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Does Corporate Social Responsibility make business sense?

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I recently wrote to Portsmouth Water to ask them if they would be interested in sponsoring an event I was involved in organising.  They politely replied, explaining that they concentrate their charitable efforts on a charity called Water Aid, which helps to provide clean drinking water in Third World countries.  This is of course a great way for this company to deal with the endless requests for donations like mine but, more importantly, is their strategy for contributing towards the great tide of ‘Corporate Social Responsibility’.

Corporate Social Responsibility (CSR) has grown exponentially in the last 50 years, with no major company strategy complete these days without a CSR statement, expressing their intention to invest in communities and care for the environment.  The cynics out there see CSR as merely a marketing ploy but, aside from a few inevitable bad examples, the great majority appear to be having a sincere and positive impact, not only for the wider community, but for the companies themselves. And, done correctly, it makes us all feel good!

As I pop my counter into a box in my nearby supermarket ‘voting’ for a new local playground, there is a feeling that I have done ‘my good deed of the day’.  The supermarket is endearing itself into its community and everyone’s a winner.  Having a quick look at a number of corporate websites today I couldn’t miss such phrases as “a desire to put something back”, “committed to being a global citizen”, and “investing in communities”.  It all sounds so positive.

The surge in socially responsible investing has coincided with increased awareness of global environmental and social problems, highlighted by horrific stories such as the 2010 Deepwater Horizon Oil Spill and the 2013 Savar garment factory collapse. The media onslaught of worldwide man-made tragedies eats at our conscience and it is human nature to want to help.

Yet does CSR make business sense?

  • Financial Gain: One successful approach has been for CSR to drive the company strategy.  Think of The Body Shop, Fair Trade and The Co-Operative Group.  They have built huge customer loyalty based on distinctive ethical values.
  • Cost savings: Recycling, water management, renewable energy, reduced packaging, reusable materials, less paper use etc. all save money and are widely accepted.
  • Community involvement: This can include raising money for local charities, providing volunteers, sponsoring local events or employing local workers,
  • Employee Motivation.  Staff can become involved through payroll giving, fundraising activities or community volunteering.  One standout example is Salesforce.com, which has a CSR policy to give 1% of its profit, 1% of its employees’ time, and 1% of its equity to charities and other non-profit organisations.
  • Partnerships.  Brands have come together to tackle larger issues. Rivals such as PepsiCo and Coca-Cola, and Unilever and P&G have joined forces to develop more sustainable refrigeration technologies.  12 of the world’s largest chocolate and cocoa companies, including Nestlé and Mars, are working together to help farmers meet the growing demand for cocoa.
  • Reputation.  And, of course, it doesn’t do a business any harm to be seen to be “doing good” either.

CSR has become more institutionalised and, so long as it is not viewed as a meaningless PR effort, has become increasingly significant for business success.  In another blog soon I’ll share how my360plus clients are also tying their leadership development to their CSR strategy.

Now, where did I put my ‘Bag for Life’?…

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