Quanta Corporate Citizenship Greenmasking? 03/04/2010
A recent paper called Do Green Products Make Us Better People?, by Nina Mazar and Chen-Bo Zhong, from the University of Toronto, found that consumers exposed to green products behave differently from consumers who actually buy those products. According to their findings, “while mere exposure can activate concepts related to social responsibility and ethical conduct and induce corresponding behaviors, purchasing green products may produce the counterintuitive effect of licensing asocial and unethical behaviors by establishing moral credentials. Thus, green products do not necessarily make us better people”. In other words, “purchasing green products will reduce subsequent altruism because it establishes moral credentials” and “that can subsequently license deviating behavior”.
This is yet another piece in a growing jigsaw of studies that show that human beings often act in a way that is fundamentally different from their inner values. They act in a way that fits what is perceived to be the ‘right’ behaviour; however, once they have ticked the social expectation box, they believe they have earned enough ‘credits’ to do something that is morally unacceptable. Apparently we believe that, if we do more than others, we can counterbalance our good deeds by misbehaving elsewhere.
Now let’s think about what is going on in the corporate world. Less than a decade ago, students at top business schools were debating the best excuses to justify briberies, and attempts to introduce CSR classes were being pulled because so few students were interested. The few ‘green’ projects were a laughing matter among mainstream executives, and corporate citizenship was viewed as a post-hippie ideology, and their few corporate champions used to be frowned upon, with the healthy degree of suspicion reserved to the utopians, and their careers were carefully sidetracked to minimize their potential negative impact on their companies. Suddenly, less than a decade later, all companies are ‘green’ and it has become fashionable to be environmentally conscious.
But have we truly become responsible human beings in a responsible society in such a short decade? Or are we just behaving in a way that is socially acceptable? And, worst, will we use these moral credentials to offset our misbehaviours elsewhere?
If we look at the recent responses McKinsey received from almost 2 thousand executives when it asked why their companies invested on sustainability, it is evident that the vast majority are still primarily focused on reputation management. Only 1 in 5 is doing it because it is linked to its corporate goals. The situation becomes even worse among those operating in the B2C sphere, where the number of those who are doing it to manage their reputation is 2.5 times the number of those who are doing it because it is aligned to their strategic objectives.
This is yet another piece in a growing jigsaw of studies that show that human beings often act in a way that is fundamentally different from their inner values. They act in a way that fits what is perceived to be the ‘right’ behaviour; however, once they have ticked the social expectation box, they believe they have earned enough ‘credits’ to do something that is morally unacceptable. Apparently we believe that, if we do more than others, we can counterbalance our good deeds by misbehaving elsewhere.
Now let’s think about what is going on in the corporate world. Less than a decade ago, students at top business schools were debating the best excuses to justify briberies, and attempts to introduce CSR classes were being pulled because so few students were interested. The few ‘green’ projects were a laughing matter among mainstream executives, and corporate citizenship was viewed as a post-hippie ideology, and their few corporate champions used to be frowned upon, with the healthy degree of suspicion reserved to the utopians, and their careers were carefully sidetracked to minimize their potential negative impact on their companies. Suddenly, less than a decade later, all companies are ‘green’ and it has become fashionable to be environmentally conscious.
But have we truly become responsible human beings in a responsible society in such a short decade? Or are we just behaving in a way that is socially acceptable? And, worst, will we use these moral credentials to offset our misbehaviours elsewhere?
If we look at the recent responses McKinsey received from almost 2 thousand executives when it asked why their companies invested on sustainability, it is evident that the vast majority are still primarily focused on reputation management. Only 1 in 5 is doing it because it is linked to its corporate goals. The situation becomes even worse among those operating in the B2C sphere, where the number of those who are doing it to manage their reputation is 2.5 times the number of those who are doing it because it is aligned to their strategic objectives.
What will happen if, like the human beings leading them, companies who are ‘green’ use their green masks to offset their citizenship shortfalls elsewhere? Are these green investments being used to justify less socially responsible attitudes elsewhere? Suddenly, all companies are ‘green’, but how many are truly interested in being good citizens? And for how long can this last?
The danger is that this green bubble will eventually burst and generate its opposite, creating an enormous ‘green vacuum’ surrounded by scepticism, in the same that, when the internet bubble burst, no one trusted even the sound dotcoms and, when the mortgage bubble burst, the loan market dried even to reliable borrowers. The ‘green vacuum’ it will leave behind will have massive negative effect that goes well beyond the corporate realm.
Furthermore, because many organisations are portraying a green behaviour but are not even aware of their own corporate personality, many aspects of their corporate citizenship are being overlooked. Many companies are forgetting (or are unaware) that corporate citizenship also covers a myriad of other issues and stakeholders, such as employees, shareholders, consumers, government, local communities, supply chain, competitors etc. If companies are acting as human beings, and by buying ‘green credentials’ they are allowing themselves to act irresponsibly on other fronts, they should at least start thinking about how to brace themselves for the wave of problems ahead, from bad press to customer criticism, from shareholder lawsuits to government intervention.
It is naïve to imagine that all these stakeholders will not eventually increase the level of public scrutiny against companies they might believe are using green investments to cover up their lack of commitment in other areas of the citizenship spectrum. And our experience has shown us that, for all these stakeholders, worse than not doing anything is falling into discredit because they don’t trust your actions and intentions anymore. The amount of effort, time and resources required to recover from a discredited position is much higher, and they often do not succeed.
