What Is Corporate Social Responsibility?

Alfie Treleven loves wearing his TOMS. He owns several pairs of the trendy loafers. And though the shoes are stylish, he’s also a fan for another reason: For every pair purchased, TOMS donates a pair — 60 million and counting — to children in need in developing countries.

“That’s a really good idea. I’ve really embraced that in buying TOMS,” said the president of Sprague Pest Solutions in Tacoma, Wash.

TOMS isn’t the only company with a strong social mission. Bombas socks and Warby Parker eyeglasses donate pair-for-pair. D.light provides affordable solar light and power to those without access to reliable electricity, so far improving the lives of 77 million people in 62 countries.

In fact, making a profit and helping solve social or environmental issues is gaining ground with companies, big and small. Why? Several reasons: First, when done right, corporate social responsibility (CSR) pays off. According to the authors of the book “Firms of Endearment” (Pearson FT Press, 2nd edition, 2014), public companies like Amazon, Costco, Starbucks and Southwest Airlines, which are “fueled by passion and purpose, not cash,” have outperformed the S&P 500 by 14 times.

Second, a higher purpose helps attract and retain employees, namely millennials, the largest working demographic in the U.S. It’s a great “side benefit” to making a difference in the community and really has a positive impact on company culture, said Carl Braun, owner of Quality Pest Control in Omaha, Neb.

Data confirms this: Millennial workers who have opportunities to contribute to charities and causes at multinational corporations “show a greater level of loyalty, have a more positive opinion of business behavior, and are less pessimistic about the general social situation,” reported The Deloitte Millennial Survey 2017.

Finally, customers increasingly want to do business with socially responsible companies. Thanks to science and social media, consumers today are very aware of how products, services and business practices impact society and the environment. As such, they prefer to buy from firms with the same sensibilities. According to the 2017 Cone Communications Corporate Social Responsibility (CSR) Study, 87 percent of American said they will purchase a product or service because a company advocated for an issue they cared about.

Millennials are the most likely to seek out responsible products when possible compared to Americans overall (85 vs. 79 percent), found the Cone Communications study. Even more: 80 percent of millennials believe business should take actions to improve issues, even ones that may not be relevant to everyday business operations.

That might include issues like helping the homeless, which is the very reason Green Frog Pest Control was founded two years ago in Vancouver, British Columbia. Green Frog donates 60 percent of net profits to the Simpson Society, which provides training, employment and independent living support to persons at risk of homelessness in Vancouver’s Downtown Eastside neighborhood. It also hires people hindered by poverty, disability and other barriers to employment, providing the training, support and encouragement they need to become certified applicators.

The company was started after CEO Dylan Goggs suffered a serious health scare. He realized that a good many people who face health injuries and mental trauma don’t have safety nets and can end up homeless as a result. “I started to think about ways that we could actually help this marginalized community,” recalled Goggs, who was reluctant to rely on government or grants. Instead he chose to compete in the marketplace and “be dependent upon our professionalism and our success in delivering services” to fund the cause.

MANY WAYS. Green Frog Pest Control was founded as a community contribution company, a business classification in British Columbia that bridges the gap between for-profit and non-profit entities. Other companies, like Method, King Arthur Flour, Patagonia and Solberg Manufacturing in the U.S., are structured as benefit corporations, which have legally defined goals of making a positive impact on society, workers, the community or environment in addition to making profit. (B corp classification is available in other countries too.)

But you don’t have to re-structure the organization to get on-board with corporate social responsibility. A growing number of companies, for instance, practice “conscious capitalism” (consciouscapitalism.org), a reform movement advanced by the founders of Whole Foods, Panera Bread and The Container Store to elevate humanity through business. While free-market capitalism is “the most powerful system for social cooperation and human progress ever conceived,” it can do even more to make a positive impact on the world, states the non-profit organization on its website.

Conscious companies embrace four tenets, explained spokesperson Dan Dement. They have a higher purpose that involves more than making money. They seek shared prosperity for all stakeholders (customers, employees, partners, vendors, investors, communities). They have leaders who seek solutions that benefit these stakeholders, and a culture based upon trust, accountability, transparency, integrity, loyalty, fairness, personal growth and love.

PRACTICAL IMPROVEMENTS. This doctrine works for Clarke, a global public-health company in St. Charles, Ill., that provides mosquito control and aquatic habitat management. Clarke is a sustaining member of Conscious Capitalism and CEO J. Lyell Clarke III regularly speaks at the group’s summits. “We recognize that every action we take, big or small, can directly impact the environment and significantly affect future generations,” Clarke states on the company website. In 2009 he shifted the firm’s business model, prioritizing environmental sustainability, innovation and community.

As such, Clarke employees actively initiate projects designed to make communities around the world more liveable, safe and comfortable.

