What is Corporate Social Responsibility (CSR) ?
According to the Financial Times, Corporate Social Responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.
In truth, many CSR endeavours have been criticised as ‘greenwashing, which is the practice of making an unsubstantiated or misleading claim about the environmental benefits of a product, service, technology or company practice in an attempt to make a company appear to be more environmentally friendly than it really is. Often a company’s CSR activity involves nothing more than simply handing a charity a cheque in return for some heart-warming photos and stories for its website in order to enhance its brand image. While the charity does of course benefit, the company benefits more.
In the 1970’s the economist Milton Friedman famously stated that,’ the social responsibility of a business is to increase its profits’ and while social and environmental sentiments have changed somewhat since then, markets continue to demand that CEO’s remain primarily focused on enhancing and increasing shareholder returns. Therefore, if some of those hard earned gains from business activities are expected to be given away to charitable causes for CSR purposes is it not surprising that companies still seek benefit from those activities?
Snowstar Consulting recognises the dilemma faced by companies in respect of CSR activities, but also believe that companies do have a responsibility to act in the best interests of the environment and the societies in which they operate. We believe that a suitable ‘win-win’ compromise is found in the ‘Shared Value’ approach to CSR proposed by Professor Michael Porter and Mark Kramer in the Jan-Feb 2011 issue of the Harvard Business Review. The Shared value approach encourages companies to expand its view of value creation to uncover business opportunities within social problems. The approach identifies three key ways in which value can be created, – by reconceiving markets and products focusing on innovation, improving practices within the value chain and enabling ‘cluster’ developments, – using local suppliers and improving skills to boost productivity, growth and innovation. Snowstar Consulting believes the shared value approach to be valuable as it provides a win for the business and a win for society on top of many other benefits. As the Shared Value approach effectively serves to enhance the bottom line, companies are more likely to give Shared Value CSR activities the resources and enthusiasm they need to be effective, thus benefitting society.
Examples of Shared Value CSR activities
Nescafe recognised the sustainability of the coffee sector was threatened by poor yields, diseased trees and volatile prices. Nescafe therefore provide educational and technical support for farmers, teach sustainable farming methods and gift farmers with disease resistant plants, as well as provide education on health and nutrition. Nescafe also reduced the environmental impact of their factories and operate in accordance with the Rainforest Alliance. These activities ultimately provide the farmers with greater crop yields thus ensuring the sustainability of the sector, and enabling Nescafe’s customers enjoy a superior quality of coffee.
Novartis recognised the healthcare crisis in rural India. They employed hundreds of healthcare educators to provide training and create clinics across the country providing healthcare services for over 42 million people. Novartis then distributed their products to over 50,000 rural clinics allowing them to access high growth emerging markets.
Southwire operated in a small town in Georgia but suffered from an ageing workforce with no access to new employees due to the high dropout rate (40%) at the local school. So they created a programme in partnership with the school, providing both part time work and educational oversight for the most at risk children. The outcome was that 100% of the children graduated, many were granted permanent employment and Southwire generated millions of dollars in profits.
GE’s ‘Ecomagination’ projects – the building of efficient machines that produce cleaner energy, reduce greenhouse gas emissions, clean water and reduce its usage, has not only generated $200billion in revenue since inception, but also served to provide enhance employee engagement and motivation.
Like Southwire, CISCO also helps to provide education in underserved populations. This helps to improve the outlook of disadvantaged communities and also provides the company with a ready stream of skilled IT professionals around the world and enhances the CISCO brand and reputation.
How can Snowstar Consulting help your organisation with its CSR activities?
Snowstar Consulting can assist your organisation to create a unique Shared Value CSR project relative to its own market, context, strategy and competitive position, providing a win for society and a win for your organisation.
Please let us know how we can help you with your CSR needs by calling us on +44 (0) 115 928 6273 or alternatively please complete the contact form and we will come back to you as soon as possible.