As consumers around the world become more ethically aware, Corporate Social Responsibility (CSR) is becoming increasingly important. At the IEC Canada 2009 Conference, Professor Andrew John and Christian Stadil each addressed delegates and shared their experiences and expertise on this subject.
It is no longer sufficient for organisations to simply tell their customers that they practice CSR; customers need to see the benefits that the organisation’s efforts are making to the community.
CSR can take a number of forms, from pure corporate philanthropy, to operational CSR and corporate marketing (trying to change how people think and behave), right through to community volunteering.
Professor Andrew John specialises in CSR and has carried out numerous studies on the subject. He stressed to the IEC audience that it is no longer sufficient to simply sign a cheque and donate it to a good cause; organisations must ensure that their CSR initiatives are carefully targeted and aligned to their overall strategic goals.
The benefits of CSR
There are two main reasons to practice CSR; the first being that it is morally the right thing to do, the second that it is good for a business’s bottom line. In Professor John’s experience, these two reasons do not have to be exclusive.
When implemented strategically, CSR can bring many benefits to a business:
- Socially aware customers may be more willing to pay more for a product
- Improves brand perceptions, which leads to improved product judgements
- Improves a business’s corporate reputation
- Improves employee morale
- Can lead to process and product innovations
Professor John believes that organisations that ignore CSR, do so at their peril: “There is now a lot of expectation for companies to behave in a socially responsible way”. A third of the population are now considered to be ethical consumers; as well as judging a product, they also judge the company and its behaviour.
In the past we have seen boycotts; people refusing to purchase certain products or brands because an organisation has been judged to act unethically. Recently, a new phenomenon has begun - buycotts; people who are willing to pay more - and encourage others to do so - because a product or brand is considered ethical.
Good CSR initiatives will bring benefits to communities, whether it is helping to feed people in poverty, supplying better working conditions for employees, or donating staff time to build and improve community facilities. However, if the business’s target audience, usually the customer, is unaware of these activities, they will not be benefiting the organisation.
In Professor John’s experience, people judge an organisation on why it is carrying out CSR. “People don’t generally like it if a company is only doing CSR to boost its profit; just to be seen to do good”. However, it is acceptable to do both, people accept that a business can profit because it does good.
According to both Professor John, and Mr Stadil, the most effective CSR is relevant CSR. The initiative or project that a company chooses to become involved with should have some relevance to its actual product or industry.
Mr Stadil stressed to the IEC audience that to be fully effective, as well as being credible to the consumer, the CSR initiative should also be carefully promoted, making the customer feel good about choosing that product, because they believe that it helps a wider cause.
He urged businesses to communicate modestly, but effectively and, where possible, to enlist a partner organisation to communicate the message. According to Mr Stadil, using a partner company in this way helps to reinforce the facts, and tell customers what is being done, but it appears more modest.
Different cultures value different CSR initiatives
When considering how to implement a CSR initiative, it is critical to remember that what people consider to be important varies from country to country, and continent to continent.
Professor John explained that, according to recent research, in the US and Europe, treating workers fairly is considered to be most important. In China, India and Russia, people believe that safe working conditions and high quality products are the top priority; while in Canada and Australia, the focus is on the environment.
Professor John and Mr Stadil both encouraged IEC members to practice corporate social responsibility, but to ensure that the initiatives were carefully chosen, well aligned with the business’s overall strategic goals, and carefully communicated.