Hill+Knowlton Strategies

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

Just over a year ago, in the aftermath of the worst natural disaster ever to befall Haiti, I wrote about the generous and inspirational commitments that individuals, organizations and corporations were making in response. I also wrote about the very best way to help in times of disaster, based on lessons long learned by government, NGOs and others in the disaster response and relief community.

Now, in the aftermath of the worst natural disaster ever to befall Japan, I feel compelled to revisit some of those same themes and learnings. It’s unfortunate that just a year later, we are faced once more with a seemingly unprecedented crisis and the prospect of a long, hard recovery and rebuilding process. If there is any glimmer of a bright spot here for humanity, it is that when times are their worst, people and companies are often at their best. And, with each disaster, we have the benefit of knowing what worked – or didn’t – in previous instances.

According to the latest data collected by the Business Civic Leadership Center, response by the corporate sector has been incredibly strong – more than $200 million dollars in aid committed in just over 10 days. If giving continues at this pace, it is on track to surpass business support for disaster relief efforts following the January, 2010 earthquake in Haiti. Individual giving to major relief agencies is also picking up, totaling more than $64 million just one week after the disaster. And that’s a very good thing, because the cost, by any measure, is going to be severe, even for as advanced and industrialized a nation as Japan. Experts now estimate the cost could reach $309 billion, making it the world’s costliest natural disaster ever.

Most telling for me about the true need and real plight of those affected was the appeal I received from ChildFund International, an organization that I support. On an ordinary day, it noted, ChildFund Japan raises funds for the programs it implements in developing countries around the world… but today is no ordinary day. For the first time in its history, ChildFund Japan launched an emergency response effort for its own country.

One of the most important lessons the world has learned from responding to disasters is that cash donations are the best way to help the people impacted, especially in the initial aftermath. Cash is immediate, it is flexible, and it provides for culturally and geographically appropriate support. Most importantly, it allows disaster relief organizations to purchase exactly what is needed, and to procure materials near the affected area, cutting down on transportation time and cost. It also supports regional economies and speeds the rebuilding process.
 
One of my clients, the Center for International Disaster Information, has been tracking and advocating for responsible and appropriate disaster response for more than 20 years. Over that time, they have witnessed some incredibly insensitive, culturally inappropriate, inefficient, and even harmful responses. Simply put, when individuals, groups or companies send stuff that is unneeded, supply chains get clogged, boxes must be unloaded and warehoused eating up precious time, personnel and storage space. Ports near Sendai and many throughout the Miyagi Prefecture are severely damaged; some will be closed for months. There are extremely limited points of entry for the critical relief supplies being brought in by experienced agencies, so it’s critical that they not be choked up by well-meaning but unneeded donations.
 
Worse than that, in some instances after disasters people send items apparently without any thought at all. Hard to believe, but people have sent winter coats to affected people in tropical climates; companies have sent stale cookies and long-expired medicines; canned ham has been shipped to predominantly Muslim countries and canned beef to predominantly Hindu areas; in one shipment of donated supplies, a relief agency found used tea bags; party decorations were mailed to families who had just lost their homes. And, in perhaps the worst instance of inappropriate disaster response ever, one company sent a shipment of breast implants. However well-intentioned, it often seems that some companies and organizations don’t take into account the full impact of their donations. They are in such a rush to act, that they forget – or just plain fail – to think.
 
That’s why in the midst of this tragedy, I am encouraged by the thoughtfulness and innovativeness of corporate response, not to mention the sheer volume of companies expressing an interest in helping. Some companies, because of their unique capabilities, core competencies, knowledge and expertise, and product and service offerings, are in great positions to bring those things to bear after a disaster. This is especially true when they establish long-term relationships with relief organizations ahead of time, and invest in preparedness and contingency planning. 

In the past week alone, I have read about and learned of some truly responsible and wholly appropriate ways for companies to do their part for the people of Japan.

First and foremost, companies are giving cash – lots of cash – and they are directing it to the experienced, credible relief agencies that are already on the ground, the ones in the best position to help and to help quickly. Firms are matching employee donations, and many are waiving transaction and service fees for their customers who are making donations. And, many companies are giving products, services and expertise that have been specifically requested by agencies on the ground – equipment, supplies and know-how that are desperately needed right now.

• Coca-Cola has pledged $31 million in cash and much needed beverages to relief and reconstruction efforts. The company is also donating its TV and radio ad time to public service announcements encouraging Japanese citizens to conserve energy, a necessity given continued power outages in much of the country.
• Wireless carriers and telecommunications firms are facilitating text donations and allowing customers to call and text family in Japan free for a specified period. Others are offering free programming from TV Japan to keep their subscribers aware of what’s happening.
• Financial services firms like American Express, MasterCard, Visa, Discover, Citi and Western Union are waiving fees on donations and money transfers to Japan for specified periods. Wells Fargo has programmed its ATM machines to accept donations for relief efforts directly from customers.
• PayPal, Zynga, Living Social, Sony, Apple, Facebook and other tech, gaming and social media firms are doing some wonderfully creative things to help people make financial contributions.
• Airlines are awarding bonus miles to their frequent flyers as an incentive to make donations. Hotels are allowing their customers to convert rewards points into cash donations to relief organizations.
• Fed-Ex and UPS are providing logistics and transportation support to a variety of relief agencies and NGOs already on the ground.
• GE is contributing $5 million in cash, equipment and service – including critical expertise and a 24-hour command center related to their nuclear energy business.

