With growing expectations to “do good” in society, companies are finding innovative ways to use the principles of Corporate Social Responsibility (CSR).
Additionally, there’s an economic incentive to invest in CSR. Business Professor Alex Edmans found that the 100 Best Companies To Work For in America beat their peers in stock returns by 2-3%. That’s nothing to sneeze at!
In this post, we’ll show you how you can get started with CSR.
What (Exactly) Is Corporate Social Responsibility?
In 1970, well-renowned economist Milton Friedman said: “the social responsibility of business is to increase profits.”
While at some point in time, this statement was true, a lot has changed in the business environment and society expects more from businesses today.
“Corporate Social Responsibility ensures that a company’s economic growth is beneficial to all its stakeholders, including suppliers, employees, and customers, while minimizing its impact on the environment.”
CSR is a significant undertaking, but it’s essential to participate if a business is to thrive in the modern world.
It’s simple; If a company doesn’t continue to offer high-quality products and services, customers will stop buying. If businesses don’t treat their workers well, they’ll leave. And if a company pollutes the environment, its public reputation will suffer.
Conversely, if a company is socially responsible, they improve their reputation, attract the best talent, build customer loyalty, and turn a healthy profit.
Sounds good, right? Well, implementing successful CSR initiatives is far from easy. It requires excellent planning, leadership, and an ability to communicate properly and effectively. Below we break down ten examples of Corporate Social Responsibility, both the good and the bad.
The Successes
1. Once is Never Enough – Google
According to the journal Nature, data centers are estimated to use 200 terawatt hours each year, which represents approximately 1 percent of global electricity consumption.
Google has one of the largest data center networks on the planet, and they recognize the responsibility that comes with it. Here’s what they’ve implemented to combat this issue:
- Designed servers from the ground up to last longer.
- Recycle components from old servers into new ones.
- Sell old servers on the secondary market.
As a result of these initiatives, Google has increased the number of remanufactured units and sold over 2 million machines each year to secondary markets.
Key takeaway: Set specific targets to measure your progress towards a circular economy within your organization.
2. Worker Well-being initiative – Levi Strauss & Co.
In 2011, fashion giant Levi Strauss & Co launched a game-changing initiative called Worker Well-Being (WWB) to create a more sustainable supply chain.
What’s unique about WWB is that it’s worker-driven. Levi Strauss takes the time to understand what is needed at a local level.
Levi’s has expanded WWB to 17 countries, impacting 190,000 workers, which represents 65 percent of the company’s production volume.
What’s remarkable is that WWB has yielded a 4:1 return on investment in some programs!
Key takeaway: Just like you need to have customer empathy to be successful, take the time to reverse engineer what your workers want and need.
3. Coffee and Farmer Equity (C.A.F.E.) Practices – Starbucks
Starbucks developed the C.A.F.E practices program in partnership with Conservation International.
The goal of the program is to ensure that coffee, tea, cocoa, and other manufactured goods are sourced responsibly and ethically.
C.A.F.E has a set of standards suppliers must meet in different aspects of their operations, including:
- Waste created
- Water quality preservation
- Energy conservation
- Biodiversity preservation
- Humane working conditions
These standards are measured and monitored across all Starbucks suppliers, and now 99% of coffee beans are ethically sourced.
As of today, the C.A.F.E. Practices program includes over 400,000 farmers in 28 countries that are committed to ethical and sustainable practices.
Key takeaway: Use business reports to set standards with suppliers and hold them accountable.
4. Hospitality For All – Hilton
Established in 1919, Cisco, Texas, Hilton knows a thing or two about building an impeccable reputation.
Hilton is ranked among the top companies to work for in the world, with 96% of employees saying Hilton is a great place to work.
Hilton’s secret sauce in their CSR initiatives lies in how they treat their employees.
From top-down and bottom-up, Hilton embodies a simple yet powerful philosophy, Hospitality For All.
Hilton treats every employee with the same world-class service they provide to their customers.
Key takeaways: Have a clear set of company values and put a communication plan in place to hold the team accountable to these values.
