around.
The linkage between SER and business value is increasingly bottom line rather than top-line oriented. A scholarly research paper published by Stanford Business School last November found that the use of systematic SER practices such as supplier audits, third-party certifications and training or education efforts are positively associated with lower operating costs. The authors are hosting a conference at Stanford next month to explore the topic with help from companies like Nike, Cisco, and Nestlé.
The cynical among us may gravitate to the idea that big business prefers greenwashing to genuine social and environmental responsibility. No doubt these concerns are grounded to some degree in historical reality, but 10-plus years into the movement and we're beginning to see that real sustainability depends on greening, cleaning and leaning the global supply chain for less cost, waste, and damage.
Tim Cook is doing it for shareholders all right, and for that we should be glad.
This blog is reprinted with permission from SCM World. "Greenwashing? Apple? No, Just Value-Adding Supply Chain Practice" by Kevin O'Marah, originally appeared March 14, 2014.