February 12, 2020

How to Navigate Corporate Social Responsibility

Now, every business — large and small — is subject to an environment in which CSR is increasingly top-of-mind for consumers. It’s also important to potential employees. In fact, among millennials, 64 percent won’t take a job if the company “doesn’t have strong CSR values.” Clearly, CSR isn't something you can ignore. In this post, we’ll explain what CSR is and why it matters.

What Is Corporate Social Responsibility?

Early business leaders like Andrew Carnegie and John D. Rockefeller donated millions of dollars, created foundations, and funded important social institutions. However, back then this was simply a nice thing to do. Today, CSR is a necessity. Thanks to technology, information about unsustainable business practices is available everywhere. We also know much more than we used to about the importance of sustainability. In short, people are far more aware of what businesses are doing and how their operations affect the community and environment. As a result, consumers and employees demand that businesses give back in more ways than simply selling a service or product. The Business Dictionary definition of CSR is “responsibility towards the community and environment (both ecological and social) in which it operates.” CSR governs operations within your business that may affect people and/or the environment. This includes processes like waste management and pollution reduction and programs to give back to the community. Although CSR is often portrayed as a drag on business, you don’t have to look at it this way. Socially responsible companies can use CSR to help their bottom line, if they choose to. Consider the following stats from Business News Daily:
  1. Nearly 90 percent of survey participants said they would purchase a product if a company supported an issue they care about.
  2. Roughly 75 percent of consumers refuse to buy from a company that supports an issue contrary to their own beliefs.
Similarly, an Accenture study found that over half of consumers will pay more for sustainable products. Also, as mentioned earlier, many job applicants prefer companies with a strong CSR initiative. Ultimately, corporate social responsibility is as important as for modern businesses as other more traditional issues, like financial responsibility.

Why Does CSR Matter?

As a business owner, you’re likely wondering what’s in it for you when it comes to CSR. Here are four reasons CSR matters:
  1. Consumers and Job Applicants Care About it
As the statistics we referenced earlier show, both consumers and job applicants care about CSR. Obviously, your business relies on making employees and consumers happy. So if they care about it, you should too.
  1. CSR is the Right Thing to Do
As a capitalist society, we can only rely on governments and charities to do so much. The for-profit businesses that drive the world’s economy have to be part of the solution. Otherwise, though individual businesses may be more profitable, as a whole, society loses.
  1. You Can Use it to Achieve Other Business Goals
Through a narrow lens, CSR seems like a chore. However, you can achieve other business goals, like improving brand awareness, while also donating or volunteering to improve social issues. Similarly, you can leverage society’s increased emphasis on CSR to highlight areas of your business that are already sustainable.
  1. Long-term Business Health Relies on CSR
A healthy, well-educated population with equal opportunities for personal and career growth is good for business. In this way, CSR matters to business because it helps ensure you have educated and productive employees.

Strong Examples of Corporate Social Responsibility

Corporate social responsibility relies on a mix of strategy and execution. That’s why truly socially responsible companies review and report on their sustainability initiatives. They recognize that it’s not enough to just pay lip service to CSR. There has to be real, tangible action. To see what that looks like, it’s best to look to leaders in corporate social responsibility. In the following few paragraphs, we’ll describe corporate social responsibility examples from three highly successful businesses.

The Starbucks Model

Howard Schultz, Executive Chairman of Starbucks says that balancing profitability and social conscience leads to significant long-term value. Of course, Schulz did a lot more than talk about social conscience. Under his leadership, Starbucks offered comprehensive health benefits to all their employees. At the time, in 1988, they were among the first companies in the U.S. to do that. They also started stock ownership and free college tuition initiatives for workers. As you can see, Schultz didn’t just talk about social responsibility. He put his money where his mouth was and continues to do so today. A few years after Schultz had retired as CEO of Starbucks for the first time, the company was struggling. Schultz returned as CEO and reinvigorated the company by reminding leadership about their values. For instance, he took 10,000 storage managers to a conference that started with volunteering in New Orleans. This cost the company precious sales in the short-term but it was critical to the company’s long-term recovery. The trust that Starbucks had earned through its history of CSR, Schultz showed, had to be preserved and built upon. Clearly, social responsibility was and remains critical to the Starbucks business model.

Crowley Maritime Corporation

Crowley Maritime is an example of a company that participated in corporate social responsibility. They showed that you don’t need to be a consumer-facing company to focus on CSR. As a provider of marine solutions, transportation and logistics, Crowley Maritime literally wrote the book on preventing dangerous oil spills. With the Oil Pollution Act of 1990, operational procedures published 20 years earlier became law. More recently, Crowley’s efforts have won recognition from many socially focused government organizations. Also, through the Thomas B. Crowley Sr. Memorial Scholarship Program, Crowley has awarded millions in scholarship funds to students. Crowley Maritime is an illustrative example of how corporations can use their resources and expertise to solve social and business problems. With their handbook on preventing oil spills, Crowley could cut the costs of oil spills to the company. However, they could also reduce the occurrence of oil spills worldwide with their expertise. Since this expertise already needed to be developed for business purposes it didn’t cost the organization much to share it. However, even if it did cost Crowley to share their knowledge, it’d be well worth the investment. Today, Crowley has a great reputation worldwide which makes doing business far easier and more profitable for them.

Johnson And Johnson

As far as socially responsible companies go, Johnson and Johnson was among the first adopters of CSR. In 1943, former Chairman Robert Wood Johnson established the Johnson and Johnson credo: “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services." As you can see, CSR was instilled in the organization since its founding. However, it’s particularly enlightening to see how Johnson and Johnson navigated a social crisis in 1982. Disaster struck Johnson and Johnson when seven people in Chicago died after taking Tylenol. It turned out that someone had tampered with the Tylenol after it reached market shelves. So, Johnson and Johnson was absolved of blame. Still, the chairman at the time, adhering to the company credo, recalled 30 million Tylenol products. This cost the company more than $100 million. However, it may have saved the company in the long-term. After removing Tylenol from the shelves, refunding customers, and offering safer alternatives, Johnson and Johnson went further. Two months after the crisis, Tylenol introduced new tamper-proof packaging. They promoted this new packaging heavily as Johnson and Johnson became the first manufacturer to use tamper-proof packaging. As a result, Tylenol recovered from a disaster that could have destroyed the company. More importantly, they regained their consumers’ trust.

Responsibility Is Important

As human beings, we tend to focus on our own needs, and there’s nothing wrong with that. It just means that it takes extra effort to focus on how we can help our community and the environment. The reality is, doing social good and turning a profit don’t have to be mutually exclusive pursuits. That’s a myth born of narrow thinking and a misunderstanding of the goal of corporate social responsibility. Plus, as the stewards of our planet, it’s important to keep it in good shape for future generations. For more tips on CSR and other important small business topics, sign up for our newsletter. [cta-newsletter]