Corporate Social Responsibility: Benefits and Trends
Recently Robert F. Smith, founder and CEO of Vista Equity Partners, was addressing the almost 400 students who made up the graduating class at Morehouse College in Atlanta, when he made a stunning announcement; he would be paying off each of the grad students’ debts. Once reality set in the students responded with an enthusiastic cheer. Certainly nobody had expected Smith to make this generous gesture and he was not under pressure to do so. However, the gift, estimated at up to $40M US, did earn a great deal of positive media coverage for the philanthropist, an example of the goodwill that can be earned through doing social good.
The Business Development Bank of Canada defines Corporate Social Responsibility (CSR) as “a company’s commitment to manage the social, environmental and economic effects of its operations responsibly and in line with public expectations.”
Of course all companies are required to follow the law of the land, but CSR largely refers to voluntary measures, programs and decisions. Why do companies spend time and money on these efforts and what forms are they taking? The landscape is ever-evolving.
Benefits of Corporate Social Responsibility
One obvious benefit of CSR is brand reputation. Companies that endeavor to deliver social good will often receive positive attention or at least detract from negative attention. Companies, especially large ones, face increasing public scrutiny and attempts to shape these perceptions are a necessary component of brand management. Having a good corporate image is not only important to consumers, but is a major factor in recruiting, retaining and engaging top talent as well. CSR requires groundbreaking thinking, which can inspire innovation and create operational efficiencies while often making the company more attractive to the investment community. Not to be ignored is the fact that corporate social responsibility is simply the right thing to do.
The State of CSR
Corporate Social Responsibility takes many forms, but certain themes have emerged as CSR receives greater focus in both the boardroom and the media.
The Environment: Companies are being held increasingly accountable for the environmental impact of their practices. Companies proudly tout initiatives and accomplishments that involve reduced packaging and waste, decreased energy usage and result in a lesser carbon footprint. Products that involve recycled or repurposed materials are gaining traction, particularly ones that feature innovative concepts such as L’Oréal’s vegan hair-care products. In addition to disaster relief, responsible corporate citizens are also placing increased focus on urban and rural planning in hopes of disaster avoidance. Companies that fail to adhere to sustainable development goals are often subject to consumer backlash and pressure.
Employee Relations: Good employee relations are obviously a key function of human resources but they are also important to public relations. Developing policies that treat employees fairly and create meaningful advances in diversity, equity and inclusion are a major component in establishing a positive corporate image. Meaningful policies and strong records relating to harassment are imperative. These practices are particularly important for companies who operate internationally and deal with labor forces in areas where human rights and labor laws are lacking.
Charity and Volunteerism: Donating money, supplies and employee time to charity has long been a great way for companies to do social good while making strong connections to the community. These efforts are strongest when the issue at hand has relevance to the company’s core business or community and has strong buy-in from their workforce. The best initiatives are ongoing in nature, although special circumstances are good times to give as well.
Activism: Brands receive a great deal of attention when they take a stand on social issues, such as when Nike recently released an ad featuring Colin Kaepernick, the NFL quarterback who began the practice of taking a knee during the national anthem. From a brand management point of view there are inherent risks in becoming involved in controversial subjects; so while some companies favor bold action, others prefer education, health and wellness or other, less divisive issues.
Supply Chain: Companies are not only taking steps to ensure good ethics within their own ranks, but are taking a closer look at partners and suppliers as well.
Privacy and Data: With data breaches and privacy concerns in the news, companies are taking steps to protect their customers’ privacy and avoid embarrassing and potentially dangerous breaches.
As socially aware Millennials and Generation Z come of age and as access to information continues to become more and more prevalent, the pressure to engage in ethical practices will only intensify. Efforts for companies to be in alignment with public expectations will be important not only to the conscience, but also to the bottom line.
While there will always be controversy and varying degrees of compliance, look for companies to place increasing emphasis on training and development, to make greater efforts to include CSR professionals in the boardroom, and to herald their accomplishments through their marketing department.
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