In this article the heart of business is explored from the perspective of corporate and social responsibility. If you were to accept the premise that business has a heart, then what you would also appreciate is that the heart is a very important organ and no system can survive without a well-functioning heart.
In today’s society much of the foundation towards an understanding of corporate and social responsibility came from the now infamous article by Milton Friedman published in 1970. This Nobel-Prize winning economist wrote in the New York Times:
There is one and only one social responsibility – to use its resources and engaging in activities designed to increase its profits as long as stays within the rules of the game, which is to say, engages in free and open competition without deception or fraud.
A counterpoint to Friedman’s perspective comes from John Elkington in Cannibals with Forks in 1999. Elkington introduced the concept of the “triple bottom line,” – Profit, People and Planet thus making the case that concern for society and the environment can coexist with an ambition for profits.
The Triple bottom line focuses on economic prosperity, environmental quality and social justice. John Elkington made the case for seven revolutions, intended to harmonise the traditional financial bottom line with environmental quality and social justice.
He passionately argued the case for sustainability: The principle of ensuring that our actions today do not limit the range of economic, social and environmental options open to future generations.
What is Corporate Social Responsibility (CSR)?
CSR refers to your business policies, business practices and initiatives to which your business commits and create shared values for both the business and society. In many organisations these are grouped under the headings: community interface and interaction, governance, staff health and well-being, environmental policies and customer care.
CSR requires commitment from leaders within the business to develop a strategy, real integrity and desire to embed that strategy in the core operations of the business that create shared value for the business and society.
I take the liberty of posing three important questions to You:
· Is corporate and social responsibility at the heart of your business?
· Are you giving sufficient attention to corporate and social responsibility?
· How sustainable is your business?
If you were to accept that social responsibility is a means of achieving sustainability. Then adopting key social responsibility principles, such as accountability and transparency can help ensure the long-term viability and success of your business.
Corporate social responsibility (CSR), impacts on everyone within your business, your corporate board, leaders, managers, teams inclusive of facilities & support staff; behaving and conducting business ethically and with sensitivity towards social, cultural, economic, and environmental issues.
Striving for social responsibility enables your business, staff, governance and governments the scope to have a positive impact on innovation, business development, and society.
Get this, it does not matter whether you are operating in the public, private or third sector, CSR is pertinent to you.
There is now a strong body of evidence that shows that Millennials (people born approximately between 1980 to 2000) have found their voice. Millennial consumers are currently the largest worldwide population cohort; they are digitally savvy, they respond to what they care about – people and the environment, and they are conscious capitalists.
In 2017 the Millennial Impact Report stated that Millennials are becoming even more engaged in philanthropic causes and they are more likely than other generations to research the issues that a business or company supports and the extent to which the business or company contributes to the good of society.
The following statement sets the leadership tone for CSR:
Greater transparency is an unstoppable force. It is the product of growing demands from everybody with an interest in any corporation – its stakeholder web – and of rapid technological change, above all the spread of the Internet, that makes it far easier for firms to supply information, and harder for them to keep secrets. Firms now know that their internal e-mails may one day become public knowledge, for instance, and many big companies must co-exist with independent websites where employees can meet anonymously to air their grievances. With greater transparency will come greater accountability and better corporate behaviour. Rather than engage in futile resistance to it, firms should actively embrace transparency and rethink their values and generally get in better shape. Don Tapscott, co-author The Naked Corporation
Does CSR Matter?
Remember people tend to vote by exercising choice. Deepwater Horizon oil spill events in the Gulf of Mexico cost BP over $50bn as a result of how the crisis was handled – lack of transparency, perceived lack of empathy and compassion from the leadership team and compounded environmental disaster.
There have been reports highlighting tax avoidance by a number of multinational companies operating within the U.K. The companies appear to have been operating legally, but nevertheless, the public who are experiencing austerity cuts have voiced negative opinion.
Public opinion has been impacted by a series of high-profile scandals including accusations of financial mismanagement and in an instance of a pensioner experiencing heavy handed fundraising tactics have led to a lowering of public trust in charities, and arguably the lowest since records began in 2005.
In all cases there was significant damage to business reputation.
Benefits of CSR
Within the public sector in the U.K. Local Government has got the importance of CSR. There exist the Public Services (Social Value) Act 2012 and this requires all public bodies in England and Wales, including Local Authorities to consider how the services that they commission and procure might improve the socio-economic and environmental well-being of an area.
Many businesses now include their CSR policy on their websites. For example, in 2018 Xerox made it to the 100 Best Corporate Citizens List by Corporate Responsibility Magazine for the twelfth consecutive year. Among the jewels in the crown of Xerox is the engagement of numerous CSR initiatives: from the Green World Alliance to participation in the Electronic Industry Coalition and the Xerox Community Involvement Programme.
