Published on 22 July 2018


[Inside story] When companies boycott their own products in the name of CSR

In early July, alcohol producers announced a campaign to fight alcoholism: a call for customers to consume less alcohol. "This is a question of responsibility", alcohol producers explained. And they are not alone. Other industry actors have done the same with energy, tobacco and food. Are these companies knowingly harming the very business on which they thrive? No, they are preparing for the future.

Stronger fiscal and regulatory measures related to health consequences from smoking exacerbate financial risks for businesses.

This phenomenon started in certain sectors, such as energy. A few years ago, EDF and Engie began to advise their customers on how to consume less. Since then, such actions have gradually spread. Pernod Ricard has been a pioneer in its sector by investing in the implementation of measures that promote more responsible alcohol consumption, that is to say, less consumption for its consumers.

This summer, French wine, beer and spirit producers offered to finance up to €5 million in preventative actions against alcoholism over a four-year period.

Social acceptability as preparation for the future

This phenomenon has a name: demarketing. This notion reflects the reversal of current trends which, until now, have been pushing increased consumption with a “buy more” philosophy. This can lead to cost avoidance (in the case of energy saving) or a focus on service functionality (when the sale of a product is substituted for a service).

Companies following this approach are not acting against their own best interests. On the contrary, their approach meets the expectations of their stakeholders and addresses increasingly important issues concerning social responsibility. By encouraging customers to consume less of their own products and services, they ultimately work on their social acceptability and, above all, prepare for their future.

Thus, when energy companies, which emit large amounts of greenhouse gases, help their customers reduce energy consumption, it is to meet the challenges in the fight against climate change. The latter forces them to rethink their business model, setting aside certain activities and, at the same time, focusing on new growth markets such as energy efficiency. They respond to civil society and shareholders who question them on how they intend to align with the 2°C trajectory set by the Paris Agreement.

Pression of Shareholders

This orientation towards alternative markets, under the impetus of shareholder pressure, is also found in the tobacco sector. Philip Morris' announcement to give up cigarettes saw a wave of divestment and a call for a $3.8 trillion investor coalition. The strengthening of fiscal and regulatory measures related to the health consequences from smoking do indeed bring about financial risks of such magnitude that they destabilize the business model’s sustainability.

The same shareholder pressure can be seen with the Big Four. Studies and campaigns on the use of smartphones and its significant impact on young people's health, have sent investors to niche markets, prompting Facebook and Apple to embark on a digital detox campaign.

As a result, the Big Four have started to put in place measures to combat smartphone addiction and addiction to their own services. Facebook and Google are testing "do not disturb" options, while Apple will inform users of their time spent on iPhone and iPad devices and offer applications to limit children’s use of such devices. For now, it remains to be seen what new alternative services internet giants are preparing for its users.

Béatrice Héraud @beatriceheraud

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