Corporate Social Responsibility: Strategies and Benefits
Corporate Social Responsibility (CSR)
CSR is how organizations contribute to making the world a better place, demonstrating care for a purpose beyond profit.
Components of CSR
- Economic: Be profitable by maximizing sales and minimizing costs.
- Legal: Obey all laws and adhere to all regulations.
- Ethical: Avoid questionable practices and assert ethical leadership.
- Philanthropic: Be a good corporate citizen by making contributions and supporting community programs.
Institutional CSR
- Government is a central stakeholder of business as ruler, competitor, purchaser, supplier, and watchdog.
- Businesses must obey laws and be ethical in response to government expectations and mandates.
- Interest groups strive to pursue their special stakes with the government.
Diversity in the Workplace
In today’s globally connected society and market, workplace diversity is a necessity. Modern companies sell products worldwide, reaching diverse groups. A diversified workforce is needed to successfully create, present, and sell products in this global market.
Benefits of Being a Responsible Company
- Win new business
- Increase customer retention
- Develop and enhance relationships
- Attract, retain, and maintain a happy workforce and be an employer of choice
- Save money on energy and operating costs and manage risk
- Differentiate from competitors
- Improve business reputation and standing
- Provide access to investment and funding opportunities
- Generate positive publicity and media opportunities
Reasons for Embracing CSR
- Innovation
- Cost savings
CSR: What to Do and Not Do
What Not to Do:
- Make unsafe products
- Pollute air or water
- Disobey the law
- Fail to protect employees against sexual harassment
- Neglect recycling
- Use non-environmental packaging
What to Do:
- Implement a waste reduction program
- Promote energy conservation
- Donate to charitable or educational causes
- Continuously improve practices
Global Situation of the Company: Sustainability Reporting
Triple Bottom Line/Sustainability Report/Integrated Report: Annual information provided to stakeholders.
Report of business activity by indicators (GRI): Informs stakeholders and tracks the evolution of company commitments over time, allowing comparison with other companies’ reports.
- Integrated report: Organization strategy, governance performance, and prospects lead to value creation over the short, medium, and long term.
- Sustainability report: Method to internalize and improve an organization’s commitment to sustainable development, demonstrable to internal and external stakeholders.
Circular Economy
The circular economy is an alternative to the traditional linear economy (take–make–dispose). It aims to maintain the quality and value of materials and resources long-term.
Steps to succeed:
- Prioritize waste prevention
- Reuse initiatives
- Recycling
- Connect procurement with waste produced to stimulate a secondary commodities market
Benefits of Workplace Diversity
- Variety of perspectives
- Higher innovation
- Increased creativity
- Faster problem-solving
- Increased profits
- Better decision-making
- Reduced employee turnover
- Better company reputation
- Higher employee engagement
Arguments For and Against CSR
Arguments For CSR:
- Ensures a stable environment for the company
- Satisfies society’s expectations
- Constitutes an ethical obligation
- Improves public image
- Increases reputational value
- Increases market value
Arguments Against CSR:
- Reduces profit maximization
- Diversifies efforts to improve productivity
- Transfers costs to shareholders, employees, or customers
- Increases the power of companies
- Businesses may lack sufficient capacity to address social issues
Motivation for CSR
- Sensitivity towards the environment
- Dialogue with stakeholders: leading changes in society
- Sense of community: the company is made up of people
- Shared vision and values with stakeholders (Porter & Kramer, 2011)
- Innovative capacity – the company must be enduring over time
- Intangible assets – development of competitive advantages
- Long-term consideration – win-win strategies
- Learning new values
- Value creation – for the company and the environment
B Corp
B Corps set the gold standard for good business, creating performance standards and legal structures used by thousands of businesses worldwide.
How to Grow CSR Efforts
- Corporate leadership must be actively engaged in CSR. CEO support is essential.
- CSR must align with corporate brand purpose.
- CSR is about action, not just rhetoric.
PRME (Principles for Responsible Management Education)
PRME is a United Nations-supported initiative founded in 2007 to raise the profile of sustainability in schools worldwide. It provides future leaders with the skills needed to balance economic and sustainability goals, while drawing attention to the SDGs.
Board of Directors
The Board of Directors is an elected group representing shareholders, meeting regularly to set policies for corporate management and oversight. Every public company must have one.
Functions:
- Approval of strategies
- Appointment, compensation, and dismissal of senior managers
- Identification of risks and internal control
- Management control and evaluation
- Setting information and communication policies with shareholders, markets, and public opinion
President/CEO
Responsible for the implementation and operation of the CSR strategy internally and externally.
CSR Director
Addresses issues such as commercial law, human resources, stock prices, strategy, communication, marketing, design, and innovation. Activities are managed from Quality, Environment, Human Resources, or Communication departments. The CSR Director should advise the entire organization, reporting directly to the CEO, to promote CSR across departments.
