Corporate social responsibility (CSR) is a practice where for-profit businesses work to benefit society and the environment, while still creating shareholder value. Put succinctly, the goal is to do well by doing good.
Modern businesses are putting more and more emphasis on social responsibility, for a few different reasons. For one thing, socially responsible companies are popular with customers. For another thing, businesses are made up of individual people, and all of us benefit from living in a world where companies care about society and the environment.
So, why is CSR important, and how do you establish it for your brand? Here’s a quick overview.
Why corporate social responsibility matters
Social responsibility isn’t just good for the world. Increasingly, it’s important to your company’s bottom line. A 2017 study by Cone Communications found that 63% of Americans “are hopeful businesses will take the lead to drive social and environmental change moving forward, in the absence of government regulation.”
Furthermore, 87% of respondents said they would be more likely to purchase a product if the manufacturer promoted a cause they’re passionate about. Even more tellingly, 76% of customers would not purchase a product if the manufacturer promoted a cause that was against their beliefs.
This attitude doesn’t just apply to customers. Just as importantly, prospective employees are more likely to work for a company that supports causes they agree with. According to Symantec head of diversity, equity, and inclusion Susan Cooney: “The next generation of employees is seeking out employers that are focused on the triple bottom line: people, planet and revenue.”
Finally, many socially responsible business practices are also beneficial to your bottom line. A good example is sustainable, minimalist packaging. Yes, it’s good for the environment. But less packaging also means lower shipping costs, which can save companies a significant amount of money.
How to establish CSR
So, how does corporate social responsibility work from an organizational perspective? Here are six key components of any successful CSR model.
Base your model on your core competencies
The nice thing about CSR is that it’s a fairly broad term. If you wanted to make a list of things that benefit society and the planet, you could probably fill a notebook with ideas in the course of an afternoon. But choosing and supporting a random cause – even a worthy one – isn’t necessarily going to get you the best results.
Instead, it’s best to think of problems that your company is well-equipped to handle. The closer your CSR work is to your core business, the more your company will have to offer.
A good example of this are the Home Depot Foundation and a related organization, Team Depot. Since 2011, the foundation has spent over $160 million on providing homes for veterans.
So far, this is fairly standard stuff. A large company decided to support a cause and donated a generous sum of money. But the Home Depot Foundation also works in tandem with Team Depot, company employees who volunteer their time to help with projects for veterans. These projects include renovations to retirement homes, home modifications for wounded vets, and home repairs for veterans who cannot afford them.
Home Depot didn’t just throw money at a problem. They took their core competency (home improvement), along with their resources (handy hardware store employees) and put them to work.
Know what your customers care about
As with anything else your company does, it’s important to think about your customers. What do they value? If your company’s values are out of step with your customers – or if they are perceived to be – your brand will suffer. Conversely, if your CSR model is in tune with your customer base, your brand will benefit.
Consider the example of Home Depot’s activities. They’re very popular, and very uncontroversial. Veterans come from communities throughout the country, and represent all colors and creeds. Now, consider Home Depot’s customer base: literally everybody. It makes sense for them to support an uncontroversial cause that benefits people from all walks of life.
A good example of the opposite approach is the Ben & Jerry’s Foundation. The Ben & Jerry’s Foundation is unabashed about their activism. They’ve been on the front line of many progressive causes, including labor rights and the presidential campaign of Vermont Senator Bernie Sanders. These activities are popular with some Americans, and unpopular with others. However, they’re in perfect harmony with Ben & Jerry’s young, urban customer base.
Engage your employees
Any successful CSR model requires your employees’ engagement. Remember, they’re your company’s most valuable asset. Use them! Many will be happy to help. In fact 76% of millennials take a company’s social and environmental policies into account when they’re job shopping.
Not only that, but engaged employees are more likely to stay with your company. A whopping 88% of millennials say they prefer a job where they have the opportunity to contribute to social and climate-related causes. Give them these opportunities, and they’ll be less likely to leave.
Engage your customers – but be authentic
An important part of doing well by doing good is making sure your customers know you’re doing good. You can do this in any number of ways, including through your advertising. You can even use simple templates, like these world environment day posters. They can be customized for your business or campaign, and printed off or shared on social media.
Regardless of how you’re promoting your message, make sure you’re not just blowing hot air. 65% of Americans, and 76% of millennials, will do research when a company takes a stand on a social or environmental issue.
Broaden your horizons
In the past, CSR generally entailed corporate giving and environmentally sustainable business practices. However, the definition has since expanded to include the ways in which a company conducts everyday business.
One good example of this is how well employees are paid, and how good their working conditions are. Another example is making sure your values are internally consistent. When CVS stopped selling tobacco products in 2014, many analysts were skeptical. But it’s undeniable that their efforts lowered smoking rates in areas where CVS has a significant market share.
Stay current, be flexible
No matter how well you plan, events sometimes take a sideways turn. Just like the rest of your business, your CSR model has to adjust for these changes. Look no further than the Covid-19 pandemic. In response, many companies shifted their existing efforts to some form of pandemic relief.
Types of CSR
As you can imagine, there are any number of ways a company can help to improve society and the environment. That said, CSR-related programs generally fall into four categories: environmental sustainability, charitable donations, fair labor practices, and volunteer efforts. Here’s a short summary.
Environmental sustainability is one of the most common forms of CSR. Simply put, every business has some environmental impact, and can take steps to reduce that.
A good example is Lego’s commitment to using more sustainable materials. From 2013 to 2014, they shrunk the size of their boxes by 14%. This alone saved over 7,000 tons of cardboard per year. Lego has also pledged to remove all single-use plastic packaging from their products by the year 2025.
Another way every business can contribute is to donate to charitable foundations and nonprofits. The scale of this involvement depends on the size of the business. A major corporation might want to partner with large, national organizations, while a small business might be better partnering with a local charity such as a food bank.
Remember, donations don’t necessarily have to be monetary. Companies can also donate products and used equipment to charity.
Fair labor practices
More and more, corporate social responsibility has come to encompass a company’s labor practices. For domestic firms, this means offering fair wages, a safe working environment, and enough benefits that employees can enjoy a good quality of life.
For international companies, this often means verifying that overseas partners are meeting their own obligations to workers. For example, starting in 2015, Starbucks confirmed that 99% of its coffee was sourced from ethical farms. They continue to work towards a perfect score of 100%.
Finally, companies can volunteer their employees’ time to charitable causes. To support this, businesses may offer paid time off or other incentives to help employees get involved. Not only does this do good in the community, but it also puts the company in public in a positive light.
As you can see, corporate social responsibility is more than just creating a single program, or donating to a charity. It’s an approach to business that puts the interests of society and the planet on par with the interests of the shareholder. By practicing CSR, your business can create not just financial rewards, but a better world.