Corporations don’t exactly have the best rep among the general populace, wherever you look in the world. Their single-minded focus on profit and resulting blasé attitude towards environmental responsibility hardly paints them in the best light, after all.
That all to say nothing of the constant reports of record profits for the people at the top while those very same people continue to assure us there really is no way they can pay their employees a living wage. Corporations are very easy to paint as the bad guys, and not without good reason.
This is exactly why many of them are implementing social policy that makes them look better on the outside. It’s a well known fact that the best form of advertising in the modern day is convincing your customers that you’re different, and corporations are not blind to this. In a world of social media and social awareness, brands want to be seen in the right light.
Despite today’s world being wealthier than at any other time in human history, the disparity between the wealthiest and poorest in society has never been greater. Yes, even worse than before the French Revolution. Sadly, it doesn’t take an economics degree to work out who the Louis XVI's and Marie Antoinette's of the modern world are.
There is, however, a ray of hope. Thanks to the power and influence of social credibility, corporate social responsibility (or CSR for short) is something companies actually find themselves wanting to partake in. CSR policy, no matter the reasons behind it being set up, is always a good thing, but why is that? What does a corporate social responsibility policy actually look like, and what does it do?
How do you define a CSR strategy?
Most of us would vaguely define a CSR strategy as some sort of plan for ‘giving back’. This usually means corporations sacrificing some portion of their profit for some sort of social benefit. CSR and sustainability often go hand in hand in this way. Most CSR strategies will focus on some combination, or ideally all of, these social values examples as general areas of giving back:
- Economically: Making high level financial decisions responsibly in a way that will ultimately benefit society as a whole
- Financially: Dedicating increased portions of their profits to positive areas, such as employee welfare, sustainable development, and environmental concerns.
- Environmentally: Reducing the effects they have in accelerating climate change and their environmental damage.
- Ethically: Making decisions based on what is the right thing to do on a moral level, rather than what is going to make the most money, no matter how dirty.
- Philanthropically: Dedicating time and resources to the improvement of society outside their usual scope.
Do CSR theories translate to practise?
We live in a social society first and foremost, especially with the overwhelming presence of social media. CSR theory and CSR strategies are ironically rising to prominence because this makes it an excellent way to make more profits.
CSR benefits the public image of a company, because any and all corporate social responsibility efforts can be broadcast across all the social media channels that we all use every day. This invariably makes people have a more positive opinion of the company, subconsciously working as a great form of less artificial advertising.
It’s very common to see companies with good CSR reporting on it religiously, to make sure everyone knows that they are different to all the other corporations, that they ‘care’.
Even if it’s ultimately just a bunch of CSR check boxes to make the company look good, with the CSR finance advantages being more important than the actual outcomes, there is no doubt that it is always doing some good. CSR marketing is still CSR at the end of the day, after all.
CSR sustainability is still sustainability, and so on. Companies with good CSR report both an increase in profit and an increase in public opinion, as well as all the good they do in the world as a result. In theory at least, it’s a win-win.
CSR theory explained
This isn’t an in-depth CSR course, but the theory behind what CSR is and why it works is something that CSR training companies might offer you may not cover. At it’s core, CSR theory is actually the combination of three CSR theories.
The shareholder value theory, stakeholder theory, and business ethics theory. For the sake of clarity, a shareholder is someone who owns shares of a company’s stock, whereas a stakeholder is anyone affected by a company (such as employees and customers).
A shareholder is always a stakeholder, but a stakeholder is not always going to be a shareholder.
What is the shareholder value theory?
The shareholder value theory posits that the corporation's sole responsibility is to grow more profitable. Corporate operations should, at no time, masquerade as non-profits or government agencies. Thus, they should only focus on generating more revenue. Pretty simple, and most corporations have no trouble sticking to this one.
What is the stakeholder theory?