There are many, many other great examples of companies not only doing the right thing, but responding in the right way. Take a look at some of the inspiring commitments being, cataloged by the BCLC’s Corporate Aid Tracker. The bottom line is that sending cash donations is the very best way to help the people of Japan, especially right now. CIDI and the State Department are directing people and organizations interested in helping to InterAction, a large coalition of U.S.-based international non-governmental organizations. 

Many of the same companies noted above have also announced major commitments to provide additional funding, materials and support during the post-disaster phase, when rebuilding and re-development will be the priority. This is important, because as we have seen so many times in the past, when a disaster no longer makes the headlines or the evening news, the world often forgets about it and support for vital rebuilding efforts can wane. The long-term generosity and commitment of many companies will help pave Japan’s long road to recovery that lies ahead.

Our hearts are with Japan and her people. As Emperor Akihito said in his solemn address, “those who were affected by the earthquake must not lose hope.” They must “survive tomorrow onwards…and continue to oversee the rebuilding process.”

A few blocks away from where I sit, thousands of cherry blossom trees are blooming. These are the living legacy of a gift of friendship to the U.S. from the people of Japan 99 years ago. In addition to being beautiful symbols of friendship, these trees are symbols of strength, hope and resilience. So too is Japan strong, hopeful and resilient. Like the sun so perfect and proud in the center of her flag, the Nisshōki, the sun will rise over Sendai tomorrow. And it will rise the day after that. It will shine on Japan. And in time, her people will once more be able to bask in its warmth.

Privacy in the Facebook Age – can we really have it both ways?

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

The Queen of England joined Facebook late last year. I signed up early last month. It was a New Year’s resolution and I was officially out of excuses. If, at age 83, Her Majesty could do it, then I certainly could. I had my reasons for waiting so long, much to the surprise, chagrin and teasing of friends and family. First, the time crunch. I’ve seen how so many friends and colleagues practically live on the site, and how much it consumes some of them. But, more than concerns over time were concerns over privacy. How much would I have to give up to glean the benefits of the site and all it had to offer?

Facebook has had to deal with continued criticism, boycotts and legal action over allegations of violating user privacy. Some of this was related to the site’s wildly popular but seemingly innocuous gaming apps, like Farmville and Texas HoldEm. And Facebook is just one of many firms being forced to address privacy issues head on.

• Google, a company with a strong track record in corporate responsibility, has come under fire on several fronts and in many countries for ethics and privacy issues related to its Street View technology featured on Google Maps. It also settled a class action lawsuit over privacy breaches related to Google Buzz, its social networking program.
• There are concerns that photos uploaded to Flickr or Photobucket using the Exchangeable Image File Format can contain the GPS coordinates of where a photo was taken, compromising a user’s privacy and possibly their safety (or that of their children).
• A Wall Street Journal investigation found that dozens of iPhone and Android apps can share personal information with other firms without the user’s awareness or consent.
• Location-based and geosocial networking services like Foursquare present a host of challenges (check out pleaserobme.com for more on their push for greater awareness around locational privacy and over-sharing).
• Video game systems, such as the Xbox Kinect, capture and store user profile information and share them with game developers.
• Other growing concerns including scraping, where media research firms troll seemingly private chat rooms, social networking sites and discussion boards for personal information; re-identification, where aggregated and anonymized personal data is traced back to its owner; and Flash cookies, which can track a user online without their knowledge or consent.

There’s no question that new social networking sites and apps are great in so many ways. They are connecting (and reconnecting) us in ways we never imagined, they help inform and even educate us, and they certainly entertain us. In a way, these sterile, impersonal and technical platforms allow us to share and celebrate our humanity like never before. After all, these connections and relationships are what it means to be engaged and alive. But, they don’t come without a cost. And one of those costs, I am finding, is that with each new gain we lose a little bit of our privacy.

Privacy – for customers, employees and data – has always been an important facet of a company’s commitment to corporate responsibility. But, as technology has grown, so too has the focus on and importance of privacy.

How do we, as consumers and citizens, balance our desire for the benefits of these new technologies with our needs for and rights to privacy? Are current policies and limitations spawning a generation of privacy fatalists? Or do the old norms, mores and expectations for privacy just not exist anymore? Or is it both?

A bigger question may be, how can corporations balance their business needs – the seemingly endless benefits that come from these platforms and technologies, and the wealth of information they contain – with their legal and ethical responsibilities to safeguard consumer privacy? The Web Analytics Association, a trade group for internet data analysts, has launched a code of ethics for its members and supporters. It’s a good start, but some wonder how effective such a voluntary code can really be.

There is an increasing need for companies to meet market demands and win in the marketplace while also protecting, respecting and ensuring consumer privacy and navigating new laws and policies. I think most companies would agree that self policing is better than regulation, but Congress and the Federal Trade Commission (along with a host of other regulatory bodies around the world) are exploring a variety of “Do Not Track” provisions. These will certainly be game-changers if and when they are enacted.

