It’s been demonstrated over and over again – companies that create and implement a strategic, integrated, and most importantly, authentic, Corporate Social Responsibility (CSR) plan experience better performance than their counterparts who do not. These companies not only differentiate themselves in the marketplace and experience larger profits than their competitors, they also attract and retain the best talent, are more respected in the community, have less employee absenteeism and theft, garner more market share, and better weather crisis events.
But what if that same strategic, integrated, and seemingly authentic CSR program is co-opted by some within the company for less than honest purposes? It risks tearing apart the entire fabric of authenticity that can take years to build and decades to recover.
Such is the case in two recent examples: DaVita and Volkswagen.
DaVita is the largest provider of out-patient kidney dialysis in the world. Headquartered in Denver, Colorado, the company enjoys a reputation locally as well as nationally and internationally as having a unique culture that puts “community first.” In fact, DaVita has a comprehensive CSR program which includes an honorable mission, a global vision, and an extensive set of values that respect employees, patients, and the planet. Combine this deep-seated values proposition with a unique culture (the company calls itself a “Village) that encourages fun, teamwork (“All for One, and One for All”), an iconoclastic leader (referred to as the “Mayor”), and a decidedly non-corporate feel to their headquarters, and you have a pretty remarkable employer. (Full disclosure – I have been so enamored with DaVita’s unique approach to corporate culture, employee and community engagement, and sustainability that I have actually applied for more than one position with the company).
But all of that has now been threatened by a series of events, unleashing a barrage of bad publicity, cutting to the heart of the company’s core values and demonstrating a use of the company’s CSR program for nefarious purposes.
As recently reported on John Oliver’s Last Week Tonight HBO show, DaVita has been involved in a series of questionable practices that undermine the progress it has made with its unique culture and in the marketplace. Putting aside the eccentricities of DaVita Mayor Kent Thiry, the company may be involved in improper and/or illegal administration of health services. It is not my intent to comment on those allegations. Rather, there is one particular element of these recent claims that made my stomach drop. It is with regard to the use, or rather the misuse, of the company’s CSR plan, the foundation of which is the concept of community. It’s one thing to embed a sense of community when it comes to treating patients, employees, and the environment well; it’s quite another when employees use this same bedrock value of community to counsel procedures in ways that reduce life expectancy and increase corporate profits.
The latter occurred in a secretly recorded taping of one DaVita employee trying to dissuade a patient from undergoing a life extending (but dialysis ending) kidney transplant, using a “family” analogy. As depicted in the Oliver segment, the employee advocated that some patients don’t undergo a transplant because they don’t want to leave the DaVita “community.” I was in shock, as I’m certain others were, who heard this chilling recording. Could a company that built a seemingly-successful CSR program upon a foundation of “community” really use that same community for less-than-honorable purposes? It certainly made me pause to consider the implications.
Another company that recently had its CSR programs called into question by using some of its core values to deceive customers is Volkswagen. For years, the German car manufacturer made claims that its diesel engines emitted less pollution, less greenhouse gasses, and burned “cleaner” than conventional petroleum fueled vehicles. Volkswagen promoted its supposedly “clean” cars through a high-profile marketing campaign that included Super Bowl ads, online social media campaigns, and print advertising, often targeting “environmentally-conscious” consumers.
Volkswagen promotional materials repeatedly claimed that its “Clean Diesel” vehicles had low emissions, reduced nitrogen oxides (NOx) emissions by 90 percent and had fewer emissions than gasoline cars. However, in fact, according to the Federal Trade Commission’s complaint against the company, Volkswagen “clean diesel” vehicles emitted up to 4,000 percent more than the legal limit of NOx — a dangerous pollutant that contributes to environmental harms and respiratory ailments. Further, the company installed “defeat devices” so that the cars would mask the true emissions output and pass vehicle emission tests.
Volkswagen ended up resolving a criminal case against it, pleading guilty to conspiracy, obstruction of justice, and other crimes, and paying a civil penalty of $1.45 Billion for the alleged civil violations of the Clean Air Act. In addition, tens of thousands of Volkswagen owners needed to endure the inconvenience of car recalls, repairs, and returns. This is not to mention the tidal wave of negative publicity that Volkswagen has had to endure.
In the end, it will remain to be seen whether Volkswagen will be able to recover its reputation, in particular, amongst those socially and environmentally-minded customers who were duped into the company’s “clean tech” claims.
