Corporate Social Responsibility: What Is It and What Should You Be Doing
by Mr Yellow
A business does not exist in a vacuum but in a global economic ecosystem that encompasses people, resources and ultimately, the planet itself. Company owners are increasingly more aware of the social nuances that permeate the business world and customers' perception when it comes to making a purchase.It may also feel like a challenge that can be especially daunting for smaller enterprises. However, the concepts of giving back and accountability can be integrated in all business operations, be they household names or start-ups. Read on to see all you need to know about Corporate Social Responsibility (CSR).
What Is Corporate Social Responsibility?
So what constitutes CSR and where did the concept come from?
In its simplest form CSR, corporate ethics, corporate accountability or corporate citizenship can be described as the guidelines that a business enterprise follows to ensure that its operations are conducive to a positive impact on its customers, suppliers, business partners, the environment and society at large. In other words, a business should not solely be seen as a way of generating revenue but also as a channel through which society is impacted positively.
It could be said that CSR, started off as corporate charity initiated by affluent business owners who saw it as their duty to give to those who were less fortunate. Perhaps one of the earliest and most notable examples is the Scottish American industrialist Andrew Carnegie. Carnegie was famous for his decisive role in the expansion of the American steel industry during the 19th century. His fame was consolidated by his large-scale philanthropic donations which amounted to nearly $350 million (equivalent to $78 billion in today's values) by the time of his death.
However, it wasn't until the 1940s that CSR as we know it today began to take shape and we started seeing a gradual shift from benevolent acts by wealthy entrepreneurs to responsibility that is attributed directly to companies. For instance, in 1943, Robert Wood Johnson created Johnson & Johnson's 'Our Credo' to serve as the company's moral compass.
In 1953, the economist Howard Bowen wrote the seminal book Social Responsibilities of the Businessman, in which he stressed the importance of business ethics. During the 1960s and 1970s, businesses started to pay more attention to their role in society and many continued to consolidate their CSR policies during the 1980s and 1990s. Ben & Jerry's became the first company to publish a social report in 1989.
Nowadays, there are four principal types of CSR:
- Philanthropic Actions - This is probably the oldest and most identifiable form of CSR with many companies making direct monetary donations to local or international charitable organisations and causes.
- Environmental Conservation - As awareness about climate change and natural resource depletion increases, many companies are incorporating more responsible sourcing and production practices.
- Ethical Business Practices - This CSR model focuses on the inclusion of fair labour practices (particularly fair wages and adequate working conditions) for the company's employees or individuals employed by contracted service providers.
- Volunteering Efforts - Many companies choose to give back by volunteering in their communities and providing their time for causes that are close to them.
CSR: The Benefits for Business
Giving back is essentially that - making the environment in which the business operates a better place. However, one should not discount the benefits that this can generate for the business itself.
The primary benefit is doubtlessly to the company's image - just like we are more inclined to feel positively about a person that cares and contributes, customers are more likely to feel in this manner about a business that is not solely concerned about profits. And while we're on the topic of profits, it turns out that giving back helps businesses to improve their profit margins. As consumers become more socially and environmentally aware, they become more likely to buy products and services from companies that share the same concerns.
The statistics back this up as well. For instance, an overwhelming 87% of consumers are more inclined to purchase products from companies that have a strong level of advocacy on social matters, a whopping 70% of millennials claimed that a company's social commitment influences their decision to work there, while 58% of Gen Zers and 61% of millennials are willing to pay more for a product that is eco-friendly.
Corporate Social Responsibility in Malta
CSR may have different baselines in different countries, however, the heart of the matter is that doing good is something that all businesses should increasingly make part of their way of operating.
Many companies in Malta are generous and willingly donate to charities and good causes, however, the absolute majority of local companies are small and medium-sized businesses with a large portion of them being micro-enterprises (we're talking 10 employees or less). So, it is understandable that many local business owners feel overwhelmed or unprepared to create and adopt a systematic CSR policy. So, while CSR should be proportionate to the size of the company and the sector in which it operates, it is important to note that it is not impossible to create a structured plan of action.