CSR Committee
Members should have experience in:
- Strategic management of CSR
- CSR public policies
- Socially responsible investment
- Corporate Governance
OECD Principles of Corporate Governance (CG)
- CG framework
- Rights of shareholders
- Equitable treatment of shareholders
- Roles of stakeholders in GC
- Disclosure and transparency
- Responsibilities of the board
Corporate Governance is the direction, management, and control of the organization, governing companies and the relation of directors and shareholders. The purpose of CG is to facilitate effective, prudent, and entrepreneurial management for long-term success.
Codes of Conduct
Codes of Conduct are voluntary and part of the company’s soft law, without legal force. They should be public and available to all employees and collaborators, including documents like the ethical code, and be prepared for modifications due to company changes. The code of conduct represents our behavior in the company and must:
- Be directed to the people of the organization and to the rest of stakeholders
- Be objective
- Be consistent
Social Behavior of the Company: Models
- Reactive Company: Reluctant and slow to undertake social change.
- Defensive Company: Analyzes changes from the risks involved, minimizing costs.
- Adaptative Company: Continuously adapts to change, seeking benefit and opportunity.
- Proactive Company: Actively causes change with new products and services.
The Role of Corporate Communication and CSR
Corporate Communication: Activities involved in managing internal and external communication to create favorable starting points with stakeholders.
Ben & Jerry’s – Communication Strategy
- Corporate communication: Brownies that do good
- Marketing communication: Campaigns and promotions
- Internal communication: “We love cows and believe the only happy cows make great ice cream”
- Mission (foundation): Engage employees in philanthropy and social changes, giving back to Vermont communities and supporting grassroots activism for social and environmental justice. “We make the best possible ice cream in the best possible way”
How Starbucks Communicates Its Social Impact
- “We are the largest purchaser of fair trader certified coffee in the world, you might also know us as Starbucks”
- “Buy a bag of coffee and we’ll provide a tree for a farmer in need”
Principles for Defining the Content of the Report (GRI)
These Principles are designed to be used in combination to define the content of the report.
- Inclusiveness of interested parties Principle: Identify interested parties and explain how the organization has responded to their expectations and interests.
- Sustainability context Principle: Present the organization’s performance in the broader context of sustainability.
- Principle of materiality: Include aspects that reflect significant economic, environmental, and social impacts.
- Principle of integrity/Completeness: Include coverage of material aspects and their limits, allowing stakeholders to evaluate performance.
Social Marketing
Kotler and Lee define social marketing as “a process that applies marketing principles and techniques to create, communicate, and deliver value in order to influence target audience behavior that benefits society as well as the target audience.”
Companies communicate social marketing actions, non-profit actions: solidarity projects and its social strategy.
Involve the consumer in these social actions, offering opportunities to buy products with a social purpose, contributing socially and differentiating from competitors.
Brand Activism
Kotler and Sarkar define it as an attempt by the company to solve the global problems of its future customers and employees, expressed through the vision, values, goals, communication, and behavior of companies and brands towards the communities they serve.
Example: Patagonia uses business to inspire and implement solutions to the environmental crisis, building the best product causing no unnecessary harm.
The Role of Corporate Communication and CSR: What and Why Communicate?
People want to know about companies, their products, values, social commitments, and behaviors. Companies need to dialogue with stakeholders and demonstrate what they are doing to improve society.
According to Fan (2005), branding is a human activity and must be evaluated from a general perspective.”As consumers tend to personalize their relationship with a corporate brand, it should come as no surprise that they judge the ‘personality’ of the corporation” The communication of values and ethical issues seeks to cover the legitimacy of the company and has evolved from reactive to proactive strategies.
Stakeholders: Definition, Typology, and Management
Stakeholders are all interest groups that can affect or be affected by the achievement of the company’s objectives.
Stakeholder approach: Considers all groups necessary for achieving the company’s objectives, either for strategic reasons or moral legitimacy. The company has a responsibility towards different audiences or groups seeking the long term, including shareholders, customers, workers, managers, and suppliers. Therefore, a strategy is needed for each stakeholder.
Most Significant Issues for Stakeholders
- Material: Socially responsible investment, economic performance, ethics and integrity, responsible supply chain, electric and gas infrastructure.
- Non-Material: Public policy, circular economy, eco-efficiency, vulnerable customers.
Social Marketing Initiatives
Social marketing campaigns seek to impact different sectors of society and address various problems.
Objectives:
- Reinforce minority rights
- Give visibility to people with different diseases
- Call for action towards social and political issues
Social marketing campaigns invite us to understand problems and encourage social participation. (Examples: UEFA “No to racism”, Coca Cola #LoveIsLove).
These marketing actions can be carried out in several ways:
- Create a product whose purpose is a social benefit. (IKEA toy collection)
- Solidarity action shared with an NGO.
- Product promotion in a period of the year.
- Communicate these actions and their results/impacts.