- Gus
The danger is that this green bubble will eventually burst and generate its opposite, creating an enormous ‘green vacuum’ surrounded by scepticism, in the same that, when the internet bubble burst, no one trusted even the sound dotcoms and, when the mortgage bubble burst, the loan market dried even to reliable borrowers. The ‘green vacuum’ it will leave behind will have massive negative effect that goes well beyond the corporate realm.
Furthermore, because many organisations are portraying a green behaviour but are not even aware of their own corporate personality, many aspects of their corporate citizenship are being overlooked. Many companies are forgetting (or are unaware) that corporate citizenship also covers a myriad of other issues and stakeholders, such as employees, shareholders, consumers, government, local communities, supply chain, competitors etc. If companies are acting as human beings, and by buying ‘green credentials’ they are allowing themselves to act irresponsibly on other fronts, they should at least start thinking about how to brace themselves for the wave of problems ahead, from bad press to customer criticism, from shareholder lawsuits to government intervention.
It is naïve to imagine that all these stakeholders will not eventually increase the level of public scrutiny against companies they might believe are using green investments to cover up their lack of commitment in other areas of the citizenship spectrum. And our experience has shown us that, for all these stakeholders, worse than not doing anything is falling into discredit because they don’t trust your actions and intentions anymore. The amount of effort, time and resources required to recover from a discredited position is much higher, and they often do not succeed.
- Gus
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Temperature & the allocation of time 05/03/2010
Joshua Graff Zivin, from University of California, San Diego, and Matthew Neidell, from Columbia University, recently concluded a brilliant analysis linking labour supply and global warming, called "Temperature and the allocation of time: Implications for climate change". At the same time, they also looked at time allocation for leisure activities and its correlation with temperature increase.
Among other things, they found out that, as a whole, the labour supply does not change significantly. Accordingly to their research, the total labour supply in the whole economy would be reduced only by 19 minutes when temperatures rose above 37 degree celsius.
But, and that is where they had a very clever insight, not all industries are impacted in the same way and 19 minutes represented only an average composed by drastic changes in both directions. When they segmented the industries into those highly exposed to temperature rises and those less exposed, they found that labour supply quickly declines drastically when temperatures go above 30 degrees celsius for those industries that were more exposed. For instance, above 37 degrees celsius, labour supply in those industries with high exposure declines by as much as an hour.
In practice, that means that, as temperatures rise, we will start seeing the economy moving from blue to white collar work. Ultimately, their findings could also imply that we should expect to see service industries - which traditionally pay above average salaries-experiencing lower wages as the supply of labour will tend to increase, whilst other critical sectors where workers are highly exposed to temperatures – such as farming and construction – will tend to experience higher labour costs which will, inevitably, be transferred to the final customer.
Furthermore, as they explain “while the net employment impacts in the US may be small, they may be considerably larger in developing countries, where the industrial base is more typically concentrated in climate-exposed industries and baseline temperatures are already warmer. In middle-income countries like Mexico, for example, back-of-the-envelope calculations suggest a 2% drop in overall employment at the end of this century. In poorer regions like sub-Saharan Africa, where nearly all labour is in climate-exposed industries, the consequences may be devastating.”
When they looked at time allocation on indoor activities, they found that people tend to spend almost half an hour more time indoors when temperatures rise from 27 to 37 degrees celsius.
The growing literature of findings such as these presented by Zivin and Neidell put in check any organisation of any size thinking that changes in temperature do not affect them, or that this is someone else's problem. Regardless of where they are or in which industry they operate, temperature rises and changes on seasonal patterns will positively or negatively impact the cost of raw materials, their labour supply, the customer dynamics and, ultimately, their pricing policies and product and service availabilities.
- Gus
Among other things, they found out that, as a whole, the labour supply does not change significantly. Accordingly to their research, the total labour supply in the whole economy would be reduced only by 19 minutes when temperatures rose above 37 degree celsius.
But, and that is where they had a very clever insight, not all industries are impacted in the same way and 19 minutes represented only an average composed by drastic changes in both directions. When they segmented the industries into those highly exposed to temperature rises and those less exposed, they found that labour supply quickly declines drastically when temperatures go above 30 degrees celsius for those industries that were more exposed. For instance, above 37 degrees celsius, labour supply in those industries with high exposure declines by as much as an hour.
In practice, that means that, as temperatures rise, we will start seeing the economy moving from blue to white collar work. Ultimately, their findings could also imply that we should expect to see service industries - which traditionally pay above average salaries-experiencing lower wages as the supply of labour will tend to increase, whilst other critical sectors where workers are highly exposed to temperatures – such as farming and construction – will tend to experience higher labour costs which will, inevitably, be transferred to the final customer.
Furthermore, as they explain “while the net employment impacts in the US may be small, they may be considerably larger in developing countries, where the industrial base is more typically concentrated in climate-exposed industries and baseline temperatures are already warmer. In middle-income countries like Mexico, for example, back-of-the-envelope calculations suggest a 2% drop in overall employment at the end of this century. In poorer regions like sub-Saharan Africa, where nearly all labour is in climate-exposed industries, the consequences may be devastating.”
When they looked at time allocation on indoor activities, they found that people tend to spend almost half an hour more time indoors when temperatures rise from 27 to 37 degrees celsius.
The growing literature of findings such as these presented by Zivin and Neidell put in check any organisation of any size thinking that changes in temperature do not affect them, or that this is someone else's problem. Regardless of where they are or in which industry they operate, temperature rises and changes on seasonal patterns will positively or negatively impact the cost of raw materials, their labour supply, the customer dynamics and, ultimately, their pricing policies and product and service availabilities.
- Gus
