Corporate social responsibility (CSR) is rapidly emerging as the defining business concept of our age. Of course, philanthropy is not a new phenomenon in the corporate world: traditional companies like Olivetti, Clarks shoes and Lever Bros sought to improve the lives of their workers by providing good working conditions, housing and education.
But the motivations behind their behaviour may well have been surprisingly modern: Victorian philanthropists would probably have agreed with many of the following points.
Because It’s Inherently Good To Do What’s Right
Of all the arguments that follow, this one carries the most weight, and it applies regardless of any religious affiliations. The business world is a source of great power and influence, and by fulfilling its responsibility to the society within which it operates it’s doing an inherently good thing. This is particularly true in times of unrest or economic downturn.
In the United States, Tyson Foods is a good example of a business that has taken CSR right to its heart. In addition to a long-term commitment to the cause of ending childhood hunger worldwide, Tyson also uses social media to enhance its charitable activities closer to home. One campaign involved donating 100 lbs of chicken to a local food bank for every comment posted on Tyson’s hunger awareness blog.
As a Way of Modelling Enlightened Capitalism
Businesses subscribing to the PT Barnum approach exemplified by his famous quote, ‘There’s one born every minute’ are mercifully rare. With CSR fast becoming established as a norm, a respectful attitude towards customers and everybody involved in the supply chain is now the default position. Some companies even believe CSR has the power to make the world a better place as part of the vision for ‘global social business’.
Fast Retailing, the Japanese conglomerate behind the internationally renowned UNIQLO clothing brand, subscribes to the concept of CSR on this kind of ambitious scale. Fast wants its influence to be one of social betterment, and seeks to improve conditions for workers in all of the countries its garments are manufactured.
Once again, this is a company that also believes in doing good on its home territory: it has contributed and distributed extensive aid to the victims of the 2011 Japanese earthquake and subsequent tsunami.
Because Consumers and Shareholders Reward It
If potential customers suspect you have contempt for them, they’re not going to buy from you – end of story. None of us likes to feel that we’re one of the suckers born every minute in the PT Barnum quote mentioned above. And most consumers would rather not be indirectly implicated in exploitation, animal cruelty or environmental destruction as the result of doing business with an ethically dubious company.
One of the most famous examples of how not to relate to customers was demonstrated by British businessman Gerald Ratner in 1991. In a private speech, Ratner referred to his company’s products as ‘crap’, an attempt at humour which backfired when the gaffe was widely reported in the press and a reported £500 million was lost from the company’s share value almost overnight. Happily, the converse is true as well: a recent Harvard Business School study suggests that socially responsible companies get better ratings from securities analysts.
To Inspire Employees
This is a much-underrated reason for adopting socially responsible business practices, and one that makes CSR pertinent to public sector and not-for-profit organisations. In fact, it has been said that if a company’s CSR doesn’t include its employees, then it’s no better than a cosmetic exercise: greenwashing, as it’s called. An example of greenwashing might be the company that boasts about its record on the environment, but whose offices are only accessible by car.
Executed correctly, corporate social responsibility benefits and engages employees, making them proud to work for a company with principles. In order to make this work to its full potential, CSR must be embedded in the organisational structure. The financial institution JP Morgan Chase Associates exemplifies this with an innovative approach to promoting social mobility in the UK: the company runs a formal mentoring programme for young people from low-income backgrounds, with the aim of helping them succeed at top-flight universities.
It’s clear that CSR in the 21st century is less about bestowing good works and more about the empowerment of individuals and communities. That has to be good news, since the consequences will be of benefit to society, the company’s employees, their customers and stakeholders, suppliers, animals and the environment.
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