The Rise of Corporate Social Responsibility

Brodoto
Social enterprise

Corporate social responsibility is the obligation a company freely takes upon itself to communities, people, and employees (its stakeholders) in order to be seen as a responsible business entity, and it has been on the rise in recent times. However, the idea that businesses have a responsibility to society is not new. In America, at the end of the 18th century, states had the right to revoke a business’s license if that business was not acting responsibly. But, this changed in the beginning of the 19th century when the Supreme Court ruled that corporations should be treated as citizens and thus be protected under the Constitution. This transformed the idea that corporations had to act responsibly by making it a voluntary responsibility, only necessary if the corporation wants to be a “good citizen.” The government no longer had the right to revoke the license of a business if they deemed them as irresponsible because of corporate citizenship.

 

This is the way corporations are regarded in almost every country now. They all possess what is referred to as corporate citizenship/personhood. The implications of corporate citizenship meant for a long time that businesses usually looked only after themselves and acted in their own self interest, often coming at the expense of the environment, worker’s rights, poor people, the oppressed etc. This forced businesses to become the foci of negative public attention because of their irresponsible actions, and all of this still happens today. Corporations have acted this way for hundreds of years, but today we see this changing.

 

Image from: lrqa.co.uk
The Importance of CSR Today

 

The harsh feelings pent up around irresponsible business practices have culminated into a huge movement towards corporate social responsibility (CSR) in the recent decades. New technologies and the new uses of media has resulted in people being able to express outrage over bad business practices and movements against businesses who abuse their power, consequentially watching them crumble. This is why businesses should no longer see CSR practices as optional. Good CSR strategies are necessary for a successful business. Socially responsible companies gain the loyalty and adoration of customers and employees alike. Today, people have a desire to work for a reputable, ethical, and charitable company because they find that they are happier doing so, and when employees take pride in the company they work for company’s production rates, employee satisfaction, and overall bottom line is more positive. In fact, according to Cone Communications recent research, “64% [millennials] won’t take a job if a company doesn’t have strong corporate social responsibility (CSR) values

83% would be more loyal to a company that helps them contribute to social and environmental issues (vs. 70% U.S. average); 88% say their job is more fulfilling when they are provided opportunities to make a positive impact on social and environmental issue.” Likewise, customers are looking for a company they are proud to stand behind. Companies with strong corporate social responsibility strategies implemented have the most loyal customers. Another study done by Cone Communications revealed these findings about customers, “91% of global consumers expect companies to do more than make a profit, but also operate responsibly to address social and environmental issues; 84% say they seek out responsible products whenever possible; 90% would boycott a company if they learned of irresponsible or deceptive business practices.”

 

Some of the world’s biggest companies have incorporated the best examples of corporate citizenship into their culture, and here’s how. 

Patagonia's Common Threads Initiative

Patagonia as a Model for Successful CSR Strategies

 

One of the leading outdoor apparel brands in the world, Patagonia, appeals to rock climbers, fly fishers, surfers, hikers, campers, and anyone else who has an appreciation for the world we live in. Patagonia is an excellent example of a company that has implemented environmentally focused strategies of corporate social responsibility. Patagonia has used its dedication to the environment to differentiate itself from other outdoor companies. Patagonia has a base of customers and employees who exhibit devout loyalty to the company because they want to buy a superior quality product from a company they trust cares for the environment. Also, it has showed that it cares for the environment by assuring that everyone in its supply chain shares the same values as Patagonia, and by engaging in politics revolving around environmental issues.

 

By focusing on sustainability before profit Patagonia has doubled in size and tripled in profit in the recent years. Patagonia’s growth has steadily increased in the years with sales increasing 6% and gross margin 50-55%. They are a company that is thriving off its devotion to the environment and an excellent example of good corporate social responsibility strategies. The more people see them actively participating in engaging in politics revolving around environmental issues the more customers who share the same values give them their loyalty.