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What is the purpose of corporate social responsibility?

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 — August 14th, 2021

What is the purpose of corporate social responsibility?

Corporate social responsibility, or CSR, is very much the byword of today's global, socially aware economy. From Ben & Jerry's equality ice creams to Procter & Gamble's 'Best a man can be' campaign, it seems that there's big business to be made in going 'woke' and wearing your values on your sleeve.

But what is CSR in practical terms, what are its limitations, uses, and misuses? And, more importantly, what can it do for you and your company?

Three key communication lessons for managing a crisis

CSR in a nutshell

CSR is a business practice that both recognizes and prioritizes social awareness, environmental factors, and ethical labor practices while promoting a greener, more culturally conscious attitude to both peers and customers. The general ethos is we want you to invest in what we stand for first, and our product range second, albeit a very close second.

As CSR expert Susan McPhearson explains, recent events have “changed the mainstream discourse about the role corporations should play in advancing and addressing social and global challenges”. Put simply: CSR is becoming something of an expectation. You could argue that it sounds like a PR stunt that panders to an untapped demographic, but is that an overly simplistic view of a business phenomenon that has taken over the way in which companies market both themselves and their products?

More than just PR?

While the sudden implementation of social and cultural messaging can come across as trite, especially if the company and the cause don't gel in the minds of the consumer, the incorporation of CSR and a strong, ethical message – one that backs up an already existing mantra or narrative – can both attract and retain talent, and help grow a potential business beyond its existing demographic. This approach worked well for Nike, who tapped into the zeitgeist with its civil rights campaign featuring Colin Kaepernick. So, why didn't it work for Pepsi?

When it comes to lacing your brand with a social, cultural, or political message, it's important to measure not only the market but the climate, too. Tapping into the zeitgeist may seem like a sure-fire way of increasing sales, but the dangers of alienating a client base or, worse, an entire demographic in today's highly politicized society, could prove disastrous.

Making 'woke' work

When we boil it down we are left with a simple truth: people respond to emotional issues that they care about. Part of making CSR work means investing in a social issue, idea, or ideology that allows you to tap into a previously unobtainable demographic. If you can also show your customers that you not only have a great product or service, but you care about the same issues that they do in a sincere and transparent way, then half the battle is won.

In order to tiptoe around the pitfalls that have plagued other companies who have tried their hand at 'woke-dom' and failed, avoid using CSR as a one-shot ad campaign for a service or a product, which could backfire due to the social climate and the ever-changing cultural tide (see Gillette, for example). Think about the long-term projection, and promote the message that what you're doing is here to stay. Link the message intrinsically within the core of who and what your company is, and what it is that you offer and do. With CSR it's all about clarity and consistency.

Finally, consider the impact of CSR not only on your business but the culture, too. Investing in a year-long advertising campaign and championing a social cause may seem like a good way of increasing sales and keeping up with the competition, especially when everyone who's anyone is doing it, but be aware of the line between pursuing a cause and taking an idea too far.

With great power comes great (CS) Responsibility

While CSR can be an effective marketing tool, it's worth considering the long-term socio-cultural cost of the endeavor, and the way in which it will impact your business and society as a whole. Avoid the desire to appear 'on trend' by jumping on the latest social justice bandwagon, and be consistent in your messaging.

Above all else – don't fake it. Customers respond to open, transparent, and genuine messaging. If you are to invest in CSR, make it specific to the core values of the company, otherwise, it could look like you're being insincere, and, let's face it, nobody wants to be remembered as the company who broke the internet for all the wrong reasons. Instead, be one of the good guys.

What are the benefits of corporate social responsibility?

  • better brand recognition
  • increased employee engagement
  • positive business reputation
  • increased sales and customer loyalty
  • operational costs savings
  • better financial performance
  • greater ability to attract talent and retain staff
  • organizational growth
  • easier access to capital
  • access finance
  • attract positive media attention
  • reduce regulatory burden
  • identify new business opportunities

What is a CSR strategy?