In the meantime, the WAA code provides a solid framework, focusing on five key pillars: privacy, transparency, consumer control, education and accountability. A commitment to privacy rooted not just in legal requirements but in ethics-based and values-based criteria can have tremendous benefits for companies today. Such a commitment engenders confidence and loyalty on the part of customers and other stakeholders, manages risks, enhances reputation, and can even help increase sales. These benefits, however, must be balanced with the stark reality that we live in the age of data-mining and targeted marketing.

But just because consumers put their information out there, intentionally or unintentionally, doesn’t mean that they will tolerate the use of that information by third parties. Research clearly shows that Americans do not want to be tracked online. And so, we see a growing contradiction between many people today who vacillate between demanding privacy on the one hand, and on the other, practically posting their Social Security Number and blood type online. As a society, we seem to want it both ways, and this is fostering a new understanding of what privacy really means. Is it situational? Is it dependent upon the definition of the individual? I’m not sure we know the answer just yet.

And, while many of these concerns are related to social networking sites and new media, this isn’t just a technology issue. Every company in every industry should talk to its consumers about privacy. Consider, for example, the fact that more than 80% of teens and more than 40% of children ages 3 to 11 are now spending considerable time online. Or, the myriad issues looming related to increased use of RFID tags at the individual product level in supply chain management and inventory control. No time like the present to let your customers – as well as your employees, partners and regulators – know exactly where you stand.

Too often it seems, the corporate privacy policies we see – in publications, on websites, or mailed to us from the companies we do business with – are outlined in the finest of fine print. Transparency, clarity and frequency go a long way in establishing trust. When it comes to privacy, I don’t think it’s possible to over-communicate with your customers and stakeholders.

There are some excellent resources out there for those inclined to learn more, including: the Electronic Privacy Information Center, the International Association of Privacy Professionals, and Privacy Exchange.

So, with apologies to Her Majesty, to borrow from the centuries old proclamation Le Roi est mort. Vive le Roi!, as one king passes, another ascends. As one construct of privacy leaves us forever, a new one is taking shape. Responsible companies, and those that will thrive in the Facebook Age, will take heed.

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

“If mankind is not to perish after all the dreadful things it has done and gone through, then a new spirit must emerge.  And this new spirit is coming not with a roar but with a quiet birth, not with grand measures and words but with an imperceptible change in the atmosphere – a change in which each one of us is participating…”

If ever there were a New Year’s wish for humanity, this beautiful prose from Albert Schweitzer would fit the bill perfectly.  A new year, a new spirit, a new chance to live and work responsibly and sustainably.  It is the season for looking back and looking ahead, and I’ve been doing a lot of both lately.  Colleagues, clients and friends have been asking me what I’m seeing in terms of coming trends in corporate responsibility and sustainability.  Here’s what I’ve been telling them.

In spite of changes in Congress, questions over the validity of research, and a general “green fatigue” on the part of many Americans, climate change will still be accepted as the primary environmental issue and challenge of our time.  Research strongly suggests that citizens expect businesses to play a role in mitigating it, and act in concert with government to address it.  Additionally, business risk related to climate change will remain increasingly important to mainstream investors, and many will continue to scrutinize corporate sustainability reports and other collateral as a window into the company and its exposure. 

Leading companies are recognizing and responding to consumer demands for action and information regarding climate change, and embracing this as an opportunity for reputation building and thought leadership.  To stand out, companies will need to rethink where and how they share and celebrate their climate change related programs, policies and partnerships with customers and stakeholders.  As is often the case, one innovative and memorable effort will be worth more than dozens of smaller ones.

External influencers and organizations will continue to impact consumer brand perceptions more than corporate PR or CSR reports.  Research suggests that consumers want more information on a company’s commitment to corporate responsibility and sustainability, but need that information in simpler ways and where it connects to them.  In response to these changing influences on consumer brand perceptions, sector leaders will need to integrate their company’s CSR story into mainstream consumer communications channels – from marketing and television advertising to in-store displays and product packaging to digital communications.      

Interest in the environment will remain strong on the part of both businesses and consumers. We will also continue to see an increase in firms applying for LEED certification for their facilities, and entering into strategic partnerships with environmental conservation organizations.  It will be essential for companies to carefully navigate “green” opportunities and partnerships, as vocal consumers, activist NGOs and government regulators such as the Federal Trade Commission continue to call firms out for greenwashing, fraudulent claims and abuse of marketing communications.        

Water use, availability and scarcity will continue to be of growing concerns in nearly every part of the world, posing a major operational and reputational issue for companies.  This is especially true for firms in water-intensive industries, but since every company uses water, it will be an issue for the entire business sector.  Companies will need to get in front of the water issue first by conducting assessments of their true water “footprint”, taking steps to minimize use throughout their supply chains and product lifecycles and then highlighting success stories and sharing best practices with customers, partners, regulators and other stakeholders.

As companies and individuals continue to take action and find new ways to be more responsible and sustainable in the year ahead, 2011 presents an opportunity for humanity’s finest hour.  The critical changes we need don’t have to come with a roar or with grand measures, to paraphrase Schweitzer’s poignant words, although many of our greatest challenges certainly deserve and require them.  In the spirit of an ambitious New Year’s resolution for the world, it would be wonderful to see every individual, organization and company ask themselves how they can participate in that imperceptible but meaningful change.

