A New Era of Corporate Social Responsibility
Today, socially responsible companies tend to attract more consumers as well as the best talent, according to a 2015 global corporate social responsibility (CSR) study by Cone Communications, a public relations and marketing company headquartered in Boston, NY. The study revealed that consumers are increasingly demanding companies do more to address global social issues, as well as environmental issues. Specifically, 90% of the consumers who took part in the study said they have come to expect companies to participate actively in CSR activities while 84% said they actively seek out responsible products.
To learn more, check out the infographic below created by Norwich University’s Online MBA program.
An Overview of Corporate Social Responsibility (CSR)
Broadly speaking, CSR describes the efforts a company makes beyond the legal requirements to improve society as well as the environment. In other words, CSR requires a company to take responsibility for the impact of its operations on society and the environment. Examples of these efforts include donating money to nonprofits such as local charities, environment efforts such as reducing carbon pollution, volunteering and ethical labor practices.
Role of American Consumers in CSR
In America, CSR is highly popular with consumers. More specifically, recent research shows that 85% of consumers would shun a company’s products if they learned of its irresponsible or unethical business practices while 60% would consider a company’s CSR efforts before buying its stocks or mutual funds.
CSR and Millennial Workers
Millennial workers are generally highly passionate about global social issues. In fact, CSR efforts can help a company attract and retain quality millennial workers. For instance, the above mentioned Cone Communication’s study also revealed that 76% of millennial employees would consider a company’s CSR efforts before deciding to join the company. Additionally, many would accept a lower salary to work at a socially responsible company.
It is worth noting that social media plays an important role in millennial CSR engagement, with 66% of millennials engaging in CSR via social media platforms. Similarly, 33% of millennials use social media to learn more about brands and issues, whereas 26% share negative information about companies and issues on social media. When it comes to donations, personal passions play an important role, with 70% of the study participants saying they would support a charity based on their personal passions. Additionally, 74% said they would volunteer for a cause supported by a company they trust.
Tips for Integrating CSR into a Business Model
CSR is imperative in today’s business environment, according to a 2016 study involving CEOs. More specifically, over 65% of the CEOs who took part in the study said that companies are increasingly treating CSR as a core aspect of business rather than a stand-alone side channel. According to the Harvard Business Review, a company uses different approaches to engage in CSR. Examples of such approaches include:
Engaging in philanthropy — Philanthropy initiatives should not aim to boost a company’s profits or improve its performance. Instead, they should aim to benefit local community programs and charities. In most cases, such initiatives involve donating money or other assets to charities and other community programs.
Improving operational effectiveness — These are the efforts geared towards boosting the functional performance of a business. For this reason, they optimize a company’s operations and in the process deliver social and environmental benefits as well. Examples of such efforts include green initiatives that not only help a company conserve natural resources, reduce pollution and waste, but also reduce its operating costs.
Transform the business model — This entails creating new forms of business to address the environmental or social issues with the aim of boosting business performance. A good example of this is hiring locals to help in the distribution of products instead of outsourcing that service to another company. By doing so, a company would be able to lower its operating costs, create employment opportunities for the locals and ultimately help grow the local economy.
It is worth noting that one approach can complement or influence another approach. For instance, hiring locals would likely increase their purchasing power, enabling them to purchase a company’s goods or services. In turn, this would mean more sales for the company.
CSR Program Requirements
The most important requirements for a CSR program include:
Coherence — A CSR program must align with the company’s vision, goals and values.
Metrics — The success of a CSR program needs to be defined clearly, and not just in terms of its economic benefits.
Inclusiveness — This means that if a company is deploying multiple CSR strategies, all the CSR strategies should coordinate across the company.
You can use different initiatives to promote your company’s CSR efforts. Examples of such initiatives include:
Working for a specific cause — If you decide to go with philanthropy, choose philanthropic initiatives that would complement your company’s objectives or resonate with your target market.
CSR as a recruitment tactic — As mentioned earlier, CSR could be important for employee attraction and retention. For this reason, you should create a position whose role would be consistent with your company’s CSR culture and efforts.
Environmental efforts — Reducing pollution and conserving natural resources would benefit your company as well as the community.
Volunteering — This entails giving employees an allocated amount of time to attend volunteer events organized by local communities or organizations that are important to them.
3 Socially Responsible Companies in 2016
According to the Reputation Institute’s Global CSR Rep Trak ranking, the most socially responsible companies in 2016 included:
Google — Managed by Google for Education and Google.org, Google’s $50 million global initiative fund supports innovative education nonprofits across the world. According to Google, getting kids in the classroom is the biggest hurdle in education. However, the company believes technology and trusted nonprofits can help close the worldwide gap in learning.
Walt Disney — Walt Disney is currently focusing its CSR efforts on environmental conservation. To this end, the company plans to reduce its net emissions by half, divert 60% of its waste from landfills and incineration and develop water conservation plans for new locations. Additionally, the company sponsors various environmental protection programs through its Disney Conservation Fund.
BMW — BMW’s CSR efforts aim to reduce resource consumption, promote employ diversity and improve efficiency across its supply chain.
The Benefits of CSR Efforts
According to the Society for Human Resource Management, 38% of companies with prominent CSR benefit from stronger employee loyalty. Additionally, 43% of such business enjoy stronger public image and improved efficiency across business processes, whereas 55% experience more positive company morale.
Research shows that investing in CSR activities can increase product and company credibility, boost sales, help cultivate customer relationships, as well as improve employee retention and attraction.
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