Best Practices: Strategies for CSR

 Why do companies take up CSR activities?

Sprinkle & Maines (2010) claim that organizations may engage in CSR activities for 4 reasons: organizations may have altruistic intentions; they may use CSR activities as “window dressing” to appease various stakeholder groups; for potential benefits of recruitment, motivation and retainment of employees; for customer-related motivations as CSR may entice consumers to buy organization’s products and services. Weber (2008) indicates five key areas where CSR creates positive relations: Positive effect on organization‘s image and reputation; positive effect on employee motivation, retention and recruitment; cost savings; revenue increases from higher sales and market share; and CSR-related risk reduction or management. Polonsky & Jevons (2009) found that possible reasons to organizations of being socially responsible include: improved financial performance; contribution to market value; a more general positive impact on societal stakeholders; a connection with consumers; and improved product quality. Authors also claim that there are even internal reasons such as: increased employee commitment and reduced employee turnover; not to mention improved society overall. In addition, according to Bhattacharya & Sen (2004), CSR activities generate more immediate outcomes such as word-of-mouth; resilience to negative company information; and consumers’ awareness, attitudes and attributions about why companies are engaging in CSR initiatives. Feldman & Vasquez-Parraga (2013) summarizes possible reasons for CSR generated from various literature sources. They claim that organizations may have 6 reasons for CSR. First, CSR actions influence consumers’ reactions to that company and its products. Second, specific company strategies are found to include CSR actions in order to attract and retain customers. Third, consumers use trade-off criteria between CSR product features and traditional product features such as price, quality, convenience and lack of information, corporate brand dominance or product quality. Fourth, consumers’ evaluations of company CSR may be linked to their perspectives of how responsible a company is in relevant areas such as economic, legal, ethical, and philanthropic. Fifth, consumers’ evaluations of the fit between companies’ CSR activities and consumers’ characteristics or interests positively affect consumers’ perceptions of companies’ CSR activities. Sixth, consumers who receive communication about company CSR activities increase their CSR awareness, which in turn, generates positive attitudes towards buying products from CSR companies

Source: Migle Sontaite-Petkeviciene, CSR reasons, practices and impact to corporate reputation, 20th International Scientific Conference Economics and Management - 2015 (ICEM-2015), Published by Elsevier Ltd. This is an openaccess article under the CC BY-NC-ND license 

 

Best practices of CSR by companies’ must hinge on the aspects listed below as derived from above studies.

·         Good image in the public

·         Reputation among stakeholders

·         Attracting good talents

·         Enhancing Sales and customer preferences

·         CSR-related risk reduction or management

·         Improved financial performance

·         Increased market value

·         Immediate outcomes like Word-of-mouth, resilence to negative information,

·         Increased Brand value

·         Improve communication among stakeholders

WHY CORPORATE SOCIAL RESPONSIBILITY INITIATIVES FAIL

In a time when social impact is demanded, many companies are shifting their strategies to incorporate activities for the greater good. However, this doesn’t necessarily mean they’re doing it well. For many businesses, corporate social responsibility becomes a way of changing perceptions and reputations, rather than creating and measuring any substantial positive impact. For others, what they say to the public can be misleading. We explore some examples of misleading or disingenuous CSR below.

H&M GREENWASHING

Swedish fast-fashion chain H&M has been called out recently for supplying insufficient information about the sustainability of their “sustainable style” collection. This is known as greenwashing – the act of giving a false impression that a company and its products are more environmentally friendly than they truly are.

The internationally renowned fashion company has marked some of its products as ethical and environmentally friendly, yet they still produce materials at a non-environmentally friendly rate. The Norwegian Consumer Authority called out the chain for failing to produce sufficient information on how their products have “environmental benefits”. As a result, H&M have received criticism in the media.

VIRGIN AUSTRALIA’S OPPORTUNISTIC CAMPAIGN

Virgin Australia found themselves in hot water for an attempt at CSR gone wrong when they announced a plan to give Australian veterans a public acknowledgement on flights and priority when boarding. Unfortunately, the company failed to consult the veterans first.

The move was considered “tokenistic” by many, with the company accused of causing discomfort to veterans. The airline was critiqued for seeking an opportunistic moment on Remembrance Day and failing to engage with the community first. Virgin Australia’s attempt to participate in CSR backfired, which shows the importance of considering a strategy driven by engagement, rather than opportunism.