Take another outstanding example, Chipotle and Intermaché – The Inglorious Fruit and Vegetable that is committed to reducing waste of less-than-perfect looking food. The company does this by selling the Inglorious Product at 30% discount and in addition, they run an ugly fruit and vegetable contest on their Instagram page.
“This initiative is a complete success because it’s a win-win-win campaign: consumers get the same quality products for cheaper, the growers get money for products that are usually thrown away and Intermarché increase its business by selling a brand-new line of products.”
Why is food waste on the CSR agenda?
Data from food and agricultural organisation of the United Nations highlights that:
· Approximately one-third of food produced in the world gets lost or wasted every year.
· Food losses and waste amount to approximately $680bn in industrialised countries and $310bn in developing countries.
The Case for CSR
Blake Mycoskie witness the hardship of Argentinian children growing up without shoes. He launched TOMS with the simple idea – to match every pair of shoes sold with a pair for a child in need. The beauty is that what started as a shoe company has grown into an amazing socially responsible organisation as exemplified in the company’s statement:
Through your purchases, TOMS helps provide shoes, sight, water, safe birth, bullying prevention services to people in need and provide a gift of kindness.
Some businesses have formal corporate social responsibility programmes, others let individual employees follow their passion for volunteering and leaders have voiced their reasons for CSR.
The voice of some notable leaders follows:
To build and sustain brands people love and trust, one must focus—not only on today but also on tomorrow. It’s not easy…but balancing the short and long term is key to delivering sustainable, profitable growth—growth that is good for our shareholders but also good for our consumers, our employees, our business partners, the communities where we live and work, and the planet we inhabit – Irene B. Rosenfeld, CEO Kraft
If you can shift your thinking away from merely selling and into building trust instead, even if it costs you a few bucks in profit, you’ll begin to see opportunities you never imagined once you understand what it means to ‘wow’ that customer by giving them more than they expected! – Chris Zane, Business Owner and Author.
In the next decade, the most successful companies will be those that integrate sustainability into their core businesses – Jim Owens, CEO Caterpillar
CRS does more to add to the bottom-line of your business, the perception and reality of your business performance on social responsibility will have significant influence on:
· Business reputation, partnerships and investment.
· Competitive advantage and brand loyalty.
· The ability of your business to compete effectively around the world.
· Increased stakeholder confidence and fair operating practices.
· The ability of your business to win and successively deliver public sector contracts.
· The ability of your business to attract and retain employees, suppliers and customers.
· Employee morale, commitment and productivity
Why is it important to give attention to CSR?
Corporate Social Responsibility is a hard-edged business decision. Not because it is a nice thing to do or because people are forcing us to do it because it is good for our business – Niall Fitzerald, Former CEO, Unilever
Anita Roddick, founder of Body Shop is well remembered for her statement: In terms of power and influence you can forget about the church, forget politics. There is no more powerful institution in society than business… The business of business should not be about money. It should be about responsibility. It should be about public good, not private greed.
Ethics is the new competitive environment and CSR is about
Ethical practices – Social responsibility starts with the why the business exists, who is served by the business and both translate to what the business does. This includes ensuring that the products and services that are provided are safe. Ethical practice is also about employee engagement and employee support. Enabling employees to contribute to causes they find important can satisfy both the business and social responsibility of a business as well as the morale within the business that impacts on business reputation.
In my view the successful companies of the future will be those that integrate business and employees’ personal values. The best people want to do work that contributes to society with a company whose values they share, where their actions count and their views matter.
Jeroen van der Veer, Committee of Managing Directors (Shell)
Financial responsibility – As a business earns a profit, there is a moral duty to put some of that money back into the community. This goes beyond simply providing jobs to finding ways to help that show appreciation for the customers who support the business.
Environmental sustainability – Your business can show its social responsibility through efforts like recycling, using recycled materials, reducing packaging and choosing environmentally responsible manufacturing methods.
Educational Advancement – Education and training programmes to help communities grow. It is about scholarships and grants – my path to personal development came from an ESSO Scholarship delivered by the Industrial Society, now known as the Work Foundation. Mentorship and political activism are key instruments that impact CSR.
Finally, Companies that are breaking the mould are moving beyond corporate social responsibility to social innovation. These companies are the vanguard of the new paradigm. They view community needs as opportunities to develop ideas and demonstrate business technologies, to find and serve new markets, and to solve longstanding business problems. Rosabeth Moss Kanter, Harvard Business Review.