When CSR goes bad: Davita & Volkswagen

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.