Corporate Social Responsibility-The Advantage of Creating a Sustainable Business Practice:
Corporate Social Responsibility can be a source of opportunity, innovation, competitive advantage, and social progress.
Businesses can apply their resources, expertise, and insights to activities that benefit society and their bottom line. Companies should focus on their triple bottom line: economic, social, and environmental performance.
Corporate volunteerism and societal engagement create goodwill between the company and the community. Moreover, a stronger bond between the community and the firm will generate more support for the company’s products.
An individual and company’s legacy will soon be defined by the social entrepreneurs that lead us into a more sustainable and renewable future. They will be the heroes that save the world from all the many challenges that we face today (corruption, greed, inequality, etc.).
Ben and Jerry’s is one awesome example of a company that engages in CRS (corporate social responsibility). They donate 7.5% of their pre-tax dollars to social causes. They are known for using all natural ingredients and dairy products from cows that have not been treated with hormones. Additionally, Ben and Jerry’s makes it a point to hire people from low-income communities.
As we move into the renewable technology era, it has become an expectation that businesses look out for our society and the community. Just the act of creating a large profit margin is no longer satisfying the public.
Companies can choose whether to be caught like a deer in the headlights with negative publicity… or proactively engage in business practices that promote the well-being of society.
Beyond the Donation:
Corporations can involve themselves past just writing a check to a non-profit organization. The best corporate citizenship initiatives involve specifying clear, measurable goals that track results over time.
A company’s employees can take an active role and donate time as well as dollars to a cause. Follow up is extremely important and makes for a more effective use of corporate charitable donations.
Additionally, employees usually feel a great sense of pride in their participation, which improves employee retention.
Philanthropic initiatives should be described and tracked in terms of impact rather than dollars spent or in the number of hours volunteered.
Top Reasons for Business Owners to Become Social Entrepreneurs:
Businesses need a healthy society, as much as a healthy society needs successful companies.
No social program or government can rival the business sector when it comes to creating jobs, wealth, and innovation. The private sector is the biggest driver of efficiency and assists with the progress of society’s standard of living.
Engaging in Corporate social responsibility has many positive impacts on a company’s bottom line. Corporations that produce safe products and working conditions, will benefit from fewer accidents that result in future lawsuits.
Another benefit is that efficient utilization of land, water, energy, and other natural resources results in a reduction of input costs. This means that the overall expenses of the company will decrease, which will positively impact a company’s bottom line.
Making the Biggest Impact:
A company should look to impact society through their value chain.
- An example of this would be a pharmaceutical company that donates vaccines. This is because the pharmaceutical company can obtain these vaccines at wholesale prices. This means that they can purchase more vaccines than a non-profit organization could at standard retail prices. By leveraging its value chain, the overall impact is greater than if it were to just donate money to a cause.
Each company should select an issue or issues that intersect with its business niche. This way there can be some overlap between the businesses goals which simultaneously support the community.
A company should ask itself whether it can create value by impacting the community in a beneficial way that also adds profit to its bottom line.
Businesses should look for ways to incorporate social entrepreneurship and social corporate responsibility with a company’s economic or regulatory interests.
There is a way to have these two interests overlap and coincide together.
Greenwashing:
In the past, the common corporate response has been neither strategic nor operational but cosmetic. Firms spent the majority of their CSR funds on public relation and media campaigns to showcase the company’s social/environmental good deeds.
The public is becoming more aware of these tactics.
After the Deepwater Horizon Oil Spill in the Gulf of Mexico, BP Oil engaged in greenwashing to control the damage to its image.
Greenwashing is any disinformation disseminated by an organization so as to present an environmentally responsible public image.
Instead of engaging in reactive image/brand control, companies should start with products and policies that support their triple bottom line.
If companies are more forthcoming with regard to their actions to reduce pollution, waste, and carbon emissions… I believe that karma will prevail and the community will, in turn, support the firm’s products.
Paving the Path Ahead:
CSR and sustainability should emphasize environmental and community stewardship.
Companies should operate in ways that secure long-term economic performance. Likewise, they should avoid short-term behavior that is socially detrimental or environmentally wasteful.
Where to Start: The global reporting initiative is rapidly becoming the standard for CRS reporting. In fact, according to the GRI website, 93% of the world’s largest 250 corporations report on their sustainability performance.
Business owners and managers can look to these standards to see what areas of operation where they can improve on.
Are There Any Disadvantages to Upgrading to a LEED Certified or Greener office?
Although there is a cost to upgrading, business owners typically need to replace and upgrade their office spaces over time (as regular wear-and-tear occurs).
When old appliances break down, business owners can take that opportunity to replace them with more energy conserving versions.
Luckily, business owners can write-off all of the upgrades to an office as a business expense.
Additionally, a good “green” consultant will know about the local and state refunds, rebates, tax credits, and incentives for the area.
Often times there is a cost associated with updating equipment to newer more efficient versions.
Companies looking to remodel their building to become a LEED-certified office, typically need to hire an expert consultant. Again, this expense is tax deductible :).
Another consideration is that the company may need to find an alternative office space during the re-construction period. One alternative is that companies could allow their employees to work from home during this time.
The company may see a loss of revenue due to the interruption of daily business during the remodel.
Of course, the company should calculate the cost of labor and materials that will go into the remodel.
Although a remodel can take time and money, companies can benefit from an increase of good will. The switch will also result in a reduction in utility costs and provide a healthier environment for their employees and the community.
Conscious Consumerism:
As a collective, the community holds all of the purchasing power!
We have come to a point where stakeholders and society clearly expect businesses to engage and look out for the community’s best interest. Companies that do not change their ways will slowly see a decline in their profits.
EcoFriendlyEconomics.com is devoted to promoting conscious consumerism to speed up this change. Our goal is to signal to companies that they must fall in line with consumer’s demands.
Companies should choose one niche area that they can focus all of their attention.
This will allow them to make a meaningful impact instead of separating and diffusing their resources among numerous unrelated efforts.
Instead of focusing on the friction between businesses and civil society, we should focus more on the points of intersection.
List a few ways you believe that the company you work for can make a difference? Comment below!
Eco Economics 