BRB Bottomline: Multinational corporations—such as Wells Fargo, Walt Disney, and Wal-Mart—have the power and resources to affect society and the overall environment in a positive way. The work they do bleeds into every aspect of our lives, and so to does their influence. The real issue is whether or not these corporations practice Corporate Social Responsibility (CSR) and give back to the communities in which they conduct business. As responsible consumers, we should educate ourselves on the impact and externalities large corporations have on our lives and stand up when those practices unduly affect certain stakeholders.
This article aims to provide otherwise not-widely-disseminated ideas about the increasing demands on corporations, highlighting the importance of corporate social responsibility (CSR).
What is Corporate Social Responsibility (CSR)?
More and more, CSR is an important factor in where employees choose to work and where consumers decide to spend their money. But more than that, in a work environment where star employees are in short supply and high demand, corporations need to show a different face to stand out from the crowd. Companies that pay attention to workplace diversity, reinvest resources into the communities in which they operate, and practice socially-responsible activities can attract recruits to their firms. While this is one driving force of the recent trend towards assuming corporate social responsibility, other influences are political in a nature
A more formal definition of CSR is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public. By practicing CSR, companies become more conscious of the social, environmental, and economic impact they have on society. In the normal course of business, to engage in CSR means that a company chooses to operate in ways that improve the communities it serves rather than just taking from the community.
Utilizing Market Share to Attract Consumers
With consumers being more vocal than ever, corporations utilize their available resources to advocate their individual brand in a method that reflect society’s wants. This dual involvement of both parties has arisen as a result of the changing involvement of consumers, as they are rightfully inclined to demand certain goods and services from those in power. There are numerous accounts of research highlighting this behavior, but for the case of this article we will be turning to Cone Communications CSR Study. The survey aimed to showcase that Americans expect companies to not only improve their business practices, while investing in social issues that are aligned with the company, but to be a force for change in the broader society.The data concluded that 87% of consumers surveyed, a clear majority, said they would purchase a product because a company supported an issue they care about. More importantly, 76% will refuse to buy from a company if they learn it supports an issue contrary to their own beliefs. It’s important to note how large of a role this perception plays on our spending habits. A consumer is more likely to purchase, or disavow, a company and its products purely because it aligns, or misaligns, with their personal values.
Different Aspects of Corporate Social Responsibility
Many companies focus on and practice in a few broad categories: philanthropy, ethical labor practices, volunteering, environmental efforts and etc. Philanthropy is when big businesses practice civic duty by donating money, products or services to social causes for the social good. It is usually enacted by larger companies as they tend to have a lot of extended resources that can benefit charities and local community programs. Many leading corporations practice philanthropy and give back to society, as seen in scholarship foundations provided by Bill Gates, the Coca-Cola Company, Edison, and more.
With wage inequality being as prevalent and resilient as it is, many companies are making earnest efforts to practice ethical labor. By treating employees fairly and morally, companies can demonstrate their commitment to ethical employee treatment. This is especially true of businesses that operate in international locations with labor laws that differ from those in the United States. The idea of ethical labor is also apparent in the hiring/recruiting process of large companies as they provide a disclaimer at the bottom of their applications guaranteeing commitments to “equal-employment principles,” “no discrimination,” “merit qualifications,” and etc., highlighting that there is no bias and that they are seeking someone who will serve as an asset.
Another common form of CSR practiced by corporations is through of volunteering.
Hosting and creating volunteer opportunities says a lot about a company’s sincerity. By donating their time and resources, companies can express their concern for specific issues and support for certain organizations. Oftentimes companies may ally with notable NGOs or nonprofit groups to address a certain issue close at heart to the company. Some example orgss include the American Red Cross, Doctors Without Borders, and the Mercy Corps.
One area where companies continually try to reduce waste is in their supply chains. Patagonia, is an example of a leading brand that consciously aims to limit the effects of their clothing and the environmental effects that result from the process. They strive to be as resourceful as possible and not exploit the natural habitat which is seen as a high proportion of their materials are made from recycled fabrics, including their polyester, nylon, and wool. Similarly Levi, the brand known for its flagship jeans, created a marketing campaign centered around their unique water-saving denim process that reduced water waste by making it a priority to educate consumers on how they can extend the lifespan of their clothing. Levi makes the effort to educate consumers how to wash jeans less often or by getting them repaired and reinforced – and how and where they can donate and recycle anything they’re no longer wearing.
