Profiting from corporate social responsibility: Part 1
A recent Time poll found that 60% of Americans have bought organic products, many have also bought an energy efficient light bulb. Almost 40% bought a product because of the social or political values of the company that produced it. Consumers all over the world are choosing brands that are transparent, practice ethical business and are socially responsible.
However, there are still many consumers whose savvy and cynicism can have a negative effect on insincere corporate responsibility efforts. Greenwashing is particularly prevalent. Businesses holding mandatory community days or donating to charities are a given, but placing social responsibility at the heart of strategy needs to add value to society as well as shareholders for it to be taken seriously. Some of this is a halo effect on reputation, some is actual profit.
In the last few years leaders and boards have realised it’s acceptable for corporates to profitably benefit from socially responsible programs. A mix of businesses have taken up the challenge, from companies that actually have Corporate Social Responsibility (CSR) as the bedrock of their strategy (Innocent Drinks), those that realise it’s a necessity in sustaining the future of their business (BP) and those that realise the importance of social responsibility in the minds of their target customers (Starbucks).
Many brands have been burnt in the past by adopting unethical manufacturing practices – Walmart and Nike in the 1990’s are famous examples. This arguably led to ethical business practices becoming a necessity for companies who were compelled to adopt, rather than proactively foresee the long-term benefits such a strategy can bring. Indeed, Walmart and Nike were both lucky in a sense that the backlash wasn’t fuelled further and heightened by the internet and a generation of consumers poised to strike at any unethical brand within a matter of minutes. However, by reacting to issues rather than setting the agenda, CSR can become a cost centre without a purpose, delivering what looks to outsiders like cunning (deceiving) marketing.
2 years ago I was lucky enough to be present at a seminar by Michael Porter. At the time he commented on how CSR strategy was still very reactive, fragmented and disconnected from business. He recommended that corporate involvement in society should be approached proactively, using the same robustness as other business frameworks. The benefits could be greater both for business and society because of the tools, resources and investment that businesses have at their disposal – as well as the greater transparency enforced upon them vs not-for-profits.
CSR strategy should be focused on the points where your brand and society intersect. This is where business blurs with CSR and value is shared between both. Good Brandhabits can be observed here where customers habitually choose a brand because of their ethical practices. Businesses benefit from higher loyalty levels and greater sustainability.
Most importantly society benefits from a prosperous economy and consumers feel good about purchasing brands that are;
- Responsible
- Authentic and transparent
- Good corporate citizens
Of course this sounds very idyllic and in practice can be difficult to achieve in a far from perfect world. In Part 2 of this post, I’ll look at some of the brands that are making CSR a significant pillar of their strategy.
Brandhabits
