There can be no doubt that the money and resources afforded by business through CSR have the potential to benefit society in many ways, but beyond a conformity to modern day corporate etiquette why would and should a business engage in CSR activity and if it does what should it do and how?
Unsurprisingly, with so many factors at play, the direct financial benefit of CSR is hard to measure, but beyond the bottom line there is evidence that CSR can deliver positive results, not just for society, but for business too. Google search "the impact of corporate image on sales" and you'll find numerous studies that testify to the fact that positive corporate image and word of mouth around it has the potential to prompt consumers to both choose one brand over another and possibly even accept a higher price point when doing so. Furthermore, as business practices become ever more transparent through the internet so a negative image becomes increasingly detrimental and any steps taken to avoid one more important.
One study which looks at how CSR benefits business identifies three different types of socially responsible activity.
Philanthropy, through which companies make donations, raise funds and sponsor charitable NGOs. Business Practices, in which companies change their operations for the benefit of employees and wider society; and Production, in which businesses fundamentally change their product offer to the advantage of society and the environment.
The study demonstrates how each of these different types of activity impact positively on business performance, in different ways and to varying degrees.
However, what isn’t discussed is the degree of effort required by a business to engage in these activities, and so the value of participating is not fully clear.
For instance, philanthropic activities can and are for many businesses a relatively low investment initiative which may involve little more than investment in charity Christmas cards or staff fund raising events. On a grander scale, for the larger organisation a large and tax free cash donation to a partner NGO serves as a straightforward positive step but one that may gain little recognition from customers and the public at large.
For the more proactive and possibly larger organisation there is perhaps greater expectation of the contribution it should make.
Published in 2016 the World Economic Forums Global Shapers Survey gathered the views of 26,000 millennials across 181 countries in order to provide a snapshot of the concerns of the next generation.
The survey highlights some areas in which businesses may play a part in improving things. Environmental and Poverty issues are perhaps two areas where opportunities exist.
To ensure a company is doing the right thing by both society it needs to understand CSR issues in detail.
In recent years, there has been a lot of social commentary and activism centred upon the impact of poverty on basic female needs. In particular, the concept of Period Poverty has been highlighted and has prompted a number of corporate interventions at first by retailers opting to absorb taxation on female sanitary products and then by Bodyform which in 2017 made a three-year commitment to distribute its products free of charge to some of the most affected women and girls, a move that P&G competitor Always has now followed.
However, now some people are voicing the opinion that access to free sanitary products is a basic human right. As the conversation progresses the opinion that for anyone to be charged for sanitary protection may begin to take hold leading commercial manufacturers to come under fire by activists.
Without a clear understanding of these shifts in social conscience it would be potentially hazardous for a company to become involved in activities aimed at addressing social and environmental issues.
Once a business has identified a CSR objective and fully understood the issue it must then consider how it might best contribute.
Increasingly, CSR initiatives have become tied to more specific and practical solutions to social and environmental issues with corporates taking more direct action through philanthropy, business practice and production.
This enables companies to have a much more direct say in where and how they direct their efforts and so manage things both to the benefit of the cause and the business alike. But with this increased level of involvement also comes a greater degree of commitment in terms of both resource and money.
P&G’s long standing initiative, Children’s Safe Drinking Water demonstrates this. Through the initiative, P&G alongside a wide network of NGOs has distributed water purifying technology to over 75 countries in the last decade, funded through the commercial profits of the company with a consumer facing campaign.
Initiatives involving changes to business practices and production may be less transparent to consumers since they often operate behind closed doors and can be harder to communicate.
Lego has been working hard on its CSR agenda since 2014 when it chose to end its long standing corporate partnership with oil giant Shell.
Since then, the business has aimed to reduce the impact that its operations have on the environment, and has developed a new partnership with the World Wildlife fund, invested in off shore wind farms, worked to develop recycled packaging and invested $150m to researching alternative materials to replace plastics.
Yet whilst admirable, much of Lego’s efforts perhaps go unseen outside of its workforce and wider environmentalist circles.
Gaining that recognition is not simply a case of marketing, as with any form of advertising, the key to ensuring a positive commercial outcome is to ensure an emotional connection between the public and the chosen CSR programme.
Ensuring both a good cause and an emotionally compelling communications strategy to support CSR activity is therefore of significant importance if a company’s endeavours are to have a positive effect on business.
In contrast to Lego, specialist outdoor apparel company Patagonia are more overt in their commitment towards low environmental impact production and living. The mission statement for the business is to “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” An ethos which is embodied in its consumer facing “Don’t buy this jacket” campaign that encourages people to think about what they need and consume before making a purchase. Cleverly the campaign aligns the business with sustainable consumerism through claims that its products are of a superior quality and so more environmentally economical.
But Patagonia doesn’t stop there. Beneath the surface the company goes further with its environmental agenda, declaring itself an Activist company and backing a range of campaigns and initiatives more akin to a non-profit such as Greenpeace than a conventional commercial business.
In doing so the company has managed to combine a commercial imperative, alongside a strong ethical agenda in a way that is both emotionally engaging and intelligently thought provoking.
So, whilst there is an inevitability around CSR activity and the need for benefits to society and business alike, choosing the right cause, the means with which to support it and an effective way to communicate a programme can be a complicated challenge.
Ensuring that your company:
And importantly communicates a CSR programme cleverly in order to connect emotionally with the public are the keys to creating real shared value through CSR.