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

Hard to believe that the end of another summer is upon us.  Earlier this month I was on Cape Cod, enjoying a week of vacation, which included eating a lot of fresh seafood.   The menu included cod (of course), clams, flounder, haddock, lobster and scallops.  All of it was delicious, but with every bite there was a little remorse.  Ever since I first read the United Nations Environment Program’s (UNEP’s) prediction that the world’s fisheries could be depleted by 2050, I have suffered a tinge of guilt with every plate of broiled scrod, every cup of seafood stew, every lobster roll.

According to UNEP, 30 percent of global fish stocks have already collapsed – meaning that they now yield 10 percent or less of their previous potential.  I also know full well that some one billion people around the world, most of them from developing countries, rely on seafood as their primary source of protein and a major source of their sustenance.

Responsible fisheries management and improved practices here in the U.S. and around the world are a good start and help alleviate some of my guilt.  Fish farms also have a role to play in meeting the world’s growing demand for seafood, but they are not without their challenges or critics.  And while I’m intrigued by the promise of genetically altered fish, there are many unanswered questions and many associated risks still to be addressed.

Although my concerns about the health and vitality of the world’s fisheries are rooted in a desire for ecological sustainability and preserving biodiversity, a connection between overfishing and societal health and wellness (in America at least) is becoming increasingly clear.  I’m talking specifically about portion sizes and how (and how much) we consume.  The seafood platters I saw this summer were huge – as big, or bigger, than I can ever remember.  This trend isn’t limited to fish, and it certainly isn’t limited to Cape Cod.

A new report from the Center for Science in the Public Interest (CSPI) shows that at restaurants across the country, “regular” portions are now super-sized:  two, three (or more) times USDA and FDA recommendations.  No surprise then that CSPI believes this is contributing directly to the two-thirds of adults and one-third of children who are obese or overweight.

The same nation that now heralds the organic, fair-trade and locally-grown food movements is the same one that spawned the massive portion trend and the “endless,” “bottomless,” “unlimited,” “all you can eat” buffet.  I’m no expert on the economics of running a restaurant, but I’ve never understood how these buffets can be profitable.  Nor do I understand how such limitless consumption – of seafood or any other food – can be sustainable.

Businesses must make a profit, but there is increasing evidence that they can do so by encouraging sustainable consumption on the part of their customers.  From the television programs we watch, to the clothes we wear, to the toys we buy our kids, businesses play a major – maybe even a central – role in conditioning us as consumers.  Businesses help us define what constitutes value and normalcy in the products and services we consume. 

This is a discussion that every company in every sector should be having and many are, encouraged and aided by a great Business for Social Responsibility report – The New Frontier in Sustainability: The Business Opportunity in Tackling Sustainable Consumption.  Clearly, it’s bigger than restaurants – but food (and seafood in particular) is great place to start.

More often than not this summer, my wife and I shared the huge seafood platters at the restaurants and clam shacks we frequented.  If any of them had offered half-sized portions for half the price, they would have seen a lot more of my business.  Don’t tell them, but I would even have paid a little more than half.

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

“Business started long centuries before the dawn of history, but business as we now know it is new – new in its broadening scope, new in its social significance.  Business has not learned how to handle these changes, nor does it recognize the magnitude of its responsibilities for the future of civilization.”

        Wallace Donham, Dean of Harvard Business School – 1929

I love this quote.  Sadly, it rings as true today as it did 80 years ago.  Business had not yet learned how to handle the changes that were happening then in terms of the real impact the sector had on society.  And while incredible progress has been made in the decades since Donham’s prophetic observation, it’s clear that business still does not recognize the real power it holds in shaping the future of our planet and its people.  There are great models of responsible, sustainable corporations and glimmers of hope from enlightened enterprises.  But there are too many BPs out there – companies with lots of promise but little execution.

As someone who used to live in the Gulf Coast region and who holds a solemn respect for our natural world, the BP spill—coming to me live via 24/7 spillcam—continues to crush my spirit.  As a communications professional, it continues to astound and amaze me.  There are many important communications, public relations and corporate positioning lessons to be learned from the BP saga (no doubt, detailed analyses and dissections of the event are already appearing en masse in the PR and communications trade journals).  But the longer term story here is that BP’s spill now joins the annals of corporate communications landmark events – the flashpoints in our collective consciousness that create lasting legacies, sometimes good (think Tylenol) but usually bad. 

Every individual has their own mental list – and what’s on it depends a lot on where you live, what you do and when you were born.  For some, the list begins with watershed, game-changing books like Rachel Carson’s Silent Spring or Ralph Nader’s Unsafe at Any Speed.  For others, it is a laundry list of mismanagement, malfeasance and missed opportunity – Barings Bank, Bridgestone/Firestone, Enron, Parmalat, Societe Generale, Toyota, Tyco, WorldCom…  Exxon’s Valdez oil spill ranks high on most of our lists, but for many, the list is topped by Union Carbide’s 1984 gas leak in Bhopal, India.  More on that in a moment. 

