CSR In Procter And Gamble And Unilever

This report highlights the importance of CSR and presents relevant profile of two giant Consumer based product companies: Procter & Gamble and Unilever.

Introduction:

Corporate Social Responsibility (CSR) is an idea that has been introduced and used by businesses well over half a century, Corporate Social Responsibility is all about contributing back to social society through various charity projects from where companies have earned.

CSR is how Companies are doing businesses in a way that can standout them from traditional competitors in consumers mind; it gives companies enormous amount of benefits such as;

It helps to build good working atmosphere among its existing staff,

Brand differentiations through CSR projects are also used to convince organizations and the wider public, that company take current issues like health and safety, diversity and environmental issues seriously.

Also, CSR programs divert attention away from companies’ perceived negative image e.g. the petroleum giant BP has run a campaign to clean oil spill and also fix windmills on top of petrol stations in the Britain.

The Procter & Gamble Company

P&G is among of the world largest consumer goods manufacturing companies with US $78.9 billion revenue (2010) employing over 127000 people. It is 6th most admired company in Fortune magazine 2010 list.

The company is 172 years old and has grown through an enormous amount of challenges and Depression. Through all these difficulties, one success after another has to make P&G to progress, P&G’s principle is to touch and improve consumers’ lives with branded products and services.

Out of more than 300 brands, some of the famous brands owned by P&G are as follows;

Ariel laundry detergent, Braun a small-appliances, Crest toothpaste, Duracell batteries and flashlights, Gillette razors for men and women, Head & Shoulders, Rejoice shampoo, Olay Personal and beauty products, Pantene hair care products, Pringles crisps, Oral-B inter-dental products, Wella hair care products, Always Feminine hygiene, Dolce & Gabbana colognes, Dunhill Luxury Fragrance for men, Herbal Essences Haircare etc

The Unilever Company

Unilever is a Dutch multinational corporation that owns some of the world’s best consumer product brands in beverages, personal care products, cleaning agents and in food market.

Unilever founded in 1930 by the merger of the British soap manufacturer Lever Brothers and Dutch manufacturer Margarine Unie, and so become Unilever

Unilever has grown in remarkable way touching its revenues to €39,823 million (2009)

It directly have 163,000 colleagues (2010) and trades in 170 countries worldwide, also supporting the employments of thousand of suppliers, contractor and distributors.

Out of more than 400 brands spanning over 14 categories of food products, personal care and home, no other company involve with that many people’s lives in many different ways

Some of the famous brands owned by Unilever are as follows;

In Food products; Becel / Flora heart-healthy products, Heartbrand ice creams, Knorr a trusted and popular brand, Hellmann’s the world’s number one mayonnaise brand,

In Personal care category; Dove, Pond’s, Sunsilk, Lifebuoy, Vaseline, Lux, Rexona’s,

In Home care brands; Comfort, Radiant, Surf, are among the prestige brands of company

Model of Corporate Social Responsibility

Carroll Model

Philanthropic Contributions:

At Unilever Company Corporate Social responsibility is taken as serious key factor of growth. Company has a history of helping and responding towards disasters, some examples are mentioned below;

Unilever contributed $500,000 to United Nations World Food Programme for relief aid to Haiti earthquake victims.

Company recognize global humanitarian efforts as a priority, and showed its dedication previously by supporting in major relief efforts, such as Tsunami in Indonesia (2004) and Hurricane Katrina in the U.S (2005).

(Unilever, 2010)1.

Unilever also donate €1 million cash in recent Pakistan flood destruction

The donation was distributed among the UNICEF, World Food Programme (WFP), Oxfam Save the Children, and Population Services International (PSI).

Aid also include supplies e.g. Soap, toothpaste and shampoo. Company is looking forward to work with same type of organizations in future to help with development plans.

(Unilever, 2009; issuu, 2009)2.