UNILEVER’S SUPERFICIAL CSR POLICIES

Since CEO Paul Polman began leading Unilever – a giant multinational corporation selling consumer goods across the globe –he has regularly highlighted his eagerness to combat climate change and address social issues. However, recently the company has faced ridicule.

Unilever made headlines when nearly 600 workers in India suffered life-threatening mercury exposure. They made headlines again when a newspaper exposed claims of sexual harassment, stating that African workers were forced to bribe their supervisors to prevent advances. These controversies had a damaging impact on the company, with growth slowing and their positive reputation declining. 

·         As people become advocates, they increasingly expect transparency and authenticity from a business that declares to do good. The reasons why CSR initiatives fail include:

·         Companies choose to promote the “socially responsible” behaviour with insufficient evidence to support it

·         There is no attempt at getting stakeholder, customer or employee buy-in on the CSR strategy

·         There is no measurement of the CSR strategy value

·         The advocacy campaign doesn’t align with a brand’s operations, services or message

Trends that are shaping CSR activities

Activism by millennials and, indeed, all generations will also influence changing trends in CSR. 

A. The Occupy movement was an international left-wing populist socio-political movement that expressed opposition to social and economic inequality and to the lack of "real democracy" around the world. It aimed primarily to advance social and economic justice and new forms of democracy. The movement has had many different scopes, since local groups often had different focuses, but its prime concerns included how large corporations (and the global financial system) control the world in a way that disproportionately benefits a minority, undermines democracy and causes instability

The first Occupy protest to receive widespread attention, Occupy Wall Street in New York City's Zuccotti Park, began on 17 September 2011. By 9 October, Occupy protests had taken place or were ongoing in over 951 cities across 82 countries, and in over 600 communities in the United States

B. As more companies recognize gender disparity, they continue to take a public stand against on-the-job harassment and discrimination thanks to the #metoo movement. Diversity in the workplace will also continue to expand to embrace people of all races, genders, cultures, disabilities, and sexual orientations.

C. Another new wave of CSR has emerged from  Kerala , India. Stakeholder’s societal power is harnessed for enabling panchayati raj institutions of the locality supplying drinking water, dwellable houses, dept store for household consumer articles and provisions, etc.. funded by CSR money from KITEX Garments Ltd by organizing beneficeries under Self Help Groups..

D. Companies will also find their own voices to speak out against social injustice and policy changes that will negatively impact the environment. Even policies to protect data privacy in an ever changing environment can become part of the CSR trends as more and more data breaches threaten personal information

Best Practices : How to Stitch Startegies for CSR 

Corporate Social Responsibility (CSR) is a type of business self-regulation with the aim of being socially accountable. There is no one "right" way companies can practice CSR; many corporate CSR initiatives strive to positively contribute to the public, the economy or the environment. 

 

1. Understand & Align CSR Activities with Corporate Objectives, Mission and Vision: Determine what CSR means to your company and how it relates to your overall mission and purpose.

   CSR initiatives should connect to your core business purpose and strategy in a way that makes intuitive sense. Look at what your organization is already doing in terms of CSR activities.  

   A current analysis includes a full review of any CSR initiative you currently have running, be it officially or unofficially, within your company. CSR can mean many different things to different people. It depends on someone’s culture and past experiences with CSR that will determine their opinion and definition of it. 

   At this stage, it’s important to speak to and understand all stakeholders’ concerns; leadership, employees, consumers, professional organizations or unions, local communities, or environmental groups. Once you’ve understood concerns, you can consider where there is a match, and how your CSR program can address these.Perhaps employees have set up their form of a socially responsible initiative that can be something bigger with new support from the company. For example, fundraisers like bake sales, community running groups, volunteering days, in-office recycling, meat-free Fridays, bio-gas plant at home or eliminating single-use plastics. For example, you may already comply with environmental regulations, engage in philanthropic causes, or deploy green initiatives that reduce waste.

    

2. Research: Find out which CSR issues are most significant to your business. Start by referencing online lists for relevant issues in your sector. Look at the CSR or sustainability reports of larger companies in your industry to see which issues they’re tackling. 
3. Top management & CEO commitment and engagement at all levels: Getting senior leaders, including the CEO, senior legal counsel, and c-suite executives on board is vital for moving projects from paper to reality. This engagement can make work more meaningful, and can help employees understand the full business process and leak information to the customers for enhancing emotional bonding
4. Prioritize: Identify which CSR issues are most important to your customers and stakeholders and deal with those first. Engaging your employees and customers is a great way to get going and gain support.