Business owners can look at various areas (such as the environment, employee well-being, ethical business practices and societal impact) to incorporate in their processes while keeping in mind that no measure should be discarded, even if it may seem too small or insignificant. So, even if you are a small business owner, think about the possibility of regularly giving some of your time to a worthy cause or explore more sustainable products that you can offer to your customers.
Companies That Are Doing CSR Right
There are many companies that have adopted different approaches to CSR and are all doing a great job in their own way. We must admit that choosing our favourites was a bit of a challenge but we've managed to narrow it down to a few key categories and examples.
Local Best Practices
While the Maltese business community may be smaller than many of its foreign counterparts, there are still positive examples that are worth highlighting.
Zanzi Homes and QuickLets
The Maltese archipelago is blessed with a beautifully unique landscape, however, trees are not a particularly prominent feature. Nonetheless, there is a business that's intent on changing this. The vibrant real estate agency Zanzi Homes together with its sister company QuickLets are setting out to complete a monumental target - plant a million trees in a span of ten year through the project Saġġar. The company's QLZH Foundation has already started this tree planting adventure apart from championing other great causes, such as beach clean-ups and outreach activities with children in Ghana.
Malta International Airport
The Malta International Airport is another great local CSR example. The airport has been steadily reducing its greenhouse gas emissions intensity per passenger with a reduction of 12% in 2018 alone apart from an 11.6% reduction in the consumption of water. This is complemented by an extensive Employee Wellbeing Programme and funds granted for the allocation of heritage restoration projects across the Maltese Islands.
WasteServ is at the forefront of environmental leadership with the company utilising Green Public Procurement to acquire goods and services, that is, they are provided by entities that comply with sustainability guidelines when it comes to transport and waste reduction.
A small disclaimer is due here - we don't like to sing our own praises but we're quite proud of what we've been doing over the years when it comes to environmental sustainability.
Many might think that printing over 160,000 copies of the Yellow directory every year is counterproductive to environmental best practices. This could not be further from the reality - we've proved the naysayers wrong by placing environmental sustainability at the very core of our operation. We launched bigger recycling campaigns every year with over 945,000 used directories (that's more than 1,200 tons of paper saved from local landfills) and while we're Yellow, our paper could not be greener; it is sourced from sustainable forests where a felled tree is replaced with many more saplings. We've also received numerous local environmental awards for our efforts within this context.
We're taking things further now. We are publishing The Last Book this year and we're going fully digital. We are not only excited about launching innovative tools for businesses but we're also thrilled about establishing and surpassing new CSR goals.
Well-Known Brands Leading the Way
Some international household names have etched CSR in their way of being and go beyond minimum CSR requirements.
Ben & Jerry's
The owners of the eponymously named company state that, "Business can be a source of progressive change" and this is the rationale that they have adopted in the manufacturing of their delicious ice cream. Indeed, the company uses solely fair trade sugar, cocoa, vanilla, coffee and bananas which is essentially translated into a better deal for small-scale farmers and farming cooperatives. However, doing good does not stop here for the company - an extensive dairy welfare programme is in place, only Certified Humane cage-free eggs and non-GMO ingredients are used. The company is also very vocal about various social issues such as racial justice, climate justice and LGBT equality. The Ben and Jerry's Foundation also provides grants to its employees to create social and environmental change in their communities.
The outdoor clothing company Patagonia has made CSR its calling card - the company guarantees safe labour practices and fair wages throughout its supply chain across the globe. All factories that supply the company are vetted to ensure compliance with social and environmental principles apart from satisfactory business adequacy. The Patagonia Fair Trade Certified programme also pays an additional premium directly to the workers in participating factories.
Patagonia is also very active on the environmental front - organic cotton is used throughout their line, insulated products are filled with feathers that are completely traceable and never live-plucked, wool is sourced from suppliers with the highest animal welfare standards and the company is aiming to make the entire operation carbon neutral by 2025.