As demonstrated in previous posts, when used in a strategic, integrated, and authentic way, CSR is a wonderful, brand-enhancing tool, that has the capacity to create legions of enthusiastic “fans”, supporters, customers, and employees many of whom will evangelize about the company and their products. Such companies can even weather normal crisis events better than companies that don’t have a thoughtful CSR plan. But when a company intentionally uses its values-based CSR programs for less-than-honorable or dishonest means, the road to gain back the public’s trust can be a bumpy one.
At a time when some in the business community are predicting a major shift in how and whether companies will continue to make corporate philanthropy a centerpiece of CSR programs, it’s time we talk about “smart” giving tactics. Simply giving money away, as well-intentioned as that might be and enabling businesses to check off a “community engagement” box in a CSR program, usually doesn’t result long-term results – for either the charity or the business doing the giving. In many ways, without a strategic and integrated program, tied directly to an organization’s overall mission, vision, and values, such giving can actually undermine a business’ authenticity when it purports to support societal improvement.
Most businesses that engage in philanthropy, simply give money away to a variety of disparate causes or perhaps a group of similar organizations within the umbrella of a particular cause (eg. homelessness, child education, environmental issues, veterans’ organizations, etc.). Unfortunately, maintaining this practice without some connection to one’s organizational mission misses a whole host of benefits that an organization could otherwise gain had the giving been more strategically made.
By example, last week I met with an owner-chef and restauranteur about trying to better direct their company’s philanthropy program. Like many in the restaurant business, entrepreneurial, owner-chefs are maxed out in both time and capacity to strategize their charity work. Most smaller, independent restauranteurs don’t have private foundations or dedicated community engagement staff. Often, responding to requests falls onto the owner themselves or a marketing person (who would otherwise be spending their time marketing the company), or sometimes even a spouse or well-intentioned, but untrained staff member.
As we discussed trying to better define the types of organizations to whom he would focus his charitable giving, we discussed different causes. I asked him what causes were high on his list for charity work. He replied that he had been thinking about focusing his giving on veterans’ organizations, to which I then inquired with a series of questions:
Ultimately, the answer to all of these questions was “no.” I, therefore, suggested that after we go through a mission/vision/values exercise with himself and the key folks in their company (partners, investors, restaurant managers), that perhaps we look to causes more aligned with the business.
For example, if one of the clear business imperatives is to support small farmers or urban farms, then the charity program could do the same. Similarly, if the preference is to buy local or organic, then focus the charity on local, organic farmers and their issues. If your restaurants favor vegetarian or vegan cuisine, then directing your charitable giving to programs that support education and work in those areas. Likewise, if you’re primarily a steakhouse, perhaps organizations that promote responsible (anti-cruelty) animal husbandry, free range, and free of antibiotics or recombinant bovine growth hormone (rBGH) is for you. If you’re known for your seafood, then organizations that protect our oceans and promote sustainable seafood would be a good place to put your charitable efforts.
Once you figure out “who you are” as an organization, building out a charitable giving program that “makes sense” is fairly easy to do. In addition, you can connect your employee and community engagement programs, as well as your sustainability program (supply chain, in particular) to your corporate philanthropy. That way your CSR program is much more strategic, integrated, aligned with your values, and most importantly, authentic to both your internal and external stakeholders.
While giving to charity to help out others in the world or within one’s community is a laudable and commendable endeavor, doing so in a way that aligns with your business and core company values leads to a much more effective and mutually-beneficial relationship with the charities with whom you partner.
About a year ago, I was speaking with a CSR director at a Fortune 150 company. During that meeting, much to my surprise, he suggested that the cannabis industry needed tremendous help with CSR. In his opinion, the cannabis industry completely lacked formal programs touching on the fundamental “four pillars” of CSR: community engagement, employee engagement, sustainability and corporate philanthropy. As I investigated the issue, met with dozens of folks in the industry, I found that, indeed, very little was being done in these areas and what was being done, almost universally, was being done poorly – without strategy and authenticity.
