“Why do companies get involved in CSR?”
What is CSR? Corporate sustainability and responsibility is initially the way that the company, brand or organisation combats the impact that they have caused the environment and community that they are within, however now larger companies, corporations and brands have branched out made their businesses work harder on the positive impact that they could bring to not only their immediate community and environment but now due to the globalisation of many brands, the impact on issues that their brands audience would be interested in also.
Some critics believe that it could be a drain on resources e.g. time, money, employees needed to take care of these tasks. It is now been considered a possible means of measuring how successful a company is and what impact it has on the surrounding society and further environment whilst also being a way to measure the reputation of their brand. This comes down to the effect that CSR and it tools have on the progress of the company e.g. with customer relations, employee engagement, creating purpose within the company and money saving tactics.
Forbes has shown 6 ways in which CSR should be a tool that all companies need to embrace and they list examples (Forbes, 2012) such as:
- Innovation – the push for sustainable goods has stressed the companies in to finding more sustainable techniques in producing good e.g. Unilever Global director ‘Mr Geoff Mcdonald’ showed an example from one Unilever’s recent “less water hair conditioners”; without the sustainability initiative as a company the new products wouldn’t have been created/discovered.
- Cost Saving – In terms of sustainability there are means of cost cutting that can come about from the use of less sustainable products and cutting down on unsustainable habits e.g. water waste, food waste, lower electricity (Energy saving options) use in the offices and so on… all add up to lower expenditure for the company annually.
- Brand Differentiation – Initially CSR for big companies was to set them apart from the rest of their counterparts e.g. Coca-Cola v Pepsi – however increasingly it has bypassed just a brand difference and has become and ingrained and permanent aspect of the brand e.g. there zero net water use aims.
- Long Term Thinking – our case study company, Unilever prefers to use the term sustainability instead of CSR or corporate responsibility to look at this area as more than just a tool to increase finance in the next quarter but as a means to lay out a foundation for the future of the company in the next decade both socially and financially.
- Customer engagement – It can be a new means to be in contact with your customers in a form that is not specifically catered to their products and allows the customer to not only associate the brand with just the cold customer – company advertising communications but put a more humanised and caring message behind the brand and show new ways in which the brand can be remembered
- Employee Engagement – it allows many people within the organisation have a bigger say in the impact the company has on the surrounding society and environment by taking part in projects launched due to CSR e.g. charity fundraising, community service initiatives and event days. This gives the company and the employees that work within it a purpose bigger than their job description.
Benefits of CSR for companies – the impact that companies have on sustainability and charitable fundraising and these unused assets can be mobilised by calling upon the companies sitting on a willing workforce and resources that would benefit both the society and their income. John G. Taft, CEO of RBC Wealth Management-USA states; “Employees and customers want to work with a company that they respect.”
Insinuating that CSR and the projects that come out of it are means of attracting clients and the best employees to the company by increasing its level of respect.
Critics believe that there are doubts as to how helpful CSR is to the society and whether the companies are truly making as much positive impact as they advertise because there are many that believe there is more harm being done by these companies in different areas that they are trying to deflect attention from and that they refuse to change because it is not necessarily a money saving option but may cost more money to make that area sustainable and due to this is not focused on
Many believe that CSR is a corporate reaction to public mistrust and calls for regulation. The perversity of market mechanisms is exemplified by carbon trading: allowing corporations to avoid reducing their emissions by buying carbon credits. As Tony Blair chillingly said in his address to the World Economic Forum, ‘if we put forward, as a solution to climate change, something which involves drastic cuts in growth or standards of living, it matters not how justified it is, it simply won’t be agreed to’. Companies argue: that setting minimum standards stops innovation; that you can’t regulate for ethics, you either have them or you don’t; and that unless they are able to gain competitive advantage from CSR, companies cannot justify the cost.