Imagine you are at the supermarket, trying to decide which shampoo to buy. There is Product A, which is environmentally friendly, and no animals were harmed during the production process. Then there’s Product B, which does not promise any of those but slightly cheaper than A. Which one would you choose? Or you are trying to buy new shoes, and one of the brands is actually sending another pair to someone in need in exchange for your purchase. -This is also known as the “One for One” corporate social responsibility (CSR) model that has been widely embraced by TOMS shoes.- Would that make a difference in your buying decision?
Stakeholder Theory and Corporate Social Responsibility (CSR)
According to the Stakeholder Theory by Edward Freeman, anyone who is affected by the decisions of the business is important and the main concern should be “benefit for all”. By saying all, we mean every aspect of the society such as governments, employees, NGOs, suppliers, local ecology etc.
Fortunately, corporate social responsibility is becoming more and more important each day as the consumers want more transparency and demand value creation from the organizations. CSR is a term used to describe a company’s efforts to improve the society as a whole. But how can this concept be a win-win relationship and also be beneficial to the brands?
- Becoming a Lovemark
Marketing is about conversation and storytelling. With CSR and its positive effects on the communities, we can observe the formation of positive public image and increased media coverage -which are both good for the overall company reputation-. Eventually, these will result in increased customer loyalty based on distinctive ethical values, and help you differentiate your products from your competitors’. Brand activism promotes individual philanthropy in the workplace as well, which helps the companies boost employee engagement. This is also important to attract talent for the recruitment process in the long-term.
- Here, you can find the 10 companies with the best CSR reputations according to Forbes.
- Creating New Business Opportunities
We all know the importance of forming strong relationships in the global economy. CSR helps the companies forge organizational partnerships with NGO’s and other organizations. Creating value does not have to be an afterthought or an expense. For example, the unique ice cream flavors of Ben & Jerry’s that help raise money for specific causes or Starbucks’ “Cups of Kindness Collection” (which has donated $0.25 from the sale of each drink to Lady Gaga’s Born This Way Foundation) are good examples that you can still do good and make profit at the same time. CSR creates new funding opportunities while attracting new investors since they are more likely to back a reputable business with a more diversified portfolio.
- Here, you can find 20 great CSR initiatives for 2017.
- Cost Reductions
Yes, you’ve read it right! CSR can also help the brands reduce their costs. How? By taking sustainable steps such as reducing resource usage and waste, using recycled/ recyclable materials, less packaging etc. companies can benefit from saving money and helping the environment simultaneously. This change might be seen as costly at first, but one must not forget that the long-term benefits are greater than the short-term gains and the cost of inaction is greater than the cost of action. This again shows that CSR can be a competitive advantage for the companies as well. Some brands even use this commitment to sustainability as their primary positioning strategy (like the German brand “Frosch”). Also, since CSR will make your risk management operations easier (staying away from carbon taxes, pollution lawsuits etc.), you will save money and energy on your operational costs.
- Sustainability shouldn’t be mistaken for “greenwashing”, which is a term used to describe the false statements made by the brands to make people believe their company is doing more to protect the environment than it really is. Here, you can find out more about greenwashing.
So What’s Next
According to the statistics of Double the Donation research, 93% of the world’s largest 250 companies now publish annual CSR reports, and 55% of consumers are willing to pay more for products from socially responsible companies. We, as the public, would like to see more CSR in the C-suite. If a decision has power on a topic (which can be positive or negative), the affected side can’t be withdrawn from the subject or dissociated. Afterall, a company owes a responsibility to a wider group of stakeholders, other than only shareholders. The term itself tells us that this is a responsibility, however, if the brands can manage to make CSR a part of their core mission and everyday business, only then the projects can be authentic and come from the company roots.
What are your thoughts on CSR and sustainability? Let us know in the comments below!