When Social Good Backfires: Oscar Wylee and Goodhart’s Law
Oscar Wylee, the glasses retailer, was recently fined $3.5 million by Australia’s Federal Court for misleading consumers about the extent of its social giving.
The brand had claimed to follow in the footsteps of footwear manufacturer (excuse the pun), Toms, and that it donated a pair of glasses to someone in need for every pair purchased between January 2014 and December 2018. However, during this period of time it sold 328,010 pairs of glasses but donated just 3,181, or, less than one percent.
This raises an important question about social good and corporate social responsibility (CSR) more broadly — something that has made headlines recently with both Spotify and Coinbase taking positions that have been unpopular with the far left.
Corporate Social Responsibility in 2020
Today’s Fortune 500 spends about US$20 billion a year on CSR activities, and there are two buckets of reasons why organizations choose to commit such a large sum.
- Genuine intrinsic and altruistic motivations of senior leaders and/or founders
- The influence of employees
- Productivity: one study found a 13 percent increase in productivity in response to social incentives
- Brand: improving the perception of the company within the community and especially amongst progressive-minded target customers
- Employee acquisition and retention: increasing the pool and quality of talent that wants to work for and stay at a company
- Lower wage demands: one study found that prospective workers submitted 44% lower wage bids for the same job after learning about the employer’s social responsibility
- Signaling: signaling on the part of the founders of influencers within the company for their own individual benefit
- Profit: ultimately, if you combine all of the abovementioned factors, what you get is higher profit
Of course, these are only inauthentic reasons if companies are dishonest about their intentions. But no company is explicit…