Think corporate social responsibility is another short-lived fad? The social responsibility of a corporation and corporate responsibility to both social and environmental problems is a major driving force in business.
Consumers these days are very selective when it comes to which companies they choose to support and the brands that they stay loyal to.
In today’s ever-changing marketplace, consumers, particularly millennials, are looking for socially aware and responsible organizations who demonstrate the same values that they hold.
In fact, according to a study conducted by Cone, a communications company based in Boston, 87% of consumers will make a point of purchasing products from companies that show support for issues they care about.
On the other hand, 76% will actively avoid making purchases from organizations whose practices don’t fall in line with their beliefs. Corporate social responsibility, or CSR, is therefore a very important aspect of a company’s strategic plan.
In addition to its impact on customers, corporate social responsibility also affects hiring. Employees are now looking for socially responsible organizations to be a part of and may avoid or look past those companies that don’t demonstrate responsible and ethical practices.
As more and more employees seek out organizations that are socially responsible, those that meet this requirement are able to attract (and retain) the best talent.
Impacting both consumers and employees, corporations with social responsibility tend to thrive in today’s marketplace. It’s important to understand what it means to be socially responsible and how your organization can undertake responsible business practices.
In this article, we’ll take a look at:
What Is Corporate Social Responsibility?
Corporate social responsibility (CSR) refers to a company’s objective in ensuring that its operations impact social, environmental, and economic landscapes in a positive manner.
It is thought that companies can play a role in making the world a better place and therefore many organizations, especially those who truly care about social, environmental, and economic issues, develop strategies to reduce their negative footprint and add value to the world.
While some social responsibility is undertaken by corporations out of necessity, for example, the protection of personal information by health care providers is required by law, many organizations undertake socially responsible practices because they truly care or because of the many benefits that these practices can provide.
What Are The Benefits of Having Corporate Social Responsibility?
There are many benefits to incorporating a social responsibility plan into an organization. First and foremost, companies that engage in CSR are known to draw positive attention to themselves, earning a strong, positive reputation and building trust with customers.
In turn, this impacts their bottom line in a positive way, attracting new customers, retaining current customers, and ultimately increasing sales and market share. In addition, companies can cut costs by making positive changes to the environment. For example, reducing their carbon footprint by saving energy and using less packaging can reduce costs.
Companies with strong corporate social responsibility also tend to attract the best talent and have an easier time retaining employees who share the same values. With the best talent at their disposal, these companies are able to produce the best products and services, and inspire innovation, giving them a competitive advantage.
While acting responsibly can gain customers and build a good reputation, companies on the other side of the coin, who are found to be acting irresponsibly, often have their brand names damaged, sometimes beyond repair.
For example, years ago when it was found that employees in Nike’s contracted factories were experiencing poor working conditions and abuse. As a consequence, the company saw an 8% decrease in sales, as well as a 15% decline in their stock price.
5 Examples of Corporate Social Responsibility
There are many ways in which companies can engage in CSR. Companies both big and small can find ways to positively impact their communities and the world.
Many organizations get very creative when it comes to making a difference however, some of the most common and effective socially responsible strategies include:
1. Environmental Sustainability
Many companies strive to reduce their impact on the environment and even to help reverse negative changes that have already occurred.
Being environmentally responsible means companies do their part to reduce their impact, often by limiting the energy they use, utilizing renewable energy resources, reducing packaging, etc.
Johnson & Johnson strives to reduce their carbon footprint by using renewable energy sources. Using wind power allows the company to reduce pollution and minimize their footprint, making the world a better and healthier place.
Other companies, such as Ten Tree, have built their entire brand image and mission around their corporate social responsibility. Each product that’s purchased from the company equates to 10 trees being planted by them. Such policies are effective at not only engaging with target markets, but also serves to build brand recognition and equity.
2. Contributing to Social Change
Companies around the globe are beginning to focus their corporate social responsibility (CSR) on social change. Many multinational corporations hold strong economic influence and can greatly impact the causes that they choose support.
Netflix, for example, offers its employees 52 weeks of paid parental leave. This leave can be taken at any time that it is needed and is available to any parent. By making changes like this, Netflix hopes to lead the way and help change how other companies support parents in the workforce.
TOMS, a retail shoe company, has committed to sustainable business practices, local investment into the economies where their manufacturing facilities are located and supporting the local community. By 2019, they will have given away more than 95 million pairs of shoes, provided glasses for 780,000 people and secured more than 722,000 weeks of safe drinking water.
Philanthropy has been a longstanding tradition among organizations, especially those with leaders with a connection to a particular cause. Many more however, are taking philanthropy to a whole new level, building it into the framework of their company culture and image.
Companies may contribute by donating money, goods or even services to those in need. Regardless of the size of the company, philanthropic contributions can make a huge difference in the lives of many.
Warby Parker, an eye and sunglasses company, commits to donating a pair of glasses to a person in need with each pair of glasses purchased. Known as the “Pupils Project,” Warby Parker collaborates with local agencies and organizations to provide more than 7 million pairs of glasses worldwide.
4. Fair Trade & Ethical Sourcing
Consumers are demanding change when it comes to how ingredients and materials are sourced by brands.
While companies, especially large global brands, could often get away with treating their business partners poorly in the past, particularly in developing countries, consumers are much more savvy now when it comes to ethical sourcing and fair trade. Nowadays customers will not support organizations that don’t treat others fairly.
Many companies have made it a point to focus on ethical sourcing and building strong and fair relationships with their affiliates and partners, often times building programs with them as their focal point.
Starbucks, for example, sources only 100% sustainable coffee. They strive to purchase coffee at fair prices throughout the globe and ensure that each step of the coffee production process (i.e. planting, harvesting, processing and purchasing) is done ethically, using outside observers to ensure ethical sourcing. Through their Global Farmer Fund Program, the company also invests $50 million towards farmers – enabling them to improve their farms or to pursue more sustainable practices.
5. Volunteer Work
Many companies give back to society by contributing their time in the form of volunteer work. CEOs and other leaders, along with their employees, may attend volunteer events, supporting the causes that they believe in most. This demonstrates to their customers what is meaningful to them, especially because they do not expect anything in return for their services.
Some companies take this to another level by allowing employees to volunteer at the company’s expense. Patagonia is one such company. Patagonia employees will travel for up to 2 months, at the company’s expense, to other countries to take part in volunteer opportunities. Past endeavors have seen employees have traveled across the globe to help rebuild a sheep ranch in Chilean Patagonia.
Whether your company is a small local start up or a large worldwide brand, you can join other socially responsible corporations in making a difference and helping to make the world a better place by adopting one of the strategies above or by paving the way and finding creative solutions to social, economic and environmental issues.
Key Takeaways On Corporate Social Responsibility
While companies in the past have not been particularly invested in making positive societal or environmental changes that didn’t boost their bottom line, modern day consumers require companies to do so and hold them accountable if they don’t demonstrate responsible business practices.
To keep up with consumer expectations, companies around the world are finding creative and meaningful ways to contribute to society, making the world a better place while reaping the many benefits of being socially responsible.
Corporate social responsibility, or the commitment of a company to reduce any negative societal, environmental and economic impact and positively contribute to society, is a very beneficial practice.
An organization can demonstrate socially responsible practices in numerous ways with the most common being environmental responsibility, or ensuring they reduce their negative impact on the environment, contributing to making positive social changes around the world, philanthropy, fair trade and ethical sourcing and volunteering.
In addition to boosting brand recognition, adoption and ultimately sales, a socially responsible organization will also attract and retain the best talent. While there is a definite cost to philanthropic programs and other social incentives, the net gain is ultimately a positive one.