Starbucks & Socio-Friendly Social Responsibility
Long before its initial public offering (IPO) in 1992, Starbucks was known for its keen sense of corporate social responsibility, and commitment to sustainability and community welfare. Starbucks achieved CSR milestones such as reaching 99 percent ethically sourced coffee; created a global network of farmers; pioneered green building initiatives throughout its stores; contributed millions of hours of community service all over the world; and created a groundbreaking college program for its partner/employees. Going forward, Starbucks’ goals include hiring 10,000 refugees across 75 countries; reducing the environmental impact of its cups; and engaging its employees in environmental leadership. Starbucks is only but one business model that has succeeded in incorporating “green principles”, and has committed itself to creating welfare for society, alongside its coffee.
Violators of Corporate Social Responsibility
For starters, ride-hailing service provider Uber has paid reparations totaling $20 million after making false promises about driver earning potential; lost a half-million app users when #DeleteUber went viral as a result of the company’s activity during a taxi protest; paid New York City drivers tens of millions of dollars after taking a larger cut of fares than it was entitled; and fired numerous employees following investigations of sexual harassment, stolen trade secrets, systematic deception of law enforcement, discrimination and more.
Automotive manufacturers have been struggling in recent years as well. General Motors concealed a deadly defect and misled consumers about the safety of many cars. Takata filed for bankruptcy as a result of faulty airbag inflators, which could shoot shrapnel at drivers and passengers if the housing ruptured. And Volkswagen’s so-called “diesel dupe” stunned drivers after the U.S. Environmental Protection Agency reported that many cars had a defeat device — software in the diesel engine that could detect when emissions tests were in progress and improve performance results.
The financial industry also was all over the news when Wells Fargo was discovered to have 3.5 million potentially fake bank and credit card accounts. The banking and financial services institution also charged about 190,000 accounts with unnecessary fees, and thousands of customers were enrolled in online bill pay without their authorization. Wells Fargo blamed unrealistic sales goals placed on its employees.
There are, of course, numerous causes behind such unfortunate events, but one thing is certain: All of these organizations fell short with company culture and lacked effective management teams.
Misconceptions of Corporate Social Responsibility
The true question is whether businesses engage in CSR for the right reasons: Do they truly want to make society a better place or do they merely want the advantage of being displayed in a more favorable light, resulting in better brand recognition and a positive business reputation, which leads to increased sales and customer loyalty.
These social investments can help a company build a reputation as a responsible business, which can, in turn, lead to competitive advantage, as other companies often favor suppliers who have responsible policies and through this are able to build a more positive brand reputation. Some customers don’t just prefer to deal with responsible companies—they insist on it.
As the everyday consumer becomes increasingly connected and intimated with the origin of their products and services, companies are becoming aware of the importance of responsible, sustainable business practices. CSR is not a choice anymore but a necessity in order to remain relevant in these competitive markets. For a company to be competitive and successful, it must contribute more to the world besides just a product or service, it must stand for something. Consumers demand this accountability.
However we must be aware of the media and initiatives we are consuming. While some companies may preach that they exist on the forefront of social good and change, consumers must hold them to this standard—lest companies merely pretend to give back to society. Nor should we become customers merely because a company seems to align with our morals and ideas. We can’t be passive consumers of goods. With consumers holding companies to high standards of corporate social responsibility, society as a whole benefits through the social welfare and environmental benefits generated by business. However, we must not allow corporations to use CSR as mere publicity tool without following through on their promises. Let it not backfire to be used by companies on the unwary consumer.
Take Home Points
All in all, it is crucial for members of society to make an effort to be aware of the practices of big corporations and whether or not they practice CSR. As members of society, there is no reason to not fight for CSR, as it is meant to benefit society, but most importantly, the unfortunate reality is that there have been numerous accounts of well-known corporation failing to respect society. To prevent this, society as a collective force also has a responsibility: to hold corporations accountable and honest in their mandate to provide social good and welfare.