Plenty of companies have slow simmering issues and scandals that play out over time, but I’m convinced that the ones that are largely event-driven are more powerful to the human psyche – regardless of their actual impact.  As a result, these legacies live on sometimes for generations.  Some may argue that Prudhoe Bay or the Texas City refinery explosion would already have landed BP a place on the list, especially because of how antithetical those events were to the culture of responsibility and environmental stewardship that the company (through the voice of Lord John Browne) spent a decade building, or at least talking about.  That may be true, but those events—as unfortunate as they were—were nothing compared to the disaster in the Gulf of Mexico.

Some consumers have short memories, but many more do not.  I know people who are still punishing Exxon for the Valdez spill – going out of their way to another service station even if the price is a few cents higher per gallon.  And this brings me back to Bhopal.

Bhopal remains the world’s worst industrial disaster.  It also remains one of the early, principal milestones and demarcation points for when the world woke up to what it should expect of corporations.  And while Bhopal may still top our mental lists, until recently, it was largely a talking point in CSR speeches and a footnote in text books.  Dow, which bought Union Carbide in 1999, has maintained a quiet microsite on the event and resulting settlement, but the tragedy hasn’t been much of an issue for them, at least publicly.  That changed a few weeks ago, when sentences were finally handed down in the long running case.  Although seven former employees of Union Carbide were found guilty of death by negligence, their two year prison sentences have been hailed by survivors and their advocates as a slap in the face, prompting a torrent of fury and protest.  And there are renewed calls for Dow to do more in terms of site remediation and accepting greater responsibility to compensate victims and bring about true justice.

A full 25 years later, and Bhopal is still generating community outrage, criticism from NGO activists and a robust online campaign, pointed media coverage, interest from policy-makers and reputational risk for Dow.

So, if the recent echoes of Bhopal are any indication, it appears that the very actions by which BP hoped to save a little time and a little money are going to cost them plenty more of both.

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

“What is needed is a better approach to help the poor, an approach that involves partnering with them to innovate and achieve sustainable win-win scenarios where the poor are actively engaged and, at the same time, the companies providing products and services to them are profitable.”

                   C.K. Prahalad – From The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits

I’m often asked – by colleagues, friends, clients and prospective clients – what is the value of CSR?

I am always happy to run through the now well-established list of how different dimensions of a genuine commitment to corporate responsibility can impact the bottom line, directly and indirectly.  From stronger relationships with communities and an enhanced license to operate to increased profitability through operational efficiency gains and materials and resource management, to management of risks and improved relations with the investment community, enhanced employee relations that yield better results and cost savings with respect to recruitment, motivation, retention, learning  and productivity, to improved reputation and branding, and qualification for billions of dollars in screened business, the business value of and return on investment in CSR is increasingly clear.

In addition to these many benefits, some of the world’s largest companies have found that embracing CSR can also provide access to new “aspirational” consumers and new revenue streams in emerging markets, which in turn can foster significant product and business innovation.  Recently, we lost a visionary man who made truly game-changing contributions to the world through his research, observations and recommendations on these aspects of corporate responsibility and global citizenship.  Coimbatore Krishnarao “C.K.” Prahalad died last month after a brief bout with a lung ailment. Sadly, he was only 68.

Born in Chennai India, Prahalad earned degrees from Loyola College in Madras and the Indian Institute of Management, and later a PhD from Harvard Business School.  He would go on to consult for some of the world’s leading multinational corporations in a variety of industries, but he is best know as a distinguished professor at the Ross School of Business at the University of Michigan, where he pioneered and popularized the “bottom of the pyramid” concept.

While his theory that the world’s poor should be viewed as consumers is more firmly established today, it was still a radical and unorthodox notion even 10 years ago. 

The numbers speak for themselves – 4 to 5 billion underserved people representing more than $13 trillion in purchasing power.

Whether detergent and household products, cement and home building materials, microfinance and financial services products, or cell phones and consumer technology products, Prahalad proved to Fortune 500 companies that they could satisfy market needs, help address social problems, improve the quality of life for millions and make a profit. 

Companies across the business sector – from Unilever to Motorola to CEMEX, among many others – have now embraced Prahalad’s idea of “inclusive capitalism,” and have benefitted through increased sales, tax exemptions, and increased brand awareness.  This last benefit is significant for companies doing business in emerging economies, where it is important to cultivate consumers who may not be able to afford your products today, but who will demand them tomorrow.  Establishing brand preference and loyalty early on can pay huge dividends over a consumer’s lifetime.

And it isn’t always developed countries selling to the poor.  On occasion, innovations in products, services and business models developed in and for emerging markets have applications in established economies, providing still more benefits for enlightened global firms.

C.K. Prahalad was on my mental list of people I would love to meet at a conference or cocktail party some day.  He died too young, and I’m sure he had at least one or two more books left to write, and many more innovative ideas to share with those of us working in the corporate responsibility arena and those in the broader business and public policy communities.  While I’m deeply saddened by his loss, I’m appreciative of the fact that so many around the world are benefitting and will continue to benefit from the ideas and approaches to business and corporate responsibility that he pioneered.  His impact will be long-lasting, his legacy is secured.

