Corporate Social Responsibility (CSR), as a subject for commercial organisations to engage, in has been debated quite a bit over the last 10 years. The New York Times Magazine quoted Milton Friedman for saying “The business of business is business”, meaning that companies should focus on doing business so they can create growth and work places, and by doing that they will pay back to society, instead of being concerned about being socially responsible. This view point has however been challenged a lot, and today most companies across the world believe that  in order to maximise shareholder value, a good CSR profile is necessary.  

 

Fundamentally, CSR is all about companies acting in a socially responsible manner globally and towards society. For example, by taking human rights, social conditions, work environment, climate and environmental issues into account. CSR can be part of the company’s business strategy and if so it will usually be the goal to engage strategically in CSR activities which create more value for the company. CSR is today not only about the good cause, but also about doing business – at least for most companies. 

 

CSR is a collective name for all initiatives within a company in which the company takes all its stakeholder’s needs and desires into account – typically employees, owners, society and customers. These initiatives go beyond what the company is obliged to by law. Examples are:

- To demand from suppliers that they conform to human rights and rights of the employees.

- To co-operate with suppliers about improving social and environmental conditions.

- To work systematically to manage the environment and climate.

- To work to improve the conditions for the employees and to improve work place conditions.

- To develop new products that contain a social or environmental dimension.

Companies work more and more across borders and so CSR can get to be a complicated matter, because the national standards can differ significantly. 

 

Consumers are in general becoming more and more sophisticated and well-educated around the world, and so they have higher and higher demands for the companies that they are engaging with which is probably why companies have started talking about CSR as a business tool in the first place. Recent surveys have shown that about half of the consumers will tend to choose a product that supports a particular cause against similar products that do not. Furthermore, many consumers are even willing to pay a premium for products coming from socially responsible companies. This means that companies have an opportunity to differentiate themselves if they can communicate clearly on how they give back to their employees, communities and the environment. So in companies working with a CSR mindset, the brand manager has a powerful opportunity to integrate corporate responsibility commitments into brand platforms to win consumer loyalty. At the same time she/he also have an obligation to understand the company’s CSR politics and to integrate them well, because if she/he does not it can be very harmful to the brand and the business. One example of this is General Motor’s campaign at universities in the US to win over students. The topic of the campaign was “Reality sucks”, and the ad shows a young woman in a car smiling (or perhaps even smirking) at an embarrassed-looking cyclist who pulled up alongside her, with a text saying “Stop pedalling … and start driving”. The ad was promoting a college discount from General Motors. 

 

This ad caused an outrage amongst the cycling community, as well as student groups across The Web and other social media platforms. The criticisms especially focused on the ad’s message conflicting with GM’s environmental commitments and corporate responsibility statement, which ironically states: “… we will actively participate in educating the public about environmental conservation”. It seems that the brand manager who worked on the campaign had not been communicating with their Corporate Social Responsibility (CSR) department. One could even argue that this is a misunderstanding of the target group, but that is a different discussion.

 

General Motors, to their credit, spent a long time responding to all the outrage messages they received via Facebook and Twitter and have apologised, changed the campaign and dropped the ad.

 

This example – and there are more of them – shows well how damaging it can be to brand trust and customer loyalty if there is a discrepancy between the marketing message and the company’s CSR statement. 

 

It is vital that brand managers spend time understanding how the brand fits into the broader CSR commitments of the company. There is a powerful opportunity for the brand managers to collaborate with CSR colleagues in order to identify innovative ways of differentiating and telling a compelling brand story.

A large study shows that there are 4 main drivers for doing CSR: Cost Management, Public attitudes/building brand, recruitment and retention of staff and tax relief. Controlling costs is the main driver of corporate responsibility for business in the European Union and in Asia Pacific. This compares to public attitude/brand building which is the main driver for business in Latin America and North America. It is important to note that two thirds of businesses in mainland China also cite recruitment as a key driver towards more ethical business practices. Securing top talent is the key driver of business growth and competitiveness in China, and workers are increasingly being drawn to firms which demonstrate socially responsible practices. 

 

In China, one of the most common CSR activities conducted is actively promoting workforce health and well-being. In other countries, the main activities are donations to community, flexible work conditions and improving waste management, but not in China. 

 

A global study shows that businesses in the Philippines, Thailand, China, New Zealand and Australia have had significant CSR activities in the past year compared to their peers in India, Japan and Vietnam. Interestingly, China is the only BRIC economy in which businesses initiated high levels of socially responsible practices. 

 

So this almost sounds like China is ahead of the game? Well, not exactly. China has faced some negative publicity over the last years with news reports highlighting various incidents that demonstrate poor CSR practices in China. This has made the country’s government and industrial organisations attempt to make sea changes in corporate practices. Although there is a perception that these changes are being adopted at a snail’s pace, the fact is that a move to assume greater CSR is actively under way. But ahead of the game – no! 

Many companies in the Asia Pacific do not yet have a strong culture of reporting CSR activities, but more and more companies are now agreeing that the reporting of non-financial information should be integrated with financial reporting, which today is quite common in North America and the European Union. The lack of reporting can make it difficult to judge how much CSR activities a company is conducting.

 

Ironically, traditional, capitalist instruments and models that have existed in developed  countries may be the tools that help a country such as China address many of its societal concerns. Institutional pressures from many channels continue to make Chinese organisations more sincere about their CSR efforts. So the winds have started to pick up in China and organisations should be ready to sail in these waters and recognise that the winds are not subsiding, but may in fact require thoughtful harnessing. 

By Heidi Skovhus