/

CSR and the Future of Business

Neon lights Title image

Jeff Bezos recently made headlines for forking out $5.5B USD to spend four minutes in Space. For someone whose name is synonymous with the word ‘Amazon‘, a company whose ‘annual revenue continues to outpace the GDP of many countries’ and has come under fire for its questionable working conditions, tax evasion, and a list of other claims, it comes as no surprise that his ethics are being questioned.

CSR- Corporate Social Responsibility, which could be considered the ethical aspect of businesses, is defined by the European Commission as: The responsibility of enterprises for their impact on society. This impact can encompass everything from ‘the products or services offered to the job opportunities created as well as the working conditions, human rights, health, the environment, innovation, education & training’.

What CSR Entails

Most people would acknowledge that these enterprises have some sort of social responsibility towards the larger society. Caroll’s well recognized CSR Pyramid divides these responsibilities into:

Economic: That enterprises will not only produce desired goods or services but also profits as a means to be ‘sustainable’, pay their employees, etc.

Legal: That enterprises will operate within the rule of law and fulfill any legal requirements placed upon them.

Ethical: That enterprises will not engage in activities that are considered harmful or unethical (eg. child labor, animal testing, etc.) though not necessarily prescribed by law.

Philanthropic: That enterprises will show good faith by giving back to society and improving the lives and communities of those they impact.

How CSR can be Implemented – The Three Theatres

These responsibilities can be interwoven into the DNA of businesses through various means and strategies. This article by the Harvard Business Review lists them into three ‘theatres’.

First Theatre

The first focuses on philanthropy and doesn’t involve direct profit for the business at all. This includes donations, volunteering, or charitable projects. Without reducing the importance of donating to meaningful causes, this seems to be the most common theatre because dare I say, it’s the easiest. Let’s be honest, it also makes for some great consumer PR.

It’s fair to say that even this type of CSR could go south if wrongly aligned with the business’ mission or vision. However, if done right, it can vastly improve public image, increase brand awareness, employee engagement and a list of other known benefits. For this reason, it can be tempting for businesses to donate a small percentage of their profits to a meaningful cause and call it a day. The question is, is it enough?

Second Theatre

The second theatre functions within the operation strategy of a business for the purpose of delivering environmental benefits, let’s say while finding ways to save costs or increase efficiency – This also doesn’t necessarily involve profit. 

In this instance, with global warming staring us in the face, we would hope that most businesses are innovating and operating with the environment in mind. Europe may mostly compose of SMEs (Small Medium Enterprises), which are more likely to ‘get away’ with shirking environmental blame because the fingers are pointed at the big bad corporations. However, literature suggests that ‘SMEs contribute 60-70% of industrial pollution in Europe’.

Third Theatre

The third and final theatre involves creating ‘new forms of business specifically to address social or environmental challenges’. The example that was referred to here was that of Project Shakti by Unilever. With the purpose of empowering women, Unilever switched up their supply chain and began to train and employ women in rural India to create livelihood opportunities and enable financial independence.

According to Unilever, the project has already recruited 70,000 women and contributes €250M to their revenue in India. This theatre may come closest to a term coined by John Mackey (Whole-Foods Cofounder) and Raj Sisodia (Marketing Professor) known as Conscious Capitalism.

Conscious Capitalism

Conscious Capitalism in comparison to the first theatre, still considers profit a main factor but goes one step further by ‘changing the scope of the company’s stakeholders’ and ‘broadening their reach to better serve the environment, the community and their own employees’ by focusing on bottom-line benefits such as paying employees high wages to reduce employee turnover.

Naturally not all businesses have the means to carry out large-scale CSR like Microsoft, Lego, or Disney, which have been praised for their far-reaching efforts and positive impacts.

Nonetheless, it feels as if we need to come away from seeing CSR as a pure marketing and PR tactic with some additional benefits and more as an integral aspect of every business, with the goal being to incorporate all three ‘theatres’.  In addition, these initiatives need to be transparent, trackable, and incentivized by governmental institutions.

This might sound overly optimistic but why can’t every business strive to be economically sustainable, lawful, ethical, and engage in philanthropy?

Gen Z Insights

The upcoming working generation known as ‘Gen Z’ seems to hope so. Gen Z is the first of its kind to grow up fully digital and has been described as the most diverse, well-educated, and ‘woke’ generation yet. Despite not being responsible for many of the issues we face today, they are realizing we have quite some work to do and maybe not a lot of time.

As a workforce, they not only strive for a work-life balance, more flexible working hours, job security, and additional perks, they want to work for companies with relatable values, which make them feel like they are making a difference in the world.

As consumers, ‘a brand’s ethics and behavior concerning environmental and socio-political issues are important decision-making factors for Gen Z’. According to this PwC Consumer Insights Report, ‘more than half of consumers in this age group would be willing to pay a higher price for goods with an environmentally-friendly or ethical product profile’.

What CSR has to do with the Future?

We are currently facing a myriad of pressing global issues which concern the environment, inequality, racial injustice…the list goes on. As individuals are becoming more desperate and more vocal, the tides seem to be changing too slowly.

As individual actors, regardless of what socio-political issues we may be passionate about, it’s easy to feel like the small daily choices we make don’t make a difference. While I personally don’t agree that’s the case, it’s time to stop expecting and forcing consumers to be the ONLY means of change. Businesses may not be people, but they are certainly personified and perhaps it’s time they started gaining a conscience. CSR is a great place to start.

Cover Image by Nathan Dumlao on Unsplash.

Leave a Reply

Your email address will not be published.