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

Recently, I hosted a group of graduate students from Syracuse University’s Maxwell School.  I also spoke to a group of undergraduates at George Mason University.  I was struck by the questions they asked me and their responses to the questions I asked of them.  They wanted to know about the linkages between ethics and business performance; they asked about the risk management dimensions of social and environmental responsibility; and they hold crystal clear points of view on corporate reputation, respect for customers, and the value and impact of strategic philanthropy and employee volunteering.

These interactions reminded me of the numerous survey findings suggesting that young people prefer to work for companies that are socially and environmentally responsible.

§  Research recently conducted by PricewaterhouseCoopers found that 88% of millennials say they will choose to work for companies whose corporate social responsibility values reflect their own. 

§  A survey by Kelly Services found that nearly 90% of respondents say they are more likely to work for a company that is ethically and socially responsible and 80% are more likely to work for a company that is environmentally responsible.  The same survey found that 46% of Generation Y, 48% of Generation X and 53% of Baby Boomers would be willing to forego pay or promotion to work for an organization with a good reputation.

§  A MonsterTRAK.com poll found that 80% of young professionals are interested in jobs that have a positive impact on the environment, and 92% are more inclined to work for an environmentally friendly company.

§  A poll by BT found that a third of those surveyed felt that working for a caring and responsible company was more important than the salary they earned, and 44% said they would discount an employer that did not have a good reputation in terms of social responsibility.

§  Clearly, to land top talent, HR execs should pay heed to all this.  And it doesn’t seem to change once employees are onboard.  A survey by the St. James Ethics Center found that 77% of employees would leave a company if it acted in a way that contradicted their core principles.  The PwC study of millennials found that 86% would consider leaving a company if its CSR values no longer matched their expectations.

In some ways, it’s not surprising that young people have an interest in social and environmental responsibility – after all, they’ve grown up in an age when service-learning is an increasingly common concept in schools.  And they’ve been bombarded (in a good way) with eco-consciousness courtesy of Earth Day, Al Gore, and the green marketing prowess of Madison Avenue.

But is this ethos of responsibility sustained as these young people grow up?  Does the spirit of sustainability stick with them as they enter the workforce and deal with the real-world pressures that come with families and mortgages?  I would like to think so, but I haven’t seen any longitudinal studies that have attempted to test this.  If it is sustained, why?  And how can we apply those learnings to other populations?  If it isn’t, what can we do to recapture and then perpetuate that sensibility as young people grow into adults?  I am hopeful that enlightened sociologists and social psychologists may soon explore the answers to these questions.  Until then, we should find new ways to tap into and harness this interest and optimism.

Incidentally, next week, in conjunction with my company’s volunteer efforts around the 40th anniversary of Earth Day, I’ll be speaking to a group of first graders.  I can’t wait to hear what they have to say!

Treat the Earth well.  It was not given to you by your parents, it was loaned to you by your children. 

Native American Proverb

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

Several years ago, I attended a forum in Washington, DC on supply chain responsibility.  At the time, I was managing corporate social and environmental responsibility communications for two different clients, both with vast, global supply chains.  Supplier responsibility was an area of constant focus and opportunity for these companies.

The forum was a quiet, routine affair as these things go, and polite.  I saw a few participants looking a bit sleepy at the end of one session in particular – where representatives from three Fortune 500 multi-nationals spent the better part of an hour outlining the steps their companies had taken to eliminate child labor from their supply chains (the inspections and audits, on the ground partnerships, tracking and reporting).

Everything changed when, during the Q&A period, a young woman in the audience stood up and posed a question to the panelists.  She worked for a small NGO with operations in India, and noted that many families there desperately rely on the income of all family members – parents, grandparents, and yes, children.  She spoke briefly but compellingly, painting a picture of poverty and need that most in the room couldn’t comprehend.  The panelists look puzzled, and there were murmurs of surprise and disbelief throughout the audience.

I remember being at first repelled by her comments, to being puzzled (can child labor ever be okay?), to being unsure about the whole thing.  In my college sociology classes, I learned to appreciate cultural relativism.  It’s important to value and respect other cultures and their norms, but in my heart, I know that some things (like kids working in factories) are just plain wrong.  This woman, however, had a firsthand perspective and a better informed point of view on the issue of child labor in India than I could claim, so how could I argue with her?

I was reminded of all of this recently when I read an excellent piece by Hasnain Kazim in Spiegel Online.  He writes about the football stitchers of Sialkot in Pakistan, who produce millions of hand-stitched soccer balls each year.  The city has become the world leader in the manufacture of high quality soccer balls, and several companies that export them around the world bring jobs and opportunity to thousands of Sialkot’s people.  Tens of thousands more benefit from this work indirectly through the stability, economic development and related employment that come with the material suppliers, subcontractors, shipping and packaging firms, and the shops, restaurants and other businesses that cater to the workers.

For years, before greater attention was paid to the issue of child labor and before global companies like Nike and Adidas began cracking down on it, children as young as 10 worked in the factories stitching balls together.  In his article, Kazim quotes a stitching center manager who notes that these kids fared reasonably well there, learning a trade that guaranteed them income for life.  Now, the parents of many of these children, desperate for the income that their work can bring, are sending them to toil in the local brickworks and in metalworking factories – places far more dangerous and far more damaging to little bodies than the stitching centers.

