Is a corporate CSR strategy really necessary?
What is CSR?
The International Organization for Standardization defines CSR as
“The responsibility of an organization for the impacts of its decisions and activities on society and the environment, resulting in ethical behavior and transparency which contributes to sustainable development, including the health and well-being of society; takes into account the expectations of stakeholders; complies with current laws and is consistent with international standards of behavior; and is integrated throughout the organization and implemented in its relations.”
In other words, it is a business principle that holds companies accountable to employees, vendors, shareholders and consumers. (Spoiler alert: not just one strategy).
There is a fair amount of research on the topic. For example, Fortune Global 500 firms spend around $20 billion a year on CSR activities. Research by Cone Communications found that more than 60 per cent of Americans hope that businesses will drive social and economic change in the absence of government regulation. Even more than that, 75 per cent will refuse to buy from a company if they learn it supports an issue contrary to their personal beliefs.
Socially responsible companies are the choice of consumers as society and the economy are challenged by increasingly complex global, national and regional problems.
But, is there a competitive advantage?
Yes. In a 2015 Cone Communications Millennial CSR Study, “more than 9-in-10 millennials would switch brands to one associated with a cause,” and millennials are “prepared to make personal sacrifices to make an impact on issues they care about, whether that’s paying more for a product, sharing products rather than buying, or taking a pay cut to work for a responsible company.”
CSR is not just about one strategy. It is about how your company positions itself in a socially aware society. According to a study by Weber Shandwick, 44 per cent of millennials want companies with CEOs who express a political opinion. And, 47 per cent want CEOs who hold positions on social issues. Plus, Generation Z is now entering the labour market – they prefer companies that support green and human rights policies.
Warby Parker– Their story began as four college students who found the price of glasses to be astronomical. They discovered that the industry was controlled by a handful of people who created the prices, making them expensive. They decided to start their own business and sell glasses exclusively online for a much lower price tag. At their inception, they also decided to send glasses to a person in need for every pair bought.
IKEA– IKEA is committed to only using renewable and recyclable materials by 2030. They have provided an updated business strategy that focuses on transforming their business to become sustainable.
Starbucks– Social responsibility has been in their business model since the beginning. Their business model runs on the pillars of Community, Environment, Ethical Sourcing and Diversity. Recently they said the company plans to hire 10,000 refugees across 75 countries in the next five years. Plus they plan on hiring 25,000 veterans by 2025.
Ben & Jerry’s– This company has a reputation for social responsibility that goes back to its original IPO in 1985. That is when they created the Ben & Jerry’s Foundation, with an initial gift of 50,000 shares. The company’s board also decided that 7.5 percent of the company’s pre-tax profits be allocated to philanthropy.
The impact of dishonesty
Volkswagen– Volkswagen claimed that they had “clean diesel” vehicles which had low emissions, reduced nitrogen oxides by 90 per cent and had fewer emissions than regular cars. However, the vehicles actually emitted up to 4,000 per cent more than the legal limit of nitrogen oxide and had “defeat devices” installed so that the vehicles would pass emissions tests.
The result was catastrophic. Volkswagen was penalized over $26 billion and faced lawsuits from buyers and investors around the world, which negatively impacted their business operations, sales and reputation.
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