Back in the mists of internet time, in 2004 in California, a little company with big plans went to IPO with a three-word sentence. The company was Google. The sentence was, ‘Don’t be evil’.
The minefield of Corporate Social Responsibility
Embodied in that briefest of statements was what the founders hoped would be a guiding principle that would prevent the company from carrying out questionable business decisions. Depending on your outlook, it can be argued that it was a spectacular fail or a wonderful success. Nevertheless, the on-going controversy across the globe, whether on taxes, privacy or working with the Chinese government, led to the de facto Google corporate motto being dropped in 2018.
It’s likely that the original thinking behind that motto was well-intentioned but, in practice, it became a stick with which the court of public opinion could beat Google at every opportunity. Corporate Social Responsibility is both culturally and ethically important but it does not mean it’s easy to live up to, as so many companies have found to their cost.
What is this Corporate Social Responsibility thing?
It’s important to understand that Corporate Social Responsibility (CSR) isn’t just a bunch of pat phrases that get put out by the company PR machine. It needs to be something that is wholly embraced by the business and not an option which has been bolted-on for the good optics it provides in the short term.
At its core, Corporate Social Responsibility is a practice that an organization undertakes which goes above and beyond core business objectives. If a private sector business provides its services free to certain groups, at the expense of time and thus potential short-term profits, this could clearly be defined as an element of CSR. However, it’s not necessarily voluntary, nor even a long-term cost-center to business. Effective CSR can ultimately generate incremental revenue but, “these outcomes should be a spillover, not their reason for being,” as Rangan, Chase, and Karim emphasize.
Yet, depending on location and local law, some jurisdictions expect and legislate corporations to undertake a level of CSR whilst others consider it entirely voluntary. This means that it’s particularly difficult to pin down a simple definition of what CSR is all about. So, let’s look at a few examples of how wide-ranging it can be.
Excellent Corporate Social Responsibility in action
Lush is a luxury soap manufacturer and retailer. Based in the UK, the company received the 2014 Observer Ethical Awards. As MD of the time Mark Constantine explained, “I remember the first time I saw a company list ‘We Pay Tax’ as one of its ethical standards. I’d never even thought of not paying tax!”
Tax is another contentious area in which Lush outperforms the field. “We pay 44.5% tax over our total business. Our close competitors pay 33.4%. Last year the Body Shop paid 13.9%.”
Point and Sandwick Trust
Based in the Outer Hebridean islands on Scotland’s west coast, the Point and Sandwick Trust is a charitable organization operating wind turbines. The revenue from selling power from the UK’s biggest community-owned and run wind farm is then used to support social, cultural, educational and environmental development in the immediate community.
Once capital costs have been repaid, it’s expected to generate GBP2 million per year to support local projects.
Xerox is a company with a long heritage and a lot of significant technological milestones to its name. Xerox Parc is famous for its pioneering work on the concept of point and click computer interfaces which ultimately led to the modern world of Personal Computers. However, in 2018 Xerox was also recognized for its ethical approach to business by receiving the recognition of the Ethisphere Institute for the twelfth consecutive year.
As press reports at the time explained, “Xerox has been recognized every year since 2006 and is one of only two honorees in the Information Technology Services industry, underscoring their commitment to leading with integrity and prioritizing ethical business practices.”
The Bill & Melinda Gates Foundation
This is a particularly interesting example as it crosses the boundary between the corporate world and private philanthropy. Bill Gates became one of the wealthiest individuals in the world for his part in the creation and success of the Microsoft Corporation. However, whilst he remained Chair of the company he co-founded up to 2014, he now spends most of his time devoted to divesting wealth accrued from business success in targeted investment in technologies aimed at helping developing nations.
The Foundation has to rank as one of the most powerful modern-day examples of Corporate Social Responsibility. Clearly, this has not only given the world cause to reassess Bill Gates in a different light but to achieve the same for Microsoft; a company which today has regained its position at the top table of successful tech companies.
Greggs UK Ltd
Greggs bakery started in the north of England in 1939 and began opening retail outlets from 1951. Today it operates over 1,850 shops with 22,000 employees who serve millions of customers each week. Of particular note is the comprehensive approach to CSR across the organization.
It runs a number of charity-based programs, fund-raising for a variety of local causes. Additionally, the company operates local community development initiatives reintegrating ex-offenders, providing work experience programs for the long-term unemployed and giving school-leavers additional skills in the workplace.
More recently the company has begun to tackle environmental waste and reducing its carbon footprint. In 2019 a report into animal welfare standards included Greggs, saying “these firms have succeeded in making animal welfare an ‘integral’ part of their respective business strategies.”
Corporate Social Responsibility for large and small
What’s become clear is that CSR is not just something which large multi-national companies and government bodies can indulge in. It goes much further and deeper, meeting a need for both employees and employers to participate in a meaningful way in society. If in doing so, this improves the organization’s public image, revenues or reputation, these should be welcomed, but be recognized as a bonus rather than the main motivation for why business in the 21st century should include CSR at the heart of wider business objectives.