As the father of two children under 10, the true cost of child labor is becoming increasingly relatable and ever more disturbing to me.  When I see pictures of children in factories or fields or behind market stalls… it’s difficult to absorb and impossible not to be moved.

The decisions we make—even the obvious and unquestionably good and right ones—have ramifications, good and bad.  And the longer I work in the area of corporate responsibility, the more I see that the principles and policies that once seemed so black and white, are every shade of gray.

In a perfect and just world, 10 year olds should be playing with soccer balls… not making them.  But I am constantly reminded that we don’t live in a perfect world.

A good law gets better

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

The United Nations has declared 2010 to be the International Year of Biodiversity.

There are many definitions for biodiversity, but the one adopted by the United Nations Convention on Biological Diversity is: “the variability among living organisms from all sources, including, ‘inter alia’, terrestrial, marine, and other aquatic ecosystems, and the ecological complexes of which they are part: this includes diversity within species, between species and of ecosystems”.

Preserving the world’s ecosystems and the web of life they each support is a good and noble goal in and of itself.  But by preserving biodiversity we are really ensuring our own health, safety, economic security, and our very way of life.  So this year, global institutions of all kinds, government agencies, and even corporations are coming together to celebrate the variety of life on planet Earth, and the value and importance it has for us humans. 

From supporting and advancing agriculture, medicine and tourism, to combating climate change, biodiversity has real bottom line benefits for our global society.  If you’ve never seen it, The United Nations Environment Programme issued a great report on the topic, The Economics of Ecosystems and Biodiversity (TEEB).

But how do we make the goal of protecting species and ecosystems real?  How do we preserve biodiversity?  One way is through policies and laws with teeth, and through the rigorous enforcement of those laws.  One such law is the Lacey Act.

Named for Iowa congressman John Lacey (1841–1913), the politician who introduced the conservation measure in 1900, the law made it illegal to transport certain species of game animals, particularly ducks and other waterfowl, across state lines.  By the late nineteenth century, professional market hunters were killing hundreds of thousands of migratory birds to supply the nation’s growing taste for wild duck and to satisfy the millinery industry’s demand for feathers (fashion at the time called for feathers of all shapes, sizes and colors).  The Lacey Act was a direct response to this wanton and unsustainable slaughter.

The Lacey Act was subsequently amended and strengthened several times over the years, but almost 108 years to the day it was signed into law by President William McKinley, it was granted far greater significance.  The Food, Conservation, and Energy Act of 2008 expanded the scope of plants and plant products protected under the Lacey Act (think: timber, wood and paper).

This change caught many companies off guard, and this past November, in the first major enforcement action of the newly strengthened Lacey Act, U.S. Fish and Wildlife Service agents raided the Nashville, Tennessee facilities of the Gibson Guitar Corporation.  According to various reports, federal agents and local police seized raw wood, guitars, computers and company files – all stemming from allegations that Gibson was in possession of illegally harvested rosewood, a popular hardwood used in crafting guitars.  It’s unclear if the wood itself was a protected species of rosewood, or if the issue was its source, since Madagascar’s forests are home to several species of critically endangered lemurs.

What is perhaps most puzzling about this incident is that Gibson was a recognized leader in responsible sourcing.  They are a major purchaser of Forest Stewardship Council-certified wood, and obtain FSC-chain-of-custody certificates for much, though not all, of their raw material. Like their competitor C. F. Martin & Co., Gibson even launched a series of environmentally-conscious guitars, including the SmartWood Les Paul model.  And Gibson’s chairman and CEO, Henry Juszkiewicz, was a member of the board of the Rainforest Alliance (he has since stepped down in the wake of this issue).

Regardless of the ultimate outcome of the investigation for Gibson (and any fines, lawsuits, protests, or boycotts – not to mention lost sales that result), this was a public relations headache that the company did not need.

The World Resources Institute has developed a Lacey Act fact sheet designed to give companies an overview on the expanded law and a primer on compliance and risk.  Business leaders tasked with managing corporate responsibility and sustainability would do well to familiarize themselves with this resource.

The true value and importance of biodiversity is elegantly and succinctly expressed in this ancient proverb, translated from Malagasy, the national language of Madagascar:

Without the forest, there will be no more water, without water, there will be no more rice.

I’m sure the lemurs (not to mention the ducks), would wholeheartedly agree.

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

Our hearts are with Haiti.  The 24-hour news coverage is arresting, but at the same time, it is difficult to watch.  For each glimmer of hope – each miraculous rescue more than a week after the initial earthquake – there is the grim reality of despair, desperation and dire need.

The world is coming together for Haiti, hoping to fill that need.  Individuals, community groups, civic organizations and corporations are displaying levels of interest, compassion and generosity not witnessed since the South Asian Tsunami five years ago.  People are marveling, and rightly so, at the seeming speed and ease with which the Red Cross has received more than $22 million for Haiti relief efforts via text.