5.      Set Goals: These goals and Key Performance Indicators (KPI)s showcase your strategy is positively impacting your business, and that your CSR project is on track. In the early stages, they can be anything from winning board member buy-in, have 100% of employees understand what CSR is, host 3-5 meetings with potential CSR SaaS providers, ahem we’re right here, to name a few. Further down the line, they can be more KPI-orientated like employee engagement rates, online brand sentiment, or lower customer churn.

6. Integrate:  CSR strategy has to become part of the overall business strategy. Don’t think of it as part of your business, but rather, the way you do business.
7. Identify opportunities: Having strong CSR credentials can pave the way for new opportunities such as entering new markets, developing niche products and forging strategic partnerships. One often overlooked benefit of CSR is that it connects you to communities that can serve as a source for future employees.
8. Communicate: Ensure you effectively communicate your CSR activities including performance scores to your various target audiences through as many channels as possible.
9. Compliance : Country like India has made it mandatory for eligible Companies under Companies Act 2013 to spend 2%  of net profits for specified CSR activities in their locality and report it in the annual report as well as on the official website of the company.

Whether companies have really followed such steps is a doubt that haunts many people. reading about practical real life situations give insight into what one can do in CSR activities.Some CSR Strategies  practiced on a large scale are as follows: 

Real Life Examples:

1. ITC: ITC Limited (formerly India Tobacco Company Limited) is a consumer product and agribusiness conglomerate in India known for their production of cigarettes, specialty paper, food products and packaging services. Through the e-Choupal initiative, ITC has created more than 6,500 e-Choupal computer stations in rural areas that serve an average of six hundred farmers each. Using this technology, farmers may order supplies, learn about best agricultural practices, receive weather reports and read about pricing for crops throughout the region. e-Choupal is an initiative of ITC Limited, to link directly with rural farmers via the Internet for procurement of agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. Farmers use information to fix their own prices. They also obtain higher profit margins because they’re no longer forced to sell through a middleman. ITC Limited also benefits from the initiative, by simplifying its supply chains and increasing its profits(April 2011)

 

2.      HUL: In 2001, HUL launched its Project Shakti, that seeks to empower underprivileged rural women. This initiative targets small villages with population of 2000 people or less. Shakti is organised in Self-Help Groups (SHGs) and is focused on improving living standards in rural India. The project equips and trains rural women, enabling them to become an extended arm of the company’s operation, which in turn, this helps the women generate critically needed additional income for their families. 

These women entrepreneurs, called Shakti Ammas, are trained on basic principles of distribution management and familiarisation with the company’s products. HUL’s team of Rural Sales Promoters (RSPs) coach these Shakti entrepreneurs by familiarising them with the product range in order to manage their businesses better. They also train them on the basics of sales and troubleshooting and help them enhance their soft skills in areas such as negotiation and communication.

Under the Project is the Shakti Vani programme, which is a social communication initiative. Women trained in health and hygiene issues address village communities through meetings at schools, village baithaks, SHG meetings and other social forums.

With some 48,000 Shakti Ammas and 30,000 Shaktimaans, HUL reaches over three million households in 100,000 villages in 15 states. Project Shakti has been replicated in Pakistan and Sri Lanka. In Pakistan, the Shakti Amma is called 'Guddi Baji' (Urdu for 'doll sister'). Guddi Bajis, who are trained to provide beauty care services, sell brands such as Lux and Fair & Lovely. During visits to rural customers' homes, they also teach them the importance of hand-washing, educating girls, and registering births and deaths. In Sri Lanka, they are called 'Saubhagya', which means good luck. There are nearly 2,000 Saubhagya entrepreneurs in Sri Lanka and 1,100 Guddi Bajjis in Pakistan(July 2013).