P&G

P&G take its CSR policy seriously, According to company’s chairman of board A.G. Lafley’s latest statement he said “Company must not only sustain growth. We must contribute to the sustainability of the world we live and work in.”

P&G and In-Kind Giving

From year 2002, P&G have given away more than £6 million value of goods to a charity known as In Kind Direct. Variety of products was donated from washing powder to nappies, this help out 1,454 charity organization. The charity was established in 1996 and assists 6,000 charities since then. In Kind Directs one task is to re-distribute new goods given by some of UK’s well known producers and sellers to various other voluntary organisations.

(P&G, 2010)3.

Ethical Responsibilities:

Despite some criticism Unilever has done business in ethical manner by continue innovations;

Understanding consumer needs

Unilever has done immense amount of research on concentrating on everyday consumer requirement for diet, cleanliness and individual care by making high-quality products that are safe to use

Make products affordable and reachable to consumers

Working with Suppliers

Unilever tried to adopt sustainable ways in supply chain. From responsible sourcing, they seek to raise standards in row with the requirements set out in their Business Code and Sustainable Code of Agriculture.

Production & manufacturing

Unilever has put strict procedures in regard to look after the health and safety of its workers while at work, safeguard the health and safety of customers, and reduce the carbon emission of their manufacturing sites.

P&G

P&G has announced its new vision for environment sustainability vision that includes;

Since 2002 P&G have reduced greenhouse gas intensity of operation by 30%.

Targeting 0% consumers & manufacturing waste go to landfills.

Utilization of 100% renewable or recycled materials in products and packaging

Running site manufacturing plants with 100% recycled power.

Designing attractive products for consumers while contributing in protection of resources (P&G, 2010)4.

Legal Responsibilities:

There are several occasions on which Unilever was questioned and was forced to fulfil their legal responsibilities in better way

CASE:

“Unilever Fined over Polluting California Air with Deodorant Spray”

Unilever was fined $1.3 m by Californian air resource board USA,

After one of its Deodorant Bodyspray brand ‘AXE’ was found to have volatile organic compounds, VOCS, Exceeds its allowed limit.

Sale of 2.8 million deodorant body sprays was unsuccessful in satisfying the state’s standard of clean air. (Ens-newswire, 2010)5.

P&G

Recently Procter & Gamble was required to pay serious amount of money in terms of VAT after losing a lawful case with the tax authorities over its Pringles snack.

The Court of Appeal gives decision in favour of the Tax authorities, which has long claim that Pringles are made with a more than 42% of potato ingredients, therefore, liable for VAT. Revenue further claim that the VAT due on the sale of Pringles was “as much as £100m of tax for the past and about £20m a year for the future.”

(BBC, 2009)6.

Economic Responsibilities:

Unilever’s is indeed among the world giant multinational company and does owe the world, economic responsibility to some extent; Indeed companies like Unilever and Proctor and Gamble have influences over world economy.

EU raids Unilever in price-fix investigation

On one occasion Unilever’s Four European offices came under investigation by antitrust inspectors on suspicion of price-fixing; raid was carried out by The European Commission authority which conducts thorough inspection at the offices.

Although Commission retain the authority to fine companies up to 10 per cent of Group’s global sales, though in the past those found guilty were fined 2per cent to 3 per cent of sales.

A spokesman at Unilever confirms that inspectors did visit the offices in Austria, Belgium, Spain and Netherlands but did not comment on inspection process.

(Times online, 2008)7.

P&G

P&G has secured corporate citizenship awards five times since 2001. P&G has attracted the concentration of the public due to the various charity works that the company has done.

P&G remains to be vigilant in helping victims of natural disasters or those in accidental crises. For example, earthquake came in Turkey some years back. The country was filled with casualties; therefore P&G responded quickly to help out. They donated their relief products such as drinking water, blankets and rescue facilities. That was a huge help for people involved in the incident and were given the best support possible.

