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Corporate Social Responsibility Examples: Purpose Is Important

Posted on: May 10, 2023

A quiet — and sometimes not-so-quiet — revolution is taking place in the corporate world. It centers around corporate social responsibility (CSR) and a concept that’s being discussed more and more often in boardrooms worldwide: Purpose. 

Since the rise of capitalism, making a profit has been the primary, if not the sole, objective of any business. As Milton Friedman expressed in 1970, “The social responsibility of business is to increase its profits.” This view — that corporations should focus on increasing shareholder value above all else — had gone more or less unchallenged for decades. 

At the turn of the century, however, new ideas began to emerge, exemplified by Earth Day founder Gaylord Nelson’s pronouncement, “The economy is a wholly-owned subsidiary of the environment.” In 2012, Larry Fink, CEO of the world’s largest asset manager, BlackRock, began issuing a series of extremely influential annual letters to business leaders and CEOs in which he stressed the primacy of purpose over profit. 

Moreover, in Corporate Responsibility in the Digital Age, Ivri Verbin argues that purpose-driven companies are becoming increasingly successful in the digital age. This is because consumers, particularly younger generations, are becoming more aware of the social and environmental impact of their purchases, and are more likely to support companies that align with their values. He explains that a lack of CSR leads to a lack of trust, and a lack of trust leads to a lack of business.  

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Chapter 11 - Define Your Values

This free chapter from Corporate Responsibility in the Digital Age explains what an organizational code of ethics is and gives a step-by-step guide to its formulation for easy implementation in companies both small and large.

 
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CSR: From Theory to Practice 

CSR is a concept that refers to a company's responsibility to operate in an ethical and sustainable manner, taking into account its impact on society and the environment. CSR involves a range of practices, including philanthropy, environmental sustainability, ethical labor practices and community engagement. 

It’s important for companies to engage in CSR practices because it allows them to operate in a way that benefits both their stakeholders and society at large. But how can they get there and how can they make sure they're walking the talk? 

It all starts with purpose. CSR needs to be an integral part of a company's DNA, it's not something you can turn on and off, like a tap. It has to be embedded into the fabric of your business, woven through all of your activities and decisions. To do this requires more than just having good intentions; it requires purposeful leadership, clear goals and meaningful metrics. 

Many books have been devoted to the concept of purpose in business. All In, the Future of Business Leadership by David Grayson expresses it succinctly. “At its core, purpose is the deepest expression of a company’s ability to make the world better with its business solutions.” The corporate or organizational purpose is most frequently expressed in terms of sustainability and social equity. 

To be clear, CSR and the concept of purpose are not incompatible with profitability. In fact, research has shown that companies that have an effective CSR program are more profitable than those who don’t. It could easily be argued, for example, that Tesla is profitable not in spite of its commitment to sustainability but because of it. When Nike supported social justice issues with an ad featuring a controversial athlete activist, sales went up 31%. In general, 77% of consumers buy from brands that share their values. 

Corporate social responsibility initiatives don't ask companies to abandon their focus on the bottom line. Rather, CSR in practice asks them to adopt a broader view of their net results. This is often referred to as the triple bottom line. It measures not only profit but also sustainability and social impact, the so-called three P’s: Profit, Planet and People

Achieving the Triple Bottom Line

Some companies were founded with a purpose that’s clearly expressed in their mission or vision statements. For example, furniture retailer IKEA’s is “To create a better everyday life for the many people.” Tesla’s statement is explicitly focused on sustainability. “To accelerate the world's transition to sustainable energy.” But many organizations are only beginning to think about CSR after being in business for many years, or they want to expand their concept of CSR beyond traditional activities like philanthropy. These organizations need a process for discovering and formulating their purpose,  which will in turn make CSR an integral part of daily sustainable business activities throughout the company.y 

The role of the CEO is crucial. This cannot be over-emphasized. In Sustainability and Corporate Governance, Alan S. Gutterman points out that surveys repeatedly confirm that CEOs must play an active role if CSR is to be integrated into the corporate culture and make a difference in employees’ day-to-day activities. Gutterman also emphasizes the importance of incentives. For maximum effectiveness, executive compensation must be tied at least in part to the achievement of both short- and long-term sustainability goals. 

Purpose must not be limited to slogans and posters on the walls. It has to be integrated into every aspect of the organization. Gutterman argues that, from a structural point of view, the best practice is to create a C-level position, Corporate Sustainability Officer (CSO). In this approach, each business unit has a sustainability director who reports both to the leader of the business unit and back to the CSO. 

Whichever way CSR strategy is implemented within the organizational chart, it'll drive decision-making in every department, sometimes in ways that are not obvious. 