5. Community Involvement Program – Xerox
In 1974, the printing giant Xerox created their Community Involvement Program. Employees were encouraged to take part in the development of local communities in the areas that they care about.
Since its inception, over half a million employees have participated in the Community Involvement Program. As a result, Xerox has been recognized as one of the most ethical companies in the world for over ten years.
Key takeaway: Give employees some billable hours each year to take part in local community development. Get them to share the results amongst the rest of the organization to inspire more people to participate.
The Failures
1. Clean Diesel – Volkswagen
For several years, Volkswagen claimed its diesel engines had fewer emissions than conventional petroleum.
Volkswagen promoted the fact that its diesel vehicles reduced nitrogen oxide pollutants (NOx) by 90 percent.
But in 2015, the Federal Trade Commission made a complaint against Volkswagen as they found that these “clean cars” were emitting up to 4,000 percent more NOx than the legal limit.
Volkswagen installed software on over half a million vehicles that masked the actual output of NOx so they could pass the emission tests.
The manufacturer pleaded guilty and was penalized $1.45 billion, and their reputation took a huge hit.
Key takeaway: Be authentic and don’t claim to care about something you don’t care about.
2. The Best Man Can Be – Gillete
In 2019, Gillette released a short film highlighting the social justice issues of masculinity in the common era.
While a fraction of viewers responded positively to the ad, it was highly criticized for using sensitive topics to gain media attention.
The film highlighted examples of boys and men displaying negative behavior in society, using terms like “toxic masculinity.”
Critics see this campaign as an attempt to use CSR to appeal to a “sensitive” millennial demographic.
As it turns out, a shaving company trying to tell men how they should act didn’t go down too well.
Key takeaway: Take great care when combining social justice issues with content marketing. Also leverage customer feedback to build personalized advertising campaigns.
3. Privacy – Facebook
Facebook connects billions of users around the world with its software. They collect copious amounts of data from their users, and with that comes a huge responsibility.
In early 2018, a political consulting firm, Cambridge Analytica, exposed the data from 87 million Facebook profiles without their knowledge.
The scandal was well-publicized and Facebook has been working to mend its reputation ever since.
With more people digitizing their lives, all companies are faced with the challenge of protecting their users’ privacy as part of the foundation of their corporate social responsibility.
Key takeaway: Put every measure in place to avoid breaching the privacy of stakeholders. This means having an aligned vision across multiple departments in your organization. Think about using communication software in addition to face-to-face connections to create a culture of privacy among your team.
4. Fake Rides – Uber
It would be hard to discuss bad examples of CSR without mentioning Uber. Uber was one of the hottest startups in history, with its transformative ride-sharing service. But they’ve been involved with scandal after scandal, leading to their former CEO Travis Kalanick stepping down in 2017.
In 2014, Uber was accused of hiring employees to order and cancel 5,560 rides from ride-sharing competitor Lyft. Uber later issued a statement suggesting they were unaware of such activity.
However, given their track record, this activity further damaged their reputation and their CSR efforts.
Key takeaway: Seek ways to learn from competitors instead of trying to bring them down.
5. Account Fraud – Wells Fargo
In 2016, The Consumer Financial Protection Bureau found that employees of Wells Fargo opened up 3.5 million unauthorized customer accounts.
Wells Fargo made a statement to suggest that employees were creating unauthorized deposit and credit accounts to meet unrealistic sales targets.
To make matters worse, employees transferred money from authorized accounts to unauthorized accounts to rack up account fees.
The bank was slapped with a $2 billion fine, had to fire over 5,000 employees, and CEO John Stumpf was forced to retire.
Key takeaway: Avoid coercive tactics to motivate employees and inspire them to do their best work instead. Focus on ethical sales practices like customer relationship management, cold emailing and networking.
Conclusion
The race to a more socially responsible marketplace is well on its way, and while not every strategy is perfect, this post shows clear examples of what works and what doesn’t.
And the most exciting part is, this is only scratching the surface! So many companies are doing incredible things to create a socially responsible future.
Cover photo by Adam Jang on Unsplash