 

3. Twenty20 Kizhakkambalam is an Indian nonprofit charitable organization at Kizhakkambalam in Ernakulam district, Kerala. The prime objective of the organization is to make Kizhakkambalam Grama Panchayat the best Grama Panchayat in India by 2020. This organization won the elections in the local body elections in 2015. Twenty20 has taken lead in providing drinking water to the people of Kizhakkambalam. They have also taken interest in making toilets; repairing houses; sponsoring surgeries and wedding; building places of worship and donating seeds and agricultural implements.The organization runs a grocery shop in Kizhakkambalam supplying vegetables and groceries at half the market price and 7,000 families are visiting the market regularly to buy provisions. During the 2020 Kerala Local body elections, party has won nine seats in Aikkaranadu panchayat, five seats in Kunnathunad and five seats in Mazhuvannur higher than the 17 of the 19 seats in Kizhakkambalam in 2015.  According to Sabu M. Jacob, the Managing Director of Kitex Garments, the victory was because of the failure of the prevailing political parties. Kitex Garments disbursed its Corporate Social Responsibility (CSR) funds for the development and welfare schemes undertaken by Twenty20

4. Lego: The toy company has invested millions of dollars into addressing climate change and reducing waste. Lego's environmentally conscious efforts include reduced packaging, using sustainable materials and investing in alternative energy.
   
   

5.  TOMS: TOMS's mission is to donate a pair of shoes for every pair they sell and has resulted in the donation of over 100 million pairs of shoes to children in need. These profits have been used to assist the visually-impaired by providing prescription glasses and medical treatments, provide 'safe' drinking water and build businesses in developing countries to create jobs.

Since the company came under criticism from NGOs for creating a dependency for free shoes and collapsing local shoe making industries, TOMS has re-evaluated its strategy. Instead of focusing on free shoes, the company now donates one third of its profits to grassroots campaigns. This includes the COVID-19 Giving Fund and racial justice campaigns such as Black Lives Matter.

TOMS donates one-third of its net profits to various charities that support physical and mental health as well as educational opportunities. As of April 1, 2020, the brand is directing all charitable donations to the TOMS COVID-19 Global Giving Fund.

6. Johnson & Johnson: The brand focuses on reducing its environmental impact by investing in various alternative energy sources. The company continues to seek out renewable energy options with the goal of having 100% of its energy needs from renewable sources by 2025. Globally, Johnson & Johnson also works to provide clean, safe water to communities.
   
   
7. Starbucks: The global coffee chain has implemented a socially responsible hiring process to diversify their workforce. Their efforts are focused on hiring more veterans, young people looking to start their careers, and refugees.Starbucks Corporation has grown from a single store to become the leading retailer, roaster and brand of specialty coffee in the world with more than 15,000 company-operated and licensed locations in North America, Latin America, Europe, the Middle East, Africa and Asia Pacific (CSR annual report 2007). The first retail store was founded in Seattle‘s Pike Place Market in United States in 1971 as a local coffee bean roaster and retailer.Starbucks initiated C.A.F.E. (Coffee and Farmer Equity) Practices to evaluate, recognize, and reward producers of high-quality sustainably grown coffee in 2004. Starbucks has developed a sophisticated sourcing program that seeks to ensure that Starbucks coffee comes increasingly from suppliers who treat their workers well, pay them a decent wage, and respect their rights. Starbucks agreed to adopt a code in 1995 which has evolved into C.A.F.E., an incentive-based system under which Starbucks growers receive economic incentives for following a comprehensive set of sourcing guidelines In Starbucks fiscal 2007 report, 65 percent of Starbucks‘ coffee, 228 million pounds (103 million kilograms) was purchased from C.A.F.E. (Coffee and Farmer Equity). The goal is to be purchasing 80 percent of coffee through C.A.F.E. Practices by 2013. C.A.F.E. Practices is a green coffee sourcing guideline developed in collaboration with Scientific Certification Systems (SCS), a third-party evaluation and certification firm. C.A.F.E. Practices are the guidelines designed to help company work with coffee farmers to make sure that Starbucks sources in coffee growing sustainably grown and processed highquality coffee by evaluating under triple bottom line; the economic, social and environmental aspects. Developed in collaboration with Conservation International, C.A.F.E. Practices is a verification program that measures farms against economic, social and environmental criteria, all designed to promote transparent, profitable and sustainable coffee growing practices while also protecting the well-being of coffee farmers and workers their families and their communities. C.A.F.E. Practices has helped Starbucks create a long-term supply of high-quality coffee and positively impact the lives and livelihoods of coffee farmers and their communities. The open-sourced program consists of more than 200 indicators – from financial reporting to protecting workers’ rights and conserving water and biodiversity. The program includes a third-party verification process that is overseen by SCS Global Services, responsible for ensuring the quality and integrity of the audits.
8.  Google: Google has demonstrated its commitment to the environment by investing in renewable energy sources and sustainable offices. The company’s CEO, Sundar Pichai, is also known to take stands on certain social issues. He stands up against social issues including President Donald Trump’s anti-Muslim comments. Google also earned the Reputation Institute’s highest CSR 2018 score much in part due to their data centers using 50% less energy than others in the world. They also have committed over $1 billion to renewable energy projects and enable other businesses to reduce their environmental impact through services such as Gmail.

