Thursday, March 02, 2006

'Scrooge' in the boardroom

Bono and friends at the Product Red launch: cause-related marketing in actionThey are making billions, but are British companies giving enough to ‘good causes’? Guardian columnist Jonathan Freedland doesn’t think so. He says they are among the stingiest in the world. He is wrong.

Everyone dreams of being a rock star, even corporate businessmen. Last month, the dreams of four CEOs came true… almost. “Every month we have a Tsunami. It’s a forest fire and we’re standing round with watering cans”. With these mixed metaphors, Bono launched Product Red at Davos with as much passion as he brings to fronting one of the greatest rock bands in the world. Standing beside him were representatives of American Express, Armani, Converse and GAP.

Project Red epitomises the recent trend for ‘cause-related marketing’. According to Business in Community, cause-related marketing is “…a commercial activity by which businesses and charities or causes form a partnership with each other to market a product or service for mutual benefit”. The Global Fund to Fight AIDS, Tuberculosis and Malaria and its business partners offer a range of “red” branded products to provide a steady income for the charity.

Missing was Vodafone. Although new companies will be added in time, the mobile giant won’t rush to sign up. It was savagely criticised by Guardian journalist Jonathan Freedland, who condemned its “stingy” £1m donation to the Tsunami appeal from annual profits totalling £10bn. Freedland demanded big companies “give as generously as we do – or we will take it off you in tax”.

The same generous British public do not agree. MORI polls from 2000 and 2003 show the percentage who felt companies are responding to social and environmental concerns rose from 10 per cent to 32 per cent. An impressive turnaround in only three years given the hostility of writers including Freedland.

Through sponsorship, gifts and cause-related marketing, companies are contributing millions under the guise of corporate social responsibility. Over 300 companies form the ‘PerCent Club’, which requires members to donate at least 0.5% of pre-tax profits or one per cent of dividends. Last year, contributions totalled £814m.

Business is more complicated than Freedland suggests. As Ross Clark writing in the Telegraph points out, the board of a joint stock company like Vodafone cannot give away other people’s money - money belonging to shareholders. A supposed aim of privatisation was to offer individuals a part of the state’s former assets so they too could benefit from the success of business. Privatisation was a method of distributing wealth not a collection box.

At the Product Red launch, Bono said the following of the businessmen and himself: “Here we are fat cats in the snow. I should say winners in the snow. I feel a bit of a fraud, a bit of a loser, because we are not winning in the war against Aids”. If we immediately reject sentiment such as Bono’s and initiatives like Product Red, then we all lose.