The stakeholder theory says that stakeholder pressure on a corporation must be a valid operating concern. Customer boycotts, employee dissatisfaction and negative press all impact the corporation's ability to generate profits. The stakeholder theory of CSR has become more weighty than the shareholder theory.
If stakeholders 'vanish' — nobody comes to work and nobody buys anything, the company will cease to exist.
With the advent of social media, the power of the stakeholder has become much more visible, bringing more weight to this theory. If they wish to do business in the community, they must show some care for that community.
What is the business ethics theory?
The business ethics theory of CSR is the fulcrum around which the other two theories revolve. It states that businesses must heed shareholders but still maintain their moral duty to society, and holding some care for protection and welfare of their employees and the environment.
They must evolve to meet changing social expectations and address social responsiveness. They must always operate with fairness and concern for human rights. And they must fight for social justice and contribute to social wellbeing.
A corporation that operates this way is much more likely to gain the approval and acceptance of the general public. This is not by accident, either. Companies report CSR all across their social media because it makes them look good, and makes the community like them.
People will want to work there, and consumers will prefer their products over their competitors who are doing less. In essence, it’s just very clever and developed marketing. A happy coincidence, then, as it is also rightly considered the ethical and moral responsibility of companies to have some sort of corporate social responsibility.
Examples of good CSR (and bad CSR!)
Businesses that are genuinely socially responsible, and for the right reasons, will often keep their good works more quiet than their competitors. While this may sound counter-intuitive, it is typically seen as the far better approach morally, and emphasises that it’s being done for the right reasons. One example of a good CSR group in this regard is Ben and Jerry’s, a business that quietly gets on with embracing their ethical responsibilities.
One question I frequently find myself pondering as I go to treat myself to a bowl of Ben and Jerry’s cookie dough ice cream is “Why is Ben and Jerry’s so expensive?”. Sure, it’s really good ice cream, but it turns out there’s actually more behind the price than just the flavour.
It turns out that Ben and Jerry’s biggest contributions to the betterment of society are in fact not their cookie dough ice cream, much to my surprise, but rather all the things they get up to behind the scenes.
Childhood friends Ben Cohen and Jerry Garfield were having a hard go. One was unable to complete his medical studies and the other left school. Together, they took a course in ice cream making. A year later, in 1978, they opened their first ice cream parlour in the US state of Vermont. It only took three years to build a loyal and growing fan base. Soon, they started packing their products in cartons for retail sale.
One world-renowned ice cream brand didn't appreciate Ben & Jerry's meteoric rise. That global ice cream giant petitioned one US city's government to limit Ben & Jerry's sales throughout the city. Our heroes fought back and won, which spurred them into political and judicial activism. The next year, in 1985, they established the Ben & Jerry's Foundation.
They've been funding and spearheading environmental and agricultural projects ever since, quietly pushing for change and betterment in the industry, and crucially with the right intentions
On the extreme other end of the spectrum, a look at the Starbucks CSR efforts during the 90s and early 2000s is a perfect showcase of how not to go about your attempts at corporate social responsibility. While the Ben and Jerry’s story is a great example of using initiative to make positive change with that as the goal, Starbucks tried their hand at it very much the wrong way.
When they implemented the widely-publicised Fairtrade initiative in 2000, hailing it as a great achievement and patting themselves on the back for a job well done, they were considerably short of the mark. Only 6% of the coffee they sold that year was fair trade. Most of the other ventures in their aggressively marketed philanthropic portfolio achieved similar results.
As a result, while Ben and Jerry’s quietly enjoys a swathe of eco worthy reviews and praise, Starbucks languishes in public ire by comparison. Starbucks constant efforts to very publicly make themselves appear to care with nothing backing it up makes them appear very superficial to employees and customers alike.
Indeed, the majority of press they receive these days is about their anti-union behaviours, which makes them look like real enemies of the public. Ironically, by over-publicising and under-delivering, they have almost made themselves look worse than they started out. Even their more successful endeavours, such as the Starbucks global academy, are overshadowed by their less positive activities.
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