9. Pfizer: The pharmaceutical company's focus on "corporate citizenship" is reflected in its healthcare initiatives. Some of the company's initiatives include spreading awareness about noninfectious diseases and providing accessible health services to women and children in nee

10.  Ford Motor company: Their mission is to ‘build a better world, where everyone is free to move and pursue their dreams’. They have increased investment in electrification to $22Bn (from an original $11Bn) and aim for their vehicles to be carbon neutral by 2050.  

Committed to carbon neutrality, it’s the right thing for Ford's customers, the planet and Ford. Ninety-five percent of  carbon emissions today come from our vehicles, operations and suppliers, and they’re tackling all three areas with urgency and optimism.

Interestingly, the company is also focusing on pay equity. They are conducting a diversity, equity and inclusion audit while introducing a global salaried pay ratio (including gender) to level the playing field for all employees.

11.  Netflix and Spotify: From a social perspective, companies such as Netflix and Spotify offer benefits to support their employees and families.

Netflix offers 52 weeks of paid parental leave to the birth parent and non-birth parent (which includes adopted children). This can be taken at any time whether it is the first year of the child's life or another time that suits their needs. This compares to a median of 18 weeks at other major tech companies.

Spotify offers a similar program, although for a shorter duration of 24 weeks of paid leave. The company believes the launch of this initiative resulted in a spike in external job applications which has never abated. 

When it comes to social causes, Netflix and Spotify use their social media platforms to show support for movements such as Pride month, environmental sustainability, and Black Lives Matter. Netflix sets an example on how to target -and appeal to - niche and minority audiences through clever social media.

12.  Hennes & Mauritz AB is the full company‘s name of Swedish clothing company H&M. The founder of H&M, Mr. Erling Persson was opened the first store in Västerås, Sweden more than sixty years ago since 1947

     According to H&M sustainability report 2008, today H&M has expanded around 1,700 retail stores into 34 countries, in 4 regions which are Europe, North America, Asia and Middle East, and has 73,000 employees working worldwide, out of which 53,430 are full time employees.  H&M developed its Code of conduct to be a guarantee that everyone contributing to the success of H&M should earn a decent wage. If H&M found that any suppliers have underage workers, the contract will be cancelled.

Swedish biggest fashion retailer communicated with 800 suppliers and 2,700 production units in various countries via a Code of Conduct. Under conception that products must produce under good working conditions (H&M CSR report, 2008). This led to a big challenge for the company to make the public see that every supplier in the whole textile business to follow the same rules. According to H&M‘s website, the Code of Conduct has ‗guidelines‘ for suppliers through which it can be understood that H&M can only ask the members to volunteer but cannot force them to follow regulations, for example, in Bangladesh and Turkey, where they have big economic and social problems. The rate of unemployment is increasing in contrast to decreasing wages. H&M‘s Code of conduct is not enough to control wage systems and solve worker‘s right problem in developing countries. As Brynn, 2009 wrote “The Code of Conduct set forth by H&M does try to correct inhumane practices and give workers more rights, but they work with so many factories and I find it hard to believe that they are able to regulate all of them”.

H&M does not manufacture any clothing by itself but using suppliers do it instead. In fiscal 2008 H&M is working with 800 suppliers which stand for around 2,700 production units. ―We do not own or operate any factories producing our goods, but instead work with approximately 800 suppliers and around 2,700 production units in total, mainly in Asia and Europe (H&M sustainable report, 2008).‖ By using the best suppliers H&M can offer high fashion collections with good quality and unbeatable price to customers. Another word is the outsourcing business-model makes H&M able to keep low prices at the same time as it offer high fashion.