Creating Social Value Blog / Corporate Social Relevance

CSR Check Up: Healthy or Not?

By Bradley Googins & Philip Mirvis

A monthly installment from two of The Lewis Institute’s Social Innovation Fellows: Bradley Googins and Philip Mirvis. The Lewis Institute is proud to give thought leaders, innovators and risk takers in their fields a platform to share their perspective with our community. The opinions expressed here are their own.

It seems you can get almost anything you want or need at a drugstore today.  Lotions, potions, salves, a variety of health and medical paraphernalia are on offer of course, but also beauty products, paper goods, seasonal fare (for Valentine’s Day, Easter, 4th of July), an assortment of food and beverages, and  in  some locales even booze.

But one thing you soon won’t be able to get at a drugstore, or at least at CVS, is cigarettes.

You can be sure that CVS didn’t take this business decision lightly.  According to company officials, CVS will lose over $2 billion in sales annually by dropping cigarettes (as well as cigars, snuff, and pipe and chewing tobacco).  Immediately after the announcement, CVS’s stock price dipped 1 percent.  Meanwhile, the shares of rival Walgreen Co., which will keep selling tobacco products, jumped 3.9 percent and Rite Aid’s stock rose 2 percent.

CSR and Health

The announcement by CVS that it was yanking tobacco off its shelves invites a health check-up for CSR programs in other industries and sectors. It is not often you see a company take such a visible stance on a controversial public health issue and be willing to suffer a financial hit to its bottom line.  But consider the strategic advantage of being the “first mover” in this area.  CVS is growing big time in health care by offering “doc-in-a-box” nursing and physician services.  It is hard to be credible as a health care provider when selling cigs-on-the-side.  CVS also expects that its savvy business decision will enable the company to strike more profitable deals with health insurers, to say nothing of attracting new customers (and keeping current ones) by buffing its health-conscious image.

Other corporate moves on health in the news:  Fast food chain Wendy’s CEO, Emil J. Brolick, recently tweeted:  “We want to get to the point where nothing on our labels looks like it came from a chemistry book.”  His comments come just weeks after another fast food chain, Subway, said it would remove the chemical azodicarbonamide from its bread.  Why? Food blogger Vani Hari, who runs the site, gained 75,000 signatures to a petition asking the chain to ban the chemical, which is also found in shoe rubber and yoga mats.  The decision also responds to the growing “clean label” movement whose proponents include millions of foodies as well as consumer activists and Michelle Obama’s healthier eating campaign.

These are not isolated cases. Various bloggers report that PepsiCo Inc. will stop using brominated vegetable oil in Gatorade; Starbucks will stop using a red dye made of crushed bugs; and Kraft Foods plans to replace artificial dyes with colors derived from natural spices in its macaroni and cheese.

The clean label (and healthier ingredient) movements have a long way to go.  As an example, azodicarbonamide can still be found in breads, buns, and bagels at McDonald’s, Burger King, Arby’s, Jack-in-the-Box, and Chick-fil-A (and in other Wendy’s products), as well as in Dunkin’ Donuts.  Industry watchers note, too, that Coca-Cola, whose sports drink Powerade also contains brominated vegetable oil, has no plans to drop the ingredient and Mars Inc., who received a petition signed by 141,000 people to remove artificial colors from M&Ms, is similarly unmoved.

Getting Ahead of Trends

So two cheers for CVS, and some hand clapping for Wendy’s and Subway, but let’s get real–is this compelling evidence that companies are responding to healthy consumption and lifestyle trends?  When McDonalds takes Bacon Cheeseburgers off its menu, and Monsanto and the food processors support labelling of GMO ingredients, then we can say that industry is listening to consumers and taking their health seriously!

On this point, we are reminded of the admonition in a recent McKinsey article by John Browne and Robin Nutgall that CSR programs have failed to serve companies well by helping them to understand the profound social and environmental issues that pose threats and opportunities to their core business.

Indeed there is evidence aplenty that many companies have their heads-in-the-sand when it comes to healthier living trends.  In Salt Sugar Fat: How the Food Giants Hooked Us, journalist Michael Moss documents how the food industry has pooh-poohed data on rising obesity rates and sacrificed consumer’s health for the sake of the bottom line.  And now we have a record-breaking $2.1 billion fine levied against Toyota for hiding safety problems in its autos and GM’s new president Mary Barra admitting that the company took “too long” to acknowledge hazards associated with an faulty ignition switch that date from 2005.

While bottom line considerations are to be expected in the private sector, a small group of leading companies understand that profit-taking cannot be sustained without taking account of changing consumer expectations and emerging social and environmental issues.  We have blogged in the past about Timberland using an informative “ingredients label” on its shoe boxes to let customers know about humane animal care and the welfare of shoe sewers in the production of Timberland boots. Now Puma has developed a “clever little bag” to create more environmentally friendly shoe boxes. This bag reduces cardboard use by 65%, eliminates tissue paper and plastic retail bags, and reduces water, energy and diesel consumption by 60%.

When it comes to responding to such issues, baby steps are fine.  But how about some big moves?  Recall Peter Drucker’s sage message that “social issues are business opportunities in disguise.”  We see this responsiveness at Unilever whose “sustainable living plan” calls on the company by 2020 “to improve health and well-being, reduce environmental impact and source 100% of our agricultural raw materials sustainably and enhance the livelihoods of people across our value chain.”  The plan includes aggressive targets, measured results, regular reports on progress, and some impressive efforts, already underway, to reduce salt, sugar, and saturated and trans-fats from its recipes.

So what’s next for CVS:  How about dropping candy bars (or as a baby step moving them away from the cash register)?  And for food processors: How about your industry getting behind proposed FDA changes in nutrition labels that put calorie counts in large type and adjust portion sizes to reflect how much Americans actually eat?  And, please, get rid of more if not all of those “chemistry book” ingredients!