Among companies today, there’s a great deal of talk about corporate social responsibility. The term has become a buzzword for many businesses that lacks specific meaning. For some, philanthropic donations or employee volunteerism are believed to fulfill these responsibilities. Others support charity work in other ways in an effort to give back. While these activities are certainly admirable and helpful, they fall short when it comes to true corporate social responsibility. Charity might be good, but business products that benefit society should be the actual focus for these companies. This is where the most good can be done on a broader scale.
A big part of the problem when it comes to true corporate social responsibility involves a deep misunderstanding. Many believe anything that is environmentally friendly or benefits society falls into this category. But a more authentic approach to CSR doesn’t ignore a business’ ultimate mission or its values. Companies are in business to succeed, and that means making a profit and optimizing business performance. Therefore, it’s essential that business leaders develop a comprehensive and integrated strategy to excel while also being socially responsible. And that means designing, developing, and manufacturing business products that benefit society and that are also in demand.
“Many companies start with pet projects, philanthropy, or propaganda because these activities are quick and easy to decide on and implement. The question is how to move toward CSR strategies that focus on truly cocreating value for the business and society.” – Tracey Keys, Thomas W. Malnight, and Kees van der Graaf, Excerpt from McKinsley Quarterly
The Three Common Approaches to CSR
In a recent survey conducted by Harvard researchers, a poll was taken of 142 corporate managers. They were asked about current business practices related to CSR and described current activities. In analyzing the result, it was noted that three typical approaches were most common. The first, and most common, involved simple philanthropy, which failed to focus on business performance at all. The second included changes in operations that led to greater sustainability or better social conditions. While these might lead to higher profits, this was also not a priority concern. The third then involved a transformation of existing business models that sought to solve real social problems through new products. The development of these types of business products that benefit society reflected true corporate social responsibility.
These varying perspectives of CSR highlight many of the misperceptions about these concepts today. Indeed, philanthropy and charity are valued, but these lack the capacity to really help a business excel. Other than perhaps some positive public relations and brand promotion, these efforts are insufficient. Likewise, operational efficiencies and sustainable practices can lead to better profits. But the impact of these on both performance and society are usually minor at best. In contrast, business products that benefit society and address key problems are much more impactful. As true corporate social responsibility, these pursuits align social needs with business needs. As a result, these provide the most powerful results in total.
“Most people yearn to contribute, make the world a better place and have success…. all at the same time… Make sure to give your business a background, a mission and a story.” – Blake Mycoskie, CEO of TOMS
True Corporate Social Responsibility in Action
Fortunately, when looking for examples of true corporate social responsibility, many exist. Perhaps, one of the best examples involves TOMS shoes. The company donates a pair of shoes to children in need for every one purchased. This might initially be considered a donation or charity in isolation. However, TOMS utilizes its expertise to create products that meet social needs. It has now provided over 60 million pairs of shoes to children in poverty. Another example involves Hindustan Unilever Ltd. And its Project Shakti. Rather than utilizes existing wholesalers and distributors in rural India, it adopted a new business model. It recruited and trained rural women in sales and provided then with microloans. There are now more than 65,000 such women in India, and the project generated over $100,000 for the company. These companies designed business products that benefit society and excelled in the process.
The companies above are perhaps some of the better known ones that have designed business products that benefit society. But many companies today are adopting this new approach to true corporate social responsibility. For example, Seabin is a company that introduced floating sea devices that collected ocean trash. Orbital Marine Power has designed and launched a massive tidal turbine facility that can power 2,000 homes with electricity. DB Breweries have introduced ATM-like machines that churn empty beer bottles into sand. The sand can then be used for beach restoration or construction. And some companies are exploring solar panels that can be used for roads. Not only could these contribute to the electricity grid, but they would also keep roads warm to enhance road safety. These are the types of products that create the real win-win needed in today’s world.
“Management time and resources are limited, so the greatest opportunities will come from areas where the business significantly interacts with—and thus can have the greatest impact on—society.” – Tracey Keys, Thomas W. Malnight, and Kees van der Graaf, Excerpt from McKinsley Quarterly
Transformation, Integration, and Congruence
True corporate social responsibility is about businesses transforming themselves with a greater focus on societal needs. This requires that businesses stay true to their mission and values, and it also demands an awareness about societal needs. Throughout history, new business products that benefit society have made tremendous impacts. The steam engine, printing press, and penicillin are important examples of this. Others have been introduced that make the world a healthier and safer place. Today’s electric car companies, solar energy designs, and recycling systems offer additional illustrations of these pursuits. The bottom line is while philanthropy and charity are needed, these fail to represent the best contributions businesses can make. Businesses have much more to offer when it comes to true corporate social responsibility.