Another donation related to humanitarian was made to Indian children. Unilever conduct survey and found that many children were dying of malnutrition; P&G responded and contribute significant amount of resources towards handling this problem.

(Articles base, 2010)8.

Sethi’s Model

Social Obligation:

Unilever

There are occasions on which Unilever was forced to address their Health and safety issue in better way

Unilever ‘exposed’ staff to chemicals

On September 5, 2005 around 25 workers from Unilever Port Sunlight plant report skin complains and claim that they were exposed to chemicals without providing enough health and safety procedures

Court heard the case and Unilever pleaded guilty and was ordered to pay £28000 fine within 28 days. The company agreed with the decision and pay the fine within 28 days.

(Liverpool echo, 2008)9.

CO2 Emission

Unilever is contributing its CSR through sustainable productions.

In previous 15 years the company has considerably enhanced the environment friendly arrangement of factories. CO2 from energy has reduced near 40%, total waste with 73% and water by 65% per tonne of production.

P&G

CO2 issue

P&G are very about CO2 emissions. Their strategy is to use 100% renewable or recycled materials to manufacture all the products so that the waste which comes out due to production cannot go to landfills and using power plants having 100% renewable energy. It is their belef that their strategy will emit zero carbon dioxide. They will implement their strategy from 2020. (Fast Company, 2010)10.

Social Responsibility:

Unilever has good image in market regarding its Social responsibility despite some controversies, one of them explained below:

Union campaign targets Unilever

In Jan 2009 Unilever Pakistan become centre of news when issue of 700 contract agency workers came up,

The “National Federation of Food”, “Beverage & Tobacco Workers of Pakistan” claim that Unilever’s management were taking advantage of workers by keeping them in part time jobs for over 10 years, they were offered less money and have few benefits.

Part time employees were given the legal minimum wage of 6,000 Rupees, which is just 33% of the lowest wages of the 22 direct employees (without benefits).

Also in order to receive their 6,000 Rupees per month they were required to work at least 26 days each month. If they don’t work 26 days’ in a month, they were only paid 252 Rupees per day – the equivalent of a little over 3 US dollars.

(Businessrespect,2009; iuf, 2009)11.

P&G

P&G Suit Alleges Age Discrimination

A federal lawsuit was filed against Procter & Gamble accusing that company tried to cut costs by firing out older employees.

Gary Hagopian worked at P&G for 26 years; he claimed in U.S. District Court that he was demoted from his job because the company wanted to replace him with younger and cheaper employees.

Hagopian aged 51, claimed damages of more than $12 million.

(highbeam,2001)12.

The Procter & Gamble Company has introduced its employee vacation plan to help UNICEF’s work for children and women worldwide. This plan started in 2009 and all P&G employees in Western Europe were invited to participate. It proposes them chance to take a 3 month time off to go work with UNICEF. Five P&G employees have been chosen to work in the UNICEF Country branches in Mauritania, Cameroon and Macedonia in 2010.

P&G workers in Slovenia also take part in the “National Waste Cleaning Day”.

Earth week was marked in Slovenia that includes donating items to an orphanage and engage in educational activities to raise awareness of sustainability concerns.

(P&G,2010)13.

Social Responsiveness:

Procter & Gamble (P&G) has introduced new scoring process to calculate and improve the performance of its vendors regarding carbon emission. Supplier’s scorecard will calculate the environmental footprint of suppliers; it will measure total environmental effect in terms of energy, water, waste disposal and carbon emission.

P&G will use this scorecard in future to determine each supplier’s sustainability rating,

And post it in P&G’s annual suppliers’ performance measurement process.

(Supply management, 2010)14.

Procter & Gamble Fair Trade Program

Proctor & Gamble (P&G) is among the 4 major businesses in the world and biggest coffee vendor in the US, Company declared that it will start “Fair Trade Certified” coffee products from its coffee division.

(Ethical corporation, 2003)15.