The iconic footwear company TOMS Shoes was created with the aim of making a social impact. During a trip to Argentina in 2006, founder Blake Mycoskie witnessed firsthand the hardships experienced by children without shoes. This is what prompted him to create a company that would operate with the One for One principle - for every pair of shoes purchased, the company will donate a pair of shoes to a child in need. An impressive 60 million (and counting) pairs of shoes have been donated since 2006. The company has since branched out to champion other good causes - providing prescription glasses and sight-saving surgeries, clean water and safer birth kits.
The Body Shop
It could be said that The Body Shop was one of the first companies that saw business as a force for good - in 1976 Anita Roddick set out to create a cosmetic business that put ethical considerations at the top of its priorities. Nowadays, the company is committed to 'Enrich Not Exploit' and has set out to meet 14 targets by 2020; far-reaching goals that support communities, make products more sustainable and enrich the planet.
Not-So-Well-Known Businesses Doing It Right
The Humble Co.
The Humble Co. was founded in 2013 by Swedish dentist Noel Abdayem with the aim of providing dental hygiene products that are effective, good for the environment and also create tangible change among communities in need. The company uses bamboo instead of plastic in the production of its toothbrushes as a way in which to reduce the 3.6 billion plastic toothbrushes that are used globally every year. Toothbrushes are also donated to disadvantaged children around the world and extensive oral healthcare outreach projects are implemented in vulnerable areas.
cuddle + kind
This Canadian company creates some of the cutest hand-knit toys you'll ever see but it doesn't stop there - all toys are ethically handcrafted in Peru by artisans who earn a fair wage for their services and for every doll sold, 10 meals are donated to children in disadvantaged communities.
Ivory Ella was created with a very specific objective - good clothes for a good cause. So, through the sale of great clothing items, jewellery and accessories; the company is able to donate a portion of the proceedings to the Save the Elephants Foundation and an impressive $1.7 million dollars have been donated in a span of 4 years.
Better World Books
Everyone loves a good book and there is more to love if that book generates a broader positive impact. Not only does Better World Books sell a large variety of new and used books through its online portal, but it also donates a book to someone in need every time a purchase is made. A total of 21 million books have been donated since 2016 apart from recycling or reusing another 250 million books.
Hollywood Celebrities Pitching In
Who would have thought that celebrities would be interested in business enterprises and more importantly, a business that gives back.
The Laughing Man
The Laughing Man is the quintessential do-better business founded by veteran actor Hugh Jackman and it all started with a very heartwarming encounter - Hugh and his wife Deb travelled to Ethiopia where they met a young coffee farmer who was creating some truly amazing coffees. This inspired Hugh to open The Laughing Man Café in New York but the story doesn't end with the good coffee - all profits generated are donated to The Laughing Man foundation which in turn uses the funding to create better-living conditions, access to healthcare and education for coffee farming communities.
The Honest Co.
The brainchild of actress Jessica Alba, was created when she could not find safe and effective products that she could use for children in complete peace of mind. It turns out there was a gap in the market and The Honest Co. was born. Apart from providing an extensive selection of products that range from diapers to beauty items, the company has made giving back a priority from the beginning. Indeed, an impressive 16.9 million diapers and 2.1 million personal care products have been donated since 2012.
Sarah Michelle Gellar may be known for her vampire-slaying skills but it turns out that she has other tricks up her sleeve - she is good at baking too. Together with two longtime friends, the actress set out to create baking mixes that are better for consumers and the planet. Indeed, Foodstirs became the first baking mix company whose products are free from residues of the pesticide glyphosate. Furthermore, all products are made with chemical-free colours, fair trade chocolate and cocoa, sustainable cane sugar and traceable flour.
In a nutshell, doing good does a world of good for individuals, communities and ultimately the planet that we call home. While businesses are revenue-generating endeavours, profit margins are not the only way in which business success can be gauged, particularly in a world of increasingly conscious consumers who value honesty and accountability more than rock bottom prices.
Ready to roll up your sleeves? Check out all the local voluntary organisations that your business can support.
Keep on discovering local with Yellow.