Mylan has received plenty of attention lately for the decision to dramatically increase pricing for the life-saving EpiPen. The intense debate about this decision points to a broader problem: the fog that surrounds Corporate Social Responsibility (CSR) and its many definitions, levels and claims. This fog can obscure efforts to improve how business functions. Mylan is an interesting case study.
Mylan and CSR
Mylan’s CEO Heather Bresch defended the EpiPen price increases, blaming the healthcare system and saying “The system incentivizes higher prices.” She offered her view of stakeholder concerns a year ago when attacked for financial moves: “I try to look at it from the perspective of I should be flattered that so many people are trying to tear us down.”
Wouldn’t it be great if a pharma giant like Mylan were headed by a CEO who cared about CSR? Someone who might say:
“…[W]e put people and patients first, trusting that profits will follow. This philosophy, which we call Doing good and doing well, reflects our belief that [our company] is not just a company, we’re a cause. … we weigh every decision we make with the utmost care, asking ourselves how it might affect all of our stakeholders, including patients, customers, employees, communities, vendors, creditors and investors.”
Oh, wait. Mylan’s CEO did say that. That’s a quote from the CEO message at the front of Mylan’s 2015 social responsibility report “which is designed to acquaint you with our many CSR accomplishments to date.” The report goes on to say: “Our shared belief in Doing good and doing well is based on our values, which we express every day through our actions.”
Reviewing Mylan’s CSR report and Mylan’s actions “every day” on EpiPen pricing may produce cognitive dissonance. Something doesn’t connect.
The Fog of CSR
This disconnect could be just the frequent CSR gap between “what we say” and “what we do”. That’s not uncommon. Too much CSR reporting is still flat-out greenwash.
The Mylan disconnect might be something deeper: Mylan may interpret CSR differently than do some of its stakeholders (like patients). That’s disturbing but not surprising. CSR has become an esoteric topic, filled with systems, standards, guidelines, goals, and acronyms. There is an entire industry of folks who set CSR expectations, write reports about meeting those expectations, and evaluate reports to see if they met those expectations. It’s all too easy to separate all that CSR stuff from what companies actually do in their day-to-day business.
(To make matters worse, “CSR” is just one label. There is huge confusion around CSR versus “Global Citizenship”, “Sustainability”, “Sustainable Development” and a plethora of other terms. That babel only adds to the fog. Anyone using those terms should examine them carefully, and consider whether they are using those terms as tools for clarity or as weapons to keep up the fog level.)
Of course, some companies do very good things. Some of them go to great lengths to show how those actions fulfill their responsibility as companies, and meet public expectations.
For some companies, though, CSR is just a cost of doing business, something you have to salute and spend some time and money acknowledging. And for some companies, CSR seems to be a menu, from which they can pull out the parts they like and ignore the rest.
Cutting through the CSR Fog
In practice, CSR is a hierarchy of behavior, not a menu. In working with a wide range of companies on CSR, I’ve seen five levels of what we actually expect from a socially responsible corporation. There is a clear hierarchy among these, starting with the most basic expectations at the bottom. Interestingly, the first three are just corporate versions of “personal social responsibility”: we would expect them of our neighbors. The last two are uniquely corporate.
- Don’t be a jerk. Don’t unnecessarily harm people, animals, the environment, even if there’s no law against it. Think of this as the “don’t be a bad neighbor” level: cut your lawn, don’t leave trash out in the yard, don’t start using loud lawn equipment when the neighbors have the kids’ birthday party, don’t take up every parking spot on the block, don’t shout offensive comments or names at people walking past your house, and promptly shovel your own walk when it snows. Don’t expect to get any credit for performing at this level. If you don’t perform, though, don’t be surprised if the neighbors are critical of anything else you do.
- Don’t break the law. Laws are supposed to apply to everybody. Don’t speed in the school zone, don’t shoot out your neighbor’s windows. Again, don’t expect a whole lot of credit for fulfilling this expectation.
- Do your part. Actively be a good neighbor. Help mow the elderly neighbor’s lawn or shovel their walk when it snows. Volunteer at your school. Donate food to the local food pantry. This offers the chance to get credit for your actions, without actually having to change how you live (or do business) day-to-day. This is the level of CSR many companies are happiest to focus on.
- Do what the law fails to do. We ask business to do what we can’t get government to do. Climate change is the clearest example: it is a classic public policy challenge, which should have been met by public action years ago (carbon tax, cap and trade, regulation, whatever). Business doesn’t want to be in the business of filling this public policy gap. Many businesses would prefer to see a public policy solution that creates clear expectations and a level playing field. Business could then do what it does best: figure out how to make money in that new reality, by cutting carbon or investing or innovating. Instead, business has to guess where the bar “should” be, risk incurring costs that more recalcitrant competitors don’t face, and incur the wrath of investors who question why business is acting on what is really “Government Social Responsibility”.
- Do what the law can’t do. Innovate. Invent the new technology that reduces carbon. Develop the approach that feeds more people. Raise the bar and challenge your competitors to follow you. Drive your business by seeing CSR issues as strategic opportunities.
It’s all CSR?
The problem is that all of this is called “CSR”.
Arguably, Mylan may be doing great things in level 3, but missing (or ignoring) what it is doing with EpiPen pricing in level 1. If you’re not getting the basics right, don’t expect people to be impressed by anything else.
No company has to agree with this CSR hierarchy. But every company should take a serious look at what it has bundled in its CSR portfolio, what terms it’s using (CSR versus Sustainability et al), what it claims in its CSR report, and what it’s doing in its business day-to-day. At the very least, that might help burn off some of the fog and let in some clarity within the business.
[Full disclosure: I did a small bit of consulting work with Mylan on CSR approximately 5 years ago. Nothing in this post reflects any confidential information or insight from that engagement.
Opinions in this blog are solely those of Scott Nadler and do not necessarily represent views of Nadler Strategy’s clients or partners, or those cited in the post. To share this blog, see additional posts on Scott’s blog or subscribe please go to nadlerstrategy.com.]
Hear, hear! What was Mylan thinking? I hope their recent experience causes other CEOs to re-examine their CSR commitments, and more importantly, their companies’ actions.
Brilliant as always. It seems to me that there are few multinational corporations that are really committed to reaching level 4 or 5 on your pyramid. I might call this making the world a better place, because they can and still be successful as a company.
The change over the past decade has been for companies to embed their social responsibility as a core feature of their business, Where do you cross the line from actively doing all you can to make the world a better place to accidentally making the world a better place and then claiming social credit (Green Washing). Reducing weight in a Ford Focus saves fuel and makes the car more attractive to the buying public. Ford probably wouldn’t claim special credit for such activities, but maybe they should. The impact on GHG emmissions might make a greater impact than other overt efforts at CSR.
Is there no objective good? Everything a mutinational does is simply spin or PR. I can’t see the social good Mylan is trying to achieve by raising the price.
Thanks for raising the topic Scott.