UNILEVER

Unilever’s Ben & Jerry’s, in February 2010, said that all the materials will be certified by Fair trade in Europe. This will be implemented by the end of 2011and by 2013 throughout the world.

There are many nations in which unilever is working with smallholder farmers to develop or improve their work and productivity plan to increase productivity and encourage native income.

Their Hellmann’s, Amora and Calve brands have easily met their commitment in western countries. (Unilever, 2009)16.

Conclusion & Recommendation

From above report it can be said that both companies Proctor & Gamble and Unilever are indeed among the world giant companies that work on same pattern to make themselves successful.

If we analyse CSR through Carroll model; we can see in Philanthropic Contributions of companies, which is key base to attract stakeholders towards company image, both companies have shown their sympathy and generosity towards helping and responding disasters. Both Companies are also evident in respect to their ethical role in producing their product through sustainable channels e.g. Improving the eco-efficiency in their production process as well as reducing CO2 emission and making high-quality products.

However in regard to Legal responsibility both companies were found weak and ended up paying fines in millions of dollar. In terms of Economical responsibility we can find some cases of Unilever where they found suspicious and get involved in price fixing investigation, although Unilever was not found guilty. P&G was able to follow strong rules and regulations in regard to economical responsibility as they were vigilant in responding earthquake in Turkey and also responding to help children dying of malnutrition in India. P&G donated a significant amount of resources towards handling this problem.

If we review CSR through Sethi model; In terms of social obligation Unilever have something to criticise about; Where Unilever found with negligence in its employee’s health and safety issue, where workers were exposed to work with harmful chemicals, Company was fined up to £28000.In respect of social responsibility both companies did not go well;

In Jan 2009 Unilever Pakistan become centre of news when issue of 700 contract agency workers came up, they worked at the factory for over 10 years and still were on temporary contract. At P&G Gary Hagopian company employee worked 26 years, he claims in U.S. District Court that he was demote from his job because the company wanted to replace him with younger and cheaper employees and lastly if we analyse CSR with social responsiveness both companies have worked carefully to identify sustainability among their vendors

In the end both companies must keep on recognizing and aim different market divisions in order to compete. Today companies are extremely sensitive – as they must be vigilant in political, technological and economic changes. Addressing Corporate Social Responsibility issues are among most affective strategic perception. Thus, the most successful companies will be those that can deal with these issues more efficiently.

Learning Reflection

Kolb’s learning cycle:

Reflection is a process that refers to Feeling, Watching, Thinking, and Doing and to follow these things. Reflection is about reframing our concepts for different issues or ambiguities, trying out possible interpretations and then altering them as and when required. However reflection is not fruitful unless experienced on the basis of some concept or assumption which develops a continuous cycle as presented by Kolb (1984).Kolb defines four stages of learning:

Concrete Experience:

In the first few classes’ reflective observation remained principal since the basic concepts of Business ethics and development of corporate social behaviour concepts were focused. Practical current scenarios of fair trading and employee care helped developing a real learning experience. It also encouraged developing and highlighting components and strategies of CSR via active learning. It has been seen that this concept is very effective.

Observation and Reflection:

Reflection is necessary to classify components and differentiate along with ethical business practices, solving dilemmas etc. Observing tutor’s approach towards the topic and selecting examples, thinking and reframing ideas such as ‘Channel 3-Under cover bosses’ this has made as an evidence that how critical it is to justify a social strategy and most of the time it associates extra cost. Hence, the company should think about the stake holders while thinking about their employees.

Forming Abstract Concepts:

The implementation of models was bit difficult such as stakeholder mapping for Marks & Spencer might be a challenging job for a beginner. However the reflective skills helped here and somehow a blur outline was approached in most of such scenarios. Research about company’s practices and linking those to theoretical concepts has probably been an interesting task.

Testing in new Situations:

This stage was explicitly determined while preparing this assignment. At first, I made an outline plan and then backed them by concepts adapted from the teacher. After the completion of business profiles, I analysed them in CSR models.