Step Right Up for CSR
At the end of the 1990s, African paramlitaries started illegally mining diamonds to finance their wars. The stones, sold to local traders, entered international distribution networks, mingling with legitimate gems and ending up on display in our jewelry shops. NGOs tried to halt this rough trade, accusing De Beers, the historical leader of the industry, of being the largest importer of blood diamonds. But De Beers was purchasing diamonds neither from thugs nor from the traders dealing with them.
De Beers nevertheless decided to try to kill the market for blood diamonds. In 2000, it pushed the South African government to call the Kimberley Diamond Conference, and financed the creation of the World Diamond Council, an association linking all the major players in the industry. In 2003, De Beers and its competitors adopted the Kimberley Process Certification Scheme, a program aiming at preventing illegal imports of diamonds, which included a code of conduct for operators, a system to register and monitor rough gems, and legal certification of cut gems.
It's interesting to look at the reasons behind De Beers' actions. Although De Beers was not involved in illegal trading, the paramiltaries profiting from it were damaging the image of DeBeers' product. Diamonds evoke emotions of love and desire which are at odds with notions of senseless violence. De Beers jettisoned its defensive stance vis-à-vis NGOs and focused on heart of the matter. It involved its business rivals in the solution of the problem, rather than accusing them of having created it or trying to distance itself from them. Involving your competitors on issues of social accountability is an example of convergent CSR strategy, by which a company allies itself with the whole industry to develop shared practices, aligns itself to rivals' practices, or adopts standards advised by monitoring bodies, associations, NGOs, and other stakeholders. The overall result is that the whole industry converges toward homogeneous CSR standards. Although many argue that CSR is a source of profits – for the effects it has on corporate reputation vis-à-vis consumers, suppliers, and other agents – it's unlikely that convergent CSR will benefit the balance sheet. In fact, by adopting such an approach, you're not differentiating yourself from your rivals, developing a distinctive image, or acquiring competitive advantage, even if you are contributing to the general public interest.
More promising for business profits is divergent CSR, by which a company develops its own distinctive soutions. An example is provided by Timberland, which is creating an exclusive image of itself as a company respecting the environment with products such as Green Rubber Boots, in which recycled tires are used to manufacture the soles. It is an idea that combines savings on raw materials (virgin rubber) with an appealing message for the youth market it targets.
The converging approach may be entirely rational in the case of De Beers, a player seeking to salvage the reputation of the industry it led, but not in general. Many companies are following the convergent approach either to imitate the competition while limiting their investment in CSR, or because they are subjected to pressures coming from stakeholders to which they are unable to react with strategic creativity. Choosing between a convergent and a divergent approach is the first choice a socially responsible company must do, by taking into account its ability to innovate and assessing the strategic opportunities that a given social or ecological issue contains. Data show that divergent CSR is relatively rare, but economic, technological and cultural change can always create new opportunites for companies to distinguish themselves from their rivals.