CSR strategy can be defined as the manner in which companies plan, execute and monitor the social initiatives they have chosen to put in place within their organization. Strategy is essential in building and monitoring those CSR programs that will see organizations thrive. Having a solid CSR strategy enables businesses to remain goal-driven and to monitor the effectiveness of their current CSR practices.

Traditionally, CSR is broken into four categories: environmental, philanthropic, ethical, and economic responsibility. A CSR strategy can help you determine which of these is best for your business.

Philanthropic responsibility - Revolves around finding the best methods to give back to the community and society through worthy causes like volunteering or donating money and resources.

Environmental responsibility - Relevant today more than ever, environmental responsibility means businesses must make an effort to be more eco-conscious and continue to find methods of reducing their carbon footprint when producing their goods and services.

Ethical responsibility - Focuses on ensuring that all parties in a business including employees, customers, shareholders, and all other stakeholders get the fairest deal possible.

Economic responsibility - Incorporates philanthropic, environmental, and ethical business practices in a way that’s profitable and can sustain long-term growth.

Three key communication lessons for managing a crisis

Examples of CSR in action

LEGO

LEGO is the first and only toy company to be named a World Wildlife Fund Climate Savers Partner. The toy-making giant not only wants to help children develop and grow through play but also aims to ensure they are protecting the planet in the process.

The eco-conscious business is currently seeking to remove single-use plastic from their operations by the end of 2022 and is also aiming to have no waste from any LEGO factory, office or store to be sent to landfills by 2025.

These are just a couple of examples of the numerous changes the company plans to make going forward. Furthermore, LEGO has already carried out a number of impressive initiatives to reduce its carbon footprint over the last number of years.

Salesforce

For some time now, Salesforce has been recognized for its progressiveness in the tech world, a sector that has been largely criticized for not paying enough attention to social issues.

Under the leadership of Marc Benioff, the idea of the 1-1-1 model was put into place which ultimately means giving 1% of Salesforce’s product, 1% of its equity, and 1% of its employees’ time to philanthropic causes and the nonprofit sector.

Since the launch of the initiative, according to their website, Salesforce has given more than $240 million in grants, 3.5 million hours of community service, and provided product donations for more than 39,000 nonprofits and educational institutions.

Netflix & Spotify

From a social perspective, companies such as Netflix and Spotify are paving the way in offering benefits that support their employees and families.

Netflix currently offers 52 weeks of parental leave to birth parents and non-birth parents, with Spotify offering the same benefit but for a shorter duration of 24 weeks paid leave.

Apart from having amazing employee benefits such as these, Netflix and Spotify have both taken a very public stance on their respective platforms when it comes to raising awareness and offering support to important social movements including sustainability, Pride month, and Black Lives Matter.

Google

Google is one of the leading companies in CSR and an organization that credits itself for doing ‘everything with the Earth in mind.’ Back in 2007, the search engine giant became the first-ever company to reach carbon neutrality and just 10 years later, the company reached another huge milestone - achieving its 100% renewable energy target.

In 2020, Google issued $5.75 billion in sustainability bonds. This made it the first company in history to fund ongoing and new environmentally or socially responsible projects. As if all this was not impressive enough, the company is also in the process of pursuing new carbon-free technologies and seeking to show the world that a fully decarbonized future is not just a dream but something that is possible for everyone.

Apart from this, Google is known for its good image in the field of HR and for several years it has been ranked as one of the best places to work

These are just a few examples with many more companies being great examples of effective CSR strategies.

Conclusion

It’s increasingly important that organizations do business in a way that demonstrates social responsibility. In today’s world, consumers are becoming more aware of the importance of social responsibility, leading them to seek products and services that operate ethically and not just for their own means.

By taking an interest in important social matters and operating responsibly, organizations will show customers that their end goal is not just profit but to have a positive influence on the outside world. Customers in turn will have more trust in the company and will be much more likely to seek out its products if it shares similar ideals and values as they do.

Apart from loyal customers and a better public image, businesses practicing CSR can expect to benefit from an abundance of advantages including increased employee engagement, cost savings, and an advantage over competitors.




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