In 2016 these projects had a big impact, according to Clarke’s most recent sustainability report. The company developed an innovative rapid response protocol to help partners in Florida stop local Zika transmission. It advanced development of its green Next Gen chemistries, returned 17,000 kilowatt hours to the local power grid via its solar arrays, and re-purposed or recycled nearly 80 percent of waste company wide. In addition, employees contributed 1,400-plus volunteer hours during its annual Day of Caring and the company donated 1 percent of annual revenue from Next Gen products to seven environmental groups, among other milestones.

Clarke’s sustainability goals for 2020 raise the bar higher with targets to achieve carbon neutrality and zero waste, generate 30 percent of revenue from Next Gen products and services, and have 100 percent of employees engaging in volunteer activities.

While practicing conscious capitalism is deliberate at Clarke, other companies unconsciously do so, like Cooper Pest Solutions in Lawrenceville, N.J. With a mission to “WOW our community,” the company has raised money and awareness for the National Multiple Sclerosis Foundation for 25 years. Employees participate in the MS bike ride and volunteer at rest stops along the route where the company also provides yellow jacket trapping (a $12,000 a year in-kind donation involving 400 traps). Cooper Pest Solutions donates 200 services each year to charities for silent auctions and supports numerous other employee causes as well. “We do it because it’s the right thing to do,” said CEO Phil Cooper. “We don’t measure it back to return on investment; we don’t do cause marketing at Cooper.”

Cause marketing is when a company teams up with a charity for mutual benefit, usually as a limited-time campaign to raise funds and awareness for a cause as well as to drive product sales. When done well it can make a positive impact, such as when Starbucks donates five cents ($14 million and counting) from the sale of each beverage on World Aids Day to Project (RED) to fund HIV/AIDS prevention, education and treatment.

But it gets a bad rap when consumers feel it exploits a cause for publicity or financial gain. If you align with an environmental cause, for example, but don’t walk the talk, you may (rightfully) be accused of greenwashing.

MAKE SURE YOU MEAN IT. It all comes down to authenticity. Corporate social responsibility “has to be sincere or people will read right through it,” said Cooper. In fact, 76 percent of millennials and 65 percent of Americans overall said they will research a firm’s stand on a social or business issue to determine if it is authentic, reported the 2017 Cone Communications CSR Study. Fifty-one percent of millennials and 39 percent of Americans reported they have researched a company’s business practices.

And while many pest management companies have long histories of raising money for cancer research, supporting the environment, providing free bed bug treatments for the local homeless shelter, and the like, not many are strategic about it.

“Just like you have a business plan you should have a social responsibility plan” in order to maximize what your company has to offer so you can deliver the most good, advised Cooper.

What cause do you want to support? Where can you make the biggest impact? Do you want to donate money (the easiest), provide in-kind donations, encourage employees to volunteer?

“Beyond the money, we actually want our people donating their time,” said Cooper, who believes volunteer time eventually may get characterized like paid time off or vacation. It already influences the hiring process at Cooper Pest Solutions: The company looks for a specific value set in employees; “if they don’t want to give back, then they’re just not the right fit in our organization to begin with,” he said.

Likewise, how will you communicate and measure your CSR? You can’t assume customers and community know about these efforts and their impact, so share in e-newsletters, blogs, annual sustainability reports and on websites and social media.

More than half of millennials (54 percent) and 45 percent of Americans overall have told family and friends about companies’ CSR efforts via social media in the last year, reported the 2017 Cone Communications CSR Study. And 21 percent of consumers would choose brands if sustainability credentials were clearer on product packaging and in marketing, according to May 2017 study by Unilever.

To help companies transition to the new mindset, Conscious Capitalism (also a book of the same name) offers support at chapters across the U.S. and elsewhere and also is publishing a how-to manual, “A Field Guide to Conscious Capitalism,” in April 2018.

FAD OR FUTURE? Could this be the end of capitalism as we know it? “It’s already happened. It’s shifted,” said Treleven, who is exploring ways to more fully integrate a social mission at Sprague even though it already donates hundreds of thousands of dollars to various causes in the markets it serves.

Not everyone believes do-good capitalism is a lock, though. Jeffrey Miron, a senior lecturer at Harvard University and director of economic studies at the Cato Institute, said companies are entitled to embrace social entrepreneurialism but believes it is a marketing effort to gain recognition and appeal to younger workers. Business leaders “should realize the current pressures are for them to do stuff like that,” he said. As for the future of capitalism, “alleged changes in attitude sort of come and go every 10 or 15 years in reaction to a previous generation” but “the reality of how people behave (as consumers) really doesn’t change all that much,” he said.

Still, some business leaders believe companies will continue to step up given decreasing environmental regulation and diminished government support of nonprofits. A great opportunity exists, especially as millennials “want to make a difference and they want their company to be making a difference,” said Cooper. Firms that are multi-generational-friendly and can wrap this around civic/environmental responsibility are “going to be winners,” he said.

Dement expects conscious capitalism to eventually become capitalism. “There no longer will be a difference between the two;” consumers will vote with their dollars and “businesses will be forced to make that change,” he said.

The author is a frequent contributor to PCT.