Long gone are the days in which corporate philanthropy was a synonym of CSR, and even if it is still valid for some firms, it should be accompanied by other methods to communicate, impact, and involve the business with all its external stakeholders. Following newer CSR approaches and best practices will make the business world more successful in developing the base of the pyramid and positively boost the community’s perception of the company.
Responsible Business readers are aware of the relevance of being a fair player in business and how it positively affects business and its surroundings. However, it is easy to miss if external stakeholders are getting the right perception of its CSR approach. For all that matters, nobody wants to drain resources - corporate philanthropy is a good example - for activities that can be rethought in more effective and impactful ways or which are perceived as “greenwashing”.
Furthermore, businesses who have been an active fair player for some time can easily lose track of the impact of its activities and get stuck in old practices and miss new trends in CSR. For that matter it is important to distinguish the best practices and newest trends in CSR. This permits to analyze if the company is in line with the global evolution of CSR, and identify the best ways forward.
Evolving with CSR
The evolution of CSR is directly related to the evolution of business, and certainly it can be acknowledged that business practices in all areas have changed since the Industrial Revolution. As one of these areas, CSR has also been increasingly relevant since the 60’s. Its evolution has been driven by an interest in achieving more impact, developing the base of the pyramid and keeping the company profitable and responsible within all its external stakeholders. Throughout his time, innovative and groundbreaking CSR strategies in different industries have now become best practice. How can companies identify the best trends to follow when several CSR approaches are available?
Well-researched studies as well as trial and error social programmes, have led to thousands of innovative CSR approaches for each industry. To identify where the company stands, the company and its CSR managers should first understand the motivations to implement CSR practices. Is it to comply with governmental policies and regulatory standards from industry and NGO’s or with internal interests and values? The former will produce basic and meagre results while the latter will push to seek and create best practices. Thus, the more the C-suite pursues CSR for reasons that go beyond complying with external regulations, the better and more effective its CSR activities will be.
This engagement from high-level decision-makers is the more general drive of this evolution, and a good indicator on where to start a company’s analysis.
Once an evaluated has been conducted on where the company is standing in terms of motivations, it will need to identify the resources - human, financial and physical – and commit to these efforts. Whether or not the new resources will be committed or if the same will be retained, re-evaluating best and new practices will always help to make the most out of them.
According to the level of resources that the company is able or willing to commit to, the three general categories described below explain the most efficient ways to apply new practices for a CSR approach with higher impact. The brief examples presented in each category deliberately come from high value and high competitive sectors such as food, fashion, and finance. Competitors in these sectors struggle to differentiate themselves and some of them use purpose and values as differentiating factors, so a few good practices tend to come from them.
If the need for increased social impact and participation has been identified, but with limited resources, one of the most basic and effective ways to go ahead is to partner with NGO’s or Social Enterprises. The partnership may involve different participation methods however, they will most likely adopt one of these ways:
Social Partner as Vehicle
In this type of partnership, NGO’s or Social Enterprises are the vehicles by which corporations deliver their social impact to tackle particular sustainability and social issues. Companies partner with organizations that have the expertise, rather than developing in-house programmes. Examples of this type of partnership are: Environmental Defence Funds (EDF) and McDonald’s partnership to reduce the environmental impact of packaging and the alliance between World Wildlife Fund (WWF) and Coca-Cola’s collaboration to improve the water quality of the upper reaches of China’s Yangstze River.
Corporate Partner as Vehicle
In these alliances, non-profits tend to benefit from using the infrastructure of the company to deliver its message, products or services this way, the company acts as a vehicle to deliver and create value for the NGO. Multinational fashion retailer AllSaints launched an innovative partnership with the international anti-human trafficking group, Not For Sale, where special t-shirts are sold to raise awareness and all profits would benefit the organization.
Another interesting trend is Social Intrapreneurship, which requires a deep engagement from the company to commit to the best and most innovative ways to deliver social impact in a profitable way. Characterized by innovation, these companies, allow their human resources to become drivers of social change within the organization and thus create added value for both the organization and society. Usually, these social intrapreneurs design products and programmes targeted for the bottom of the pyramid.
The telecommunications company Vodafone, has set an example by encouraging its employees to compete for an internal innovation fund. From this effort, a particularly groundbreaking case emerged from social intrapreneurs Susie Loni and Nick Hughes. Loni and Hughes, after recognizing the lack of bank services among the population in Kenya and the extended use of mobile services, created a mobile banking service solution in the country. This allowed for the overall Kenyan population to participate in the banking system through their phones. This innovation further inspired others in Africa to follow, in particular providers of microcredits.
The biggest engagement from any business towards creating social value comes when the CEO embeds this idea in the veins of the company. More than ever, CEO’s are taking the social impact lead in their companies favouring long-term benefits rather than short-term profits. Business leaders such as Jack Welsh; Alibaba CEO, Jack Ma; the CEO of Unilever, Paul Polman; and Marc Benioff, CEO of Salesforce, among others, have claimed the idea that “the business of business is not just to create profits for shareholders, but also to improve the state of the world, and drive stakeholder value”, as Mr. Benioff declared for the Huffington Post.
This is the strongest force against the pervasive perception of cold capitalism and in favor of the evolution of business culture and CSR. These companies are running operations, in which under every step and decision considers not only the interests of shareholders, but also the interests of stakeholders such as customers, employees, suppliers, citizens, governments, the environment and any entity impacted by the business.
Responsible Business Magazine- Issue no. 18