6 Reasons Why Your Business Should Embrace Social Responsibility
Last month, Ireland launched its Second National Plan on Social Responsibility titled ‘Towards Responsible Business’. The 2017- 2020 Plan aims at building a strong economy by supporting businesses and organisations to adopt sustainable practices. The goal is to improve Ireland’s image as a competitive global player while fostering social harmony and environmental protections.
Ireland isn’t the only one taking social responsibility seriously. According to the 2016 PwC Global CEO survey, 64% of CEOs consider corporate social responsibility (CSR) core to their business initiatives as opposed to being a stand- alone program. Companies are going beyond their office walls, to advocate for solutions to global issues such as climate change, poverty, education and human rights. There are many reasons why a business should care about social responsibility including:
A few years back, only a handful of Fortune 500 companies issued reports on their sustainability practices. In today’s electronic age, consumers are more technology savvy, and can easily search a company’s record with regards to labour practices and social commitments. Results from a 2014 Nielson survey show that more than 55% of online consumers worldwide prefer to pay more for products and services from companies whose social and environmental credentials are high. The demand for transparency with the production and sourcing process, as well as a hands- on approach to global problems is becoming louder. Social media serves as a powerful platform for those either addressing concerns regarding a company’s practices or applauding its dedication to making the world a better place.
According to the 2013 Sustainable Procurement barometer, risk management remains a critical component with 80% of companies implementing a ‘Code of Conduct’, and 58% evaluating high-risk suppliers. As supply chains grow longer and more complex, risk management forms an integral part of procurement. The interconnected nature of the global economy increases the likelihood of supply chain disruptions as companies expand into new geographic regions. There is enormous pressure to assess risk across the supplier base including labour practices, supplier ethics, financing, and natural disasters.
One company looking to take supply chain risk management head on is Starbucks. The American coffee house chain created the Coffee and Farmer Equity (C.A.F.E) Practices, which promotes social, economic and environmental standards. The C.A.F.E guidelines aim to have 100 percent of Starbucks’ coffee ethically sourced by supporting fair trade farmers, and decreasing waste in production lines and stores.
One of the simplest ways for a company to start engaging in sustainability is to use it for cutting costs. In 2016, the US government accelerated the trend toward corporate social responsibility, by incentivising businesses to increase resource efficiency. With the human population growth and resources becoming increasingly finite, it is becoming necessary to eliminate waste and reuse materials. Such measures lead to savings, a factor that Google Green is cashing in significantly. Since starting its green energy campaign in 2010, Google has invested more than $3.5 billion in more than 20 renewable energy projects across the world, including a solar plant in the Atacama Desert. The company’s data centres are already 50 percent more efficient than industry standards. With the wind and solar costs coming down by 60 and 80% respectively, Google is well on target to meet 100% of its electricity needs through renewable energy.
70% of millennials marked their company’s commitment to the community as a major factor in their decision to work there
According to a Deloitte survey, 70% of millennials marked their company’s commitment to the community as a major factor in their decision to work there. Being proactive on issues affecting the world not only helps a company attract and retain talent, it also has a positive impact on employee relations, staff motivation and productivity. A great example of proactive employee engagement is the Solo Cup Company. The company operates at a grass roots level through the Sustainability Action Network, a group of more than 400 Solo Cup employees who volunteer in community service events. In 2010, the company was awarded the 2010 Corporate Leadership Award by Keep America Beautiful for its continued support of education, sustainability and other improvements in the communities where its customers and employees live and work.
Company reputation is enhanced by brand differentiation, and one way of achieving that is by tackling potential sources of competition. Since corporate social responsibility has become more commonplace, using it to manage market rivals is getting harder. Engaging with customers helps identify market niches and emerging trends, leading to the development of new products and services.
Brand differentiation through innovation and social responsibility is what makes Unilever’s SmartFoam technology so distinct. Around 40% of domestic water is used to wash clothes manually in developing and emerging countries. To reduce the amount of water used in rinsing clothes, Unilever launched the Sunlight 2- in- 1 Handwashing Laundry Powder in 2016. With South Africa experiencing its worst drought in 30 years, the SmartFoam technology in the detergent uses anti- foam molecules to break down soap suds faster. As a result, people can use less water to rinse off the soap suds from their clothes.
Global Reporting Initiative Guidelines represent an industry standard for disclosing CSR related metrics, targets and performance. Hard data and smart reporting of socially conscious projects catch the attention of investors. By strengthening stakeholder relationships, a company builds a name for itself as a good corporate citizen. One company with a sound reputation with investors regarding corporate social responsibility is Google. Over the past three years, the company has donated over $353 million in grants worldwide. It has given $3 billion in free advertisements, apps and services. Googlers have volunteered around 6,200 days of employee time to support nonprofits, which amounts to a total of 150,000 hours. With such solid statistics, investors are always eager to form an alliance with Google.
With consumers increasingly sceptical of corporate processes, it is in a company’s best interest to make global issues an intrinsic part of the work culture. This not only enhances a business’ brand value and appeal to customers, it creates a more meaningful environment for employees to work in. An enthusiastic work ethic results in better teamwork and greater productivity. Combined with resource efficiency, this generates revenue from the market and increases value with shareholders. Building active, efficient and inclusive corporate social responsibility programs are now the norm in business strategy.