What Corporate Social Responsibility Looks Like in 2020
Company culture has taken on new significance as protests roil cities across the world and the toll of COVID-19 ravages local economies. Long a signal of a company's values and priorities, corporate social responsibility initiatives, or CSR, have added importance in light of current events. The actions businesses take today will have a lasting impact on how communities, customers and employees view the business.
CSR Is Integral to Modern Business
CSR is not a new thing. Its roots go back to the 1950s and 60s as a way to determine the impact companies have on society. Since then, it has progressed as a way of voluntarily encouraging social responsibility by big business. In 2010, the ISO, an independent, nongovernmental organization established to develop a system of industry standards, created ISO 26000 with CSR in mind.
The ISO 26000 standard was designed to clarify the meaning of social responsibility and help businesses and organizations translate their principles into actionable insights. Unlike other ISO standards, ISO 26000 provided guidance, not requirements, and adherence to it cannot be certified. Regardless, businesses in a wide range of industries use ISO 26000 to develop their own CSR policies. Toby Usnik, managing partner at Philanthropic Impact and author of The Caring Economy, recommended business leaders choose from existing tools such as ISO 26000 to measure what is meaningful rather than invent their own systems.
"Many great leaders including digital billionaire Mike Bloomberg have said that if you cannot measure something, you cannot manage it," Usnik said. "Thankfully there are great measurement standards including ISO 26000, GRI and SASB."
Until January 2020, the focus of CSR had typically been global warming, climate action, sustainability, adherence to diversity and inclusion principles and efforts aimed at building a kind and empathetic corporate image. According to a 2019 report from GlobalWebIndex, 68% of online consumers in the United States and the United Kingdom would consider not using a brand because of poor or misleading corporate social responsibility and close to 50% were willing to pay a premium for brands with a socially conscious image.
As it has become more known CSR has been accepted as an integral part of running a successful business, Usnik said. Employees, customers and shareholders expect more from brands than a simple transaction and increasingly consider environmental, social and governance factors, or ESG for short. "ESG-oriented investments are now the fastest growing area in financial markets," Usnik said. "We know that when $7 trillion asset manager Blackrock’s CEO tells his stakeholders that they are expected to embrace ESG reporting — that purpose and profit are inextricably linked — that CSR is no longer a fringe part of business or window dressing."
Rethinking CSR for a Global Crisis
The global COVID-19 crisis changed the playing field. CSR shifted focus from sustainability and climate action to how companies treated employees during the crisis and extended a helping hand to the community.
The death of George Floyd, an unarmed African American man, in May 2020 at the hands of a police officer in Minneapolis, Minn., sparked protests around the United States and the world. Many corporations issued statements and stood in solidarity with the Black Lives Matter movement and the fight against racism. Usnik said these recent events can be seen as alarm bells for the business world, pushing leaders to engage stakeholders on societal issues and get on the right side of history.
"CSR serves as a playbook for businesses to do just that, so these recent tragedies elevate the importance of CSR and of businesses stepping up to make a difference while making a profit," he said.
When businesses make decisions aligned with their morals and principles, especially in the face of adversity, it shows their character and values are authentic. Customers will be more likely to do business with a company that has a clear purpose. Employees who identify with the ideals and goals of their company will be more likely to remain with that company. And communities will stand with companies that helped keep them afloat during times of trouble.
But a note of caution is warranted. Alex Edmans, author of "Grow the Pie: How Great Companies Deliver Both Purpose and Profit," said business leaders should remain focused on their core values and competencies. "Purpose is as much about knowing what not to do as what to do," he said. "Companies have limited time and resources and there are trade-offs. A discerning leader understands these trade-offs and recognizes she can't do everything. Instead, she puts her energies into where she can make the most difference."
Any business can issue a statement but if core business practices are not beneficial for society CSR is not going to do much good. "Even a tobacco company could make a statement about police brutality and give charitable donations," Edmans said. "Responsible business is about the core business — is the core way that you make money one that serves society?”
Deciding What to Include in CSR
Since CSR is about being held accountable by stockholders, customers and employees, a business must decide what their CSR will cover and how it affects society as well as the bottom line. While the focus may change, the fundamental principles used for many years to develop effective CSR initiatives haven't changed as the events of 2020 unfolded.
The first thing to recognize CSR should be built around core business competencies, Edmans said. One example is Coca-Cola's Project Last Mile, which taps into the company's global distribution expertise to get medicine to isolated rural households and hospitals in Africa. "While other consumer-facing companies have logistics know-how, Coca-Cola is particularly strong in refrigerated transportation since it sells drinks, and this expertise is critical for vaccines as they must be kept cool," Edmans said.
If a business' customer base is avid consumers of beef then supporting vegetarianism doesn't make sense. But supporting an organization that focuses on the humane treatment of farm animals does. Companies should recognize and focus on issues important to stakeholders, customers, clients and employees. "Start by asking your stakeholders what is meaningful or material and begin to measure and report on that," Usnik said. "And then build from that as you garner results and shareholder feedback."
From an employee perspective, culture matters. Most employees want to feel pride in their company and the work they do. Employees who work for a socially conscious company are more apt to be loyal to that company, advocate for the business and stay longer. They will be more engaged, more productive and have a greater feeling of fulfillment. "We all know in our guts if we are truly being cared for by a brand, as its employees, customers and/or shareholders," Usnik said.
The Impact of CSR in Communities and the World
CSR is a composite of actionable values and principles that guide the way a company does business. It may include business practices such as diversity and inclusion, volunteerism, maternity and paternity leave, and philanthropic funding for local, regional or national nonprofit organizations.
Usnik said the events of 2020 provide an opportunity for philanthropic funding and companies from Apple to Nike to Goldman Sachs have responded with financial aid and in-kind support. But those efforts don't go far enough. "Businesses will need to go deeper into rethinking their models and purposes to effect the change that we need now," Usnik said.
Developing events give the public a chance to see which companies actually walk the walk. Take for example how social media companies handled posts from President Trump about the protests following George Floyd's death. Twitter labeled some of the president's tweets as questionable and Facebook declined to take action on grounds that it was a matter of free speech.
Some Facebook employees responded with outrage, staging a virtual walk out in protest. Others resigned. Outside groups lodged complaints. "Civil rights leaders that met with Zuckerberg and COO Sheryl Sandberg during the week of protest claimed that it was 'totally confounding' that the company was not taking a tougher stand on Trump’s provocative posts," Usnik said.
It's not just employees and activists who take notice. Consumers are becoming more conscious of the fact that using the products or services of a corporation supports the CSR of that business. Actions such as those of Facebook are not likely to be forgotten even after things settle down. "I encourage all business leaders to declare where they are on the spectrum of caring for their stakeholders and then commit to moving further along the spectrum to a more responsible and healthier brand," Usnik said.
Usnik pointed to Grindr as an example of a brand making a commitment during a time of crisis. The LGBTQ dating app removed its ethnicity and race filters and released a statement: "We will continue to fight racism on Grindr, both through dialogue with our community and a zero-tolerance policy for racism and hate speech on our platform." The company went on to make donations to the Marsha P. Johnson Institute and Black Lives Matter, urging others to do the same.
Grindr did what a responsible company should do when an event or crisis occurs, Usnik said. It reviewed and revised its business model accordingly.
Having CSR in place is not only practical for business reasons. It helps a business play a positive, vital role in the lives of employees, customers and community. "I encourage all business leaders and aspiring leaders to take the time to consider their brand’s DNA and purpose," Usnik said. "Then link those to a higher societal purpose, such as social justice or climate change or empowering women and girls, and you will be the better for it — as will your bottom line."