Corporate Social Responsibility: Good for the World & the Bottom Line
In our highly connected world, people pay attention to corporate behavior. People noticed when Dick’s Sporting Goods banned the sale of assault-type weapons, and when REI said ‘no’ to Black Friday. What’s more: people change their investment in companies when they take a strong stance. In a survey by Cone Communications, 87% of consumers surveyed would purchase a product because the company supported an issue they care about. And 76% would refuse to support a company if its values weren’t aligned with their own.
Consumers, employees, and partners alike want the companies they engage with to do good and do well. People want to know how a company treats its employees, how it acquires or makes its products, and overall what kind of impact it has on society and the environment. They want to purchase from, work at, and work with companies they believe in and respect.
“People want to buy into companies that are doing good, while also doing well.” – Click to tweet
Accordingly, business leaders are adopting corporate social responsibility (CSR) strategies to both strengthen their businesses and make a positive difference in the world. Such strategies take many different forms: environmental efforts, philanthropy, employee benefits and involvement, ethical labor practices, volunteering, product quality, corporate transparency, and so on.
More broadly, CSR strategies and activities fit into one of three categories:
- Taking care of your people
- Taking care of society
- Taking care of the environment
Taking care of your people
Employees are the heart and soul of any company. And if they’re treated well, they’re more likely to perform well – and become loyal ambassadors. When Forbes contributor Devin Thorpe interviewed 59 corporate executives whose companies participate in CSR activities, 51 said they have happier employees and 45 believe they end up with better employees.
Companies large and small are seeking ways to take better care of their employees – including longer maternity and paternity leave and vacation time, higher pay, health and fitness programs, and education and medical benefits. One company that is well known for taking great care of its employees (who are called partners) is Starbucks. Whether part- or full-time, employees are paid relatively well, have access to comprehensive and affordable medical benefits, get shares of the company (called Bean Stock), and have access to a tuition-free college degree program through a partnership with Arizona State University.
Taking care of society
Whether you give back to your local community or start initiatives to support other countries, taking care of humanity is a rewarding way to make a positive difference in the world and on your bottom line. Corporate philanthropy has been shown to improve employee morale, strengthen brand image, and enhance customer and employee loyalty. As a bonus, companies who make charitable contributions are often entitled to tax savings. Many corporations encourage their employees to volunteer, match employees’ charitable contribution, and raise money or gather products for underserved communities or demographics.
PNC Bank is a great example. Their Grow Up Great program is dedicated to serving children birth to age 5 by providing “innovative opportunities that assist families, educators and community partners to enhance children's learning and development, particularly in underserved communities.” Since 2004 they’ve given over $128 million in grants to Head Start, served 3.7 million children, and dedicated 700,000 volunteer hours.
“Taking care of humanity is a rewarding way to make and inspire positive change in the world.” – Click to tweet
Taking care of the environment
Sustainability, environmental impact, and carbon footprint have become prominent corporate buzzwords as climate issues become evermore pressing. But many companies are making real efforts to take care of the environment – from reducing water and energy usage, recycling, and reducing their carbon footprint. Such efforts not only reduce the companies’ impact on the environment but according to a report by The Guardian can also yield an internal rate of return (IRR) of 20%.
Google is doing all of the above. Did you know Google has been ‘carbon neutral’ (meaning zero carbon emissions) since 2007? The Internet giant has implemented many environmentally friendly initiatives including Google Green, which has helped it substantially reduce its water and energy consumption and divert an average of 85% of waste from landfills per year.
An alternative to direct action: Offset agreements
While many companies directly and actively engage in taking care of their people, society, and the environment, direct and active engagement isn’t the only form of corporate social responsibility. Another, albeit lesser-known method of CSR, is offset agreements.
Offset agreements are based in the defense industry and are defined as a provision to an import agreement. When a country purchases from a defense contractor, the contractor agrees to make an additional investment in the country, typically worth 50-100% of the value of the contract.
Each country with an offset policy identifies economic sectors – education, healthcare, and technology, for example – that they want investment in. It is the defense contractor’s obligation to see that the investment is made.
Offsets are known to be economically beneficial for the purchasing country, but the value of offset agreements for defense contractors can be significant as well – by enabling them to make larger sales, tap into new markets, and foster relationships with local communities. It enables unique partnerships between contractor and country and is an innovative way to do well in many different communities.
“By taking care of your people, society, and the environment you can make a positive impact in the world and your bottom line.” – Click to tweet
Today’s consumers are no longer okay with corporations doing business just for the sake of making a profit.
They want to see companies make a positive social impact too. As a result, corporate social responsibility is no longer a ‘nice to have.’ It’s a competitive imperative.
In and of itself, it can be incredibly beneficial for companies, too. As McKinsey&Company puts it, business leaders should look at CSR as “as a creative opportunity to fundamentally strengthen their businesses while contributing to society at the same time.”