Ivri Verbin presents a detailed exploration of the path to a thorough set of CSR standards in Corporate Responsibility in the Digital Age, which is intended for individuals at every level of CSR experience. One of the key issues is the process of formulating an ethical code that stems from purpose. Although there are many options, they all fall into one of two categories: closed and open.  

In a closed process, the formulation is assigned to a specific group, often with the help of a consultant. An open process involves input from both internal and external stakeholders such as customers and suppliers. While the closed process is more efficient, the open process leads to greater authenticity and can help kick-start the implementation of an ethical code once it’s written. (This topic is covered in detail in Chapter 11 of Corporate Responsibility in the Digital Age, which is available as a free download .)  

Types of Corporate Social Responsibility 

Now, let's explore the four main types of CSR: philanthropic CSR, ethical CSR, environmental CSR, and economic CSR. 

Philanthropic CSR 

Corporate philanthropy involves giving back to society through charitable donations, volunteering, and providing access to education and training. By supporting social causes and investing in the local community, businesses can make a positive impact on the world and improve the quality of life of those in need. 

Ethical CSR 

Refers to promoting fair treatment of all stakeholders, including employees, customers and users. Companies can achieve this by improving labor policies, promoting diversity, equity and inclusion, and ensuring data and privacy protection. By upholding ethical principles and protecting human rights, businesses can foster trust and loyalty — something we've learned is crucial to businesses in today's marketplace. 

Environmental CSR 

Requires reducing a company's impact on the environment by implementing sustainable practices such as reducing their carbon footprint, conserving natural resources, investing in renewable energy sources and promoting eco-friendly practices among employees. Businesses that prioritize environmental responsibility are helping to take care of our planet and inspire others to do the same. 

Economic CSR 

Means supporting job creation, fair trade practices and investing in local communities. When businesses promote economic growth and sustainable development in areas where they operate, it creates opportunities for people and communities — improving the well-being of society as a whole. 

Corporate Social Responsibility Examples 

Let's dive in and explore how different industries can engage in CSR activities: 

 

Design decisions, including biodegradable materials in manufacturing.

CSR in Engineering

Design decisions about products trickle down to manufacturing and can have a significant effect on the environment. Hewlett-Packard, for example, strives to become a sustainable business by designing printers with biodegradable materials wherever possible so that when their useful life is over they can be disposed of responsibly. 

 

Reducing environmental impact through manufacturing.

CSR in Manufacturing

Every manufacturing plant has numerous opportunities to reduce its environmental impact and move towards sustainability. Honda, for example, had the CSR initiative to achieve zero waste-to-landfill in 10 of its 14 United States factories. Manufacturing organizations can also have an impact on their suppliers by demanding green components and safe, equitable labor practices. 

 

Socially responsible messages in marketing.

CSR in Marketing and Communications

Companies can include socially responsible messages in their advertising, social media and other external communications. Kaiser Permanente, a large healthcare provider operating in eight states, spends a significant percentage of its communication budget on promoting tips on healthy living to the general public. 

Adjustments in product purchases for sustainable impact.

 

CSR in Sales

Companies need to evaluate their product portfolio and make adjustments if products are environmentally harmful. Chemical giant BASF, for example, chose to stop selling a disposable drinking cup because its formulation could cause environmental problems. 

Socially responsible investing.

CSR in Finance

Organizations can make social responsibility part of their investment decisions. For example, the California Public Employees’ Retirement System (CalPERS), which manages the largest pension fund in the U.S. ( $444 billion ), takes environmental, social and governance (ESG) factors into account when making investment decisions. 

 


Is CSR The Future? 

The concept of corporate social responsibility has been gaining traction in recent years, and for good reason. As the world becomes more interconnected, businesses have an increasing responsibility to consider their impact on society and the environment. It's no longer enough to focus solely on maximizing profits for shareholders; companies must also strive to have purpose and make a positive impact on the world around them. 

Fortunately, CSR is not just a moral imperative — it can also be good for business. Companies that prioritize CSR can enhance their reputation, build stronger relationships with customers and employees, and ultimately, drive long-term financial success. 

But beyond financial gains, CSR has the potential to create a brighter, more sustainable future for all. By taking responsibility for their impact on the environment and society, businesses can play a critical role in addressing some of the world's most pressing issues, such as climate change, poverty and inequality. They can support communities, reduce their carbon footprint and promote ethical practices throughout their supply chains. 

The future of business lies in embracing CSR as a fundamental component of operations. it's not just a buzzword or a trend — it's a mindset shift that recognizes the importance of balancing profit with purpose. As corporations begin to embrace this shift, they'll not only benefit their shareholders, but they'll also create positive change in the world.