That $22 million is indeed amazing, encouraging, and critically important all at once.  One of the most important lessons the world learned from the Tsunami is that cash donations are the best way to help the victims of a disaster, especially in the initial aftermath.  Cash is immediate, it is flexible, and it provides for culturally and geographically appropriate support.  Most importantly, it allows disaster relief organizations to purchase exactly what is needed, and to procure materials near the affected area, which cuts down on transportation time and cost, supports regional economies, and speeds the rebuilding process.

One of my clients, the Center for International Disaster Information, has been tracking and advocating for responsible and appropriate disaster response for more than 20 years.  Over that time, they have witnessed some incredibly insensitive, culturally inappropriate, inefficient, and even harmful responses.  Simply put, when individuals, groups or companies send stuff that is unneeded, supply chains get clogged, boxes must be unloaded and warehoused eating up precious time, personnel and storage space.  Haiti is a powerful case in point for this, as there are extremely limited points of entry for the critical relief supplies being brought in by experienced agencies.

Worse still, many people send items apparently without any thought.  Believe it or not, people have sent winter coats to disaster victims in tropical climates; companies have sent stale cookies and long-expired medicines; canned ham has been shipped to predominantly Muslim countries and canned beef to predominantly Hindu areas; in one shipment of donated supplies, a relief agency found used tea bags; party decorations were mailed to disaster victims who had just lost their homes.  And, in perhaps the worst instance of inappropriate disaster response ever, one company sent a shipment of breast implants.  However well-intentioned, it often seems that some companies and organizations don’t take into account the full impact of their donations.  They are in such a rush to act, that they forget – or just plain fail – to think.

That’s why in the midst of this tragedy, I am encouraged by the thoughtfulness and innovativeness of corporate response, not to mention the sheer volume of companies expressing an interest in helping.  Some companies, because of their unique capabilities, core competencies, knowledge and expertise, and product and service offerings, are in great positions to bring those things to bear after a disaster.  This is especially true when they establish long-term relationships with relief organizations, and invest in preparedness and contingency planning.  Think of the logistics and transportation know-how of Fed-Ex, UPS and DHL – or Motorola or Qualcomm’s ability to restore and operate critical communications infrastructure for first responders.  In the past week alone, I have read about and learned of some truly responsible and wholly appropriate ways for companies to do their part for the people of Haiti.

§  First and foremost, companies are giving cash – lots of cash – and they are directing it to the experienced, credible relief agencies that are already on the ground, the ones in the best position to help and to help quickly.  For example, the Avon Foundation’s $1 million donation is being split evenly between the Red Cross and Doctors Without Borders.  Donations tied to Avon’s product sales are also being planned.  Many companies, including Morgan Stanley, which is also donating $1 million, are actively encouraging employee giving through matching and incentive programs.

§  Western Union is waiving all fees to wire money from the U.S. to Haiti for a full week; MoneyGram International is making a similar concession.

§  Royal Caribbean Cruise Ships operates a private beach on Haiti’s northern coast, and while this is far from the center of devastation in Port-au-Prince, the revenue it generates is critical to Haiti’s economy, and will be vital to the country’s recovery.  For this reason, the ship line has decided to resume and maintain calls on Haiti.  In addition, company ships are helping to transport relief supplies and personnel.

§  Timberland is redirecting funds that were earmarked for a reforestation project on Haiti to basic humanitarian relief efforts.

§  While Abbott, McKesson Corporation and UPS are making significant cash contributions, they are also making in-kind donations of products and services specifically requested by relief organizations already on the ground, including the Red Cross, World Vision, Direct Relief International, CARE and UNICEF.

§  Apparel retailer TJX Corporation (T.J. Maxx, Marshalls) is in a unique position to provide clothing to families that have lost everything, but first, they are donating cash to the Red Cross.  They are waiting for more details on what, specifically, is needed, where and by whom in terms of their planned in-kind donation.

§  Target and Wal-Mart have each made $500,000 donations to the Red Cross, but owing to their unique core competencies, they are also providing foodstuffs to be delivered in close coordination with relief agencies on the ground.

§  The nation’s wireless companies – AT&T, Sprint, T-Mobile and Verizon – are waiving standard text-messaging fees for their subscribers’ donations to the Red Cross.  No doubt, this is helping to drive that $22 million.  More than that, they are transmitting the funds to the Red Cross in advance of collecting them via their customers’ monthly bills.

§  My own company, in addition to making financial contributions to the Red Cross and Water.org’s Haiti relief fund, is making information and resources available to all employees offering assistance locating family members in Haiti, tips on how best to contribute to relief efforts, guidelines for talking to children following natural disasters, and tips for coping with traumatic events.

There are many other great examples of companies not only doing the right thing, but responding in the right way.  The bottom line is that sending cash donations is the very best way to help the people of Haiti, especially right now.  CIDI and the State Department are directing people and organizations interested in helping to InterAction, a large coalition of U.S.-based international non-governmental organizations. 

Haiti has a rich history and an equally rich culture.  The country’s flag includes the motto (in French), Strength through Unity.  That will serve as a fitting national mantra in the difficult months and years ahead.  In the center of the flag, is a palm tree – strong and tall, fresh and full of life.  The world will watch and pray as the people of Haiti work to get through this epic challenge.  Let us hope that they re-emerge from this tragedy as a stronger nation – and like the tall tree on their flag, proud and full of life.