Although cannabis is spreading across the country like, well, a weed, with hundreds of millions of dollars in revenue, there is little evidence that cannabis companies are taking CSR seriously. Part of this is due to the fact that it is really an “infant” industry, rising out of an illegal, black market, where dealers and growers operated in the shadows, under constant fear of criminal prosecution. Part of this is also due to the onerous taxation regime put upon the industry in states like Colorado as well as the oppressive nature of IRS Code Section 280E which, generally, prevents cannabis businesses from taking ordinary business expenses and charitable donations as deductions. Finally, part of this, frankly, is due to the fact that the industry is just worried about survival in an uncertain time of mixed messages as to the threat of federal enforcement, a patchwork of shifting state regulations and laws, and allegedly thin profit margins (at least, that’s what most operators claim).
But in the infamous words of Bob Dylan, “The times they are a changing’.” Ivy-school minted MBA graduates and former Fortune 500 executives are recognizing exciting and lucrative business opportunities in this space and are becoming a new wave of professional “ganjapreneurs.” With these new arrivals, is a growing understanding that if the medical and recreational “high-THC” cannabis industry wants to normalize operations and legitimize its existence, CSR is a wonderful avenue to help further the cause. These companies need only follow the lead of their cousins in the hemp industry like Dr. Bronner’s and Nutiva, that have successfully made CSR a central tenet of their businesses. In addition, with $6.7 Billion (that’s with a “B”) in sales in 2016, and an influx of new players in both the industry and ancillary businesses every month, there’s clearly money being made.
But what I’ve seen as passing as CSR in the cannabis industry, is a confetti approach to corporate giving, ad hoc employee engagement, and some half-measured attempts at sustainability. As I’ve emphasized previously, in order to see the greatest Return on Investment with CSR, these programs absolutely must be built upon (and screened through the lens of) the foundation of company mission, vision, and values. Rarely have I found cannabis businesses that have undertaken this critical step to establish a social mission within their corporate DNA that strays beyond a vague commitment to health-based, pain-management, and/or chronic-illness issues (one exception is Bloom Farms, though there are a few others). Without this underpinning of mission/vision/values, it’s hard to build a strategic, integrated CSR program that passes the authenticity “smell” test or experiences any kind of measurable ROI.
What I have seen is cannabis industry executives talk about donating off-spec, excess, and/or unusable product to military vets, ostensibly to help alleviate PTSD, but without a “story” as to how doing so relates back to their business. I’ve seen other businesses sponsor charity events when asked without any reason for doing so other than some vague notion of “giving back” or the resulting publicity for doing so. I’ve seen some large scale, vertically integrated companies give money to a couple dozen different charities ranging from first responders to PrideFest to environmental conservation groups, calling it “community engagement,” but without any kind of strategy to their giving, and without truly serving the real needs of the communities to which they are giving and impacting. I’ve seen companies “volunteer” their employees for roadside cleanups so they can skirt advertising restrictions. I’ve seen other companies ask employees to volunteer in park cleanups around cannabis-themed events so as to prevent the industry from gaining a black eye. While these activities are laudable and can positively impact the community, seldom have I seen any measurable outcomes/impacts from these acts of charity or community engagement.
What I haven’t seen is the kind of strategic, integrated, and authentic CSR programs that other industries have. I haven’t seen paid time off for volunteer endeavors or company wide shut-downs for days of service or any kind of willingness to match employee donations to charity. I haven’t seen massive amounts of money placed into R&D to reduce energy usage or pesticide usage (save for a few companies that try to be as “organic” as is possible and a few public/private partnerships to advance concepts in sustainability to those who are willing to participate). Much of the community engagement I have seen has been too little, too late when a company has already adversely impacted neighbors. I’ve seen millions of dollars spent on lobbying and government relations and sparse dollars spent on community or employee engagement. And I’ve seen a tremendous amount of turnover in most cannabis companies, with low level workers moving from company to company as if in search of their dream employer who will value them for who they are and not what they do.
CSR is the way for smart businesses to get ahead of the pack, retain talent, and experience growth to the bottom line.
Some form of cannabis sales and usage is now legal in nearly 30 states and the market for various products is becoming increasingly crowded. Much like the micro-brewery craze, if companies want to start to distinguish their brands in the marketplace, become “employers of choice,” and become less susceptible to public and governmental scrutiny, CSR is the way for smart businesses to get ahead of the pack, retain talent, and experience growth to the bottom line. And, I predict the cannabis companies that do accept this challenge to become industry leaders in CSR, will experience robust growth, more customer loyalty, and greater community admiration – just like the companies in other industries with strong CSR programs.