Hi folks, Alex here. Most corporations are in the business of making money. But there
are many ways in which they can take responsibility for their socio-environmental impacts and
there is much to gain by doing so… This is often called Corporate social responsibility.
In this video we are going to talk about what we mean by CSR, why good corporate citizen
make a lot more profit and we’ll look at examples like IKEA, Starbucks and Patagonia
to see if we can figure out who is real and who is faking it. Ok, Let’s get drawing!
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This is why companies have to take corporate social responsibility seriously. This is a
representation of all the major socio-environmental scandals IKEA was involved in worldwide between
1981 and 2006. These were about waste, dangerous chemical use, child labour, poor working conditions
in factories, wood procurement, etc. And this is not because IKEA is worse than the others,
if anything, it is probably one of the more decent corporate citizens out there, but any
major corporation is under a lot of scrutiny. Add to that the fact that 40% of consumers
seek purposeful brands and trust in brands to act in the best interest of society, 70%
of millennials listed their company’s commitment to the community as an influence on their
decision to work there and 50% of millennials say they would take a pay cut to find work
that matches their values. CSR matters!
Originally, corporate social responsibility was a self-regulated way for businesses to
include philanthropic and charitable contributions in their organizational policies. With the
emergence of environmental issues such as climate change, toxic substances, plastic
pollution, etc., NGOs appeared, as well as industry-wide, national and international
regulations and social pressure became greater forcing corporations to address and report
on the way they were running their business.
Nowadays, when businesses report on their CSR, it usually includes their business ethics,
how much money they donate to charitable organizations, compliance with regulations, norms, standards
and labels, working conditions, how their business affects local communities where they
work, the environment, their supply chain and their carbon footprint.
In other words, Corporate social responsibility is about capturing opportunities and avoiding
risks. According to Bob Willard’s research, any company that embeds corporate social responsibility
within its DNA can increase its profit dramatically: by 51% for small and medium businesses to
81% for a large corporation. Mostly through these 7 benefits:
Increased revenue and market share due to better products and more customers
reduced energy and waste expenses reduced materials expenses from dematerialization
and substitution (see my video on circular economy for more details on this)
increased productivity and reduced turn-over because people like working for a company
that does good in the world and reduced risks on talent management, brand
image, compliance to regulations, customer demand, etc.
(there is a link in the description below if you want to find our more about that)
Essentially, corporate social responsibility is now another word for corporate sustainability
and it is just smart business.
Let’s looks at a couple of examples of what companies do. When searching online for companies
reputable for their CSR, I ran into Starbucks many times so let’s have a quick look at
what they are doing. On the social front, they claim that their coffee is 98.6% ethically
sourced (meaning fair trade, there is no mention of organic), that they trained 200,000 farmers
and invested in farmer loans and emergency relief funds. Now, Starbucks has to do this
because the business of coffee growing is at risk altogether due to farmers worldwide
not having the financial means to adapt to climate change and the fluctuating price of
coffee. In 2019 before the pandemic, 2.8% of the drinks were served in reusable cups.
As an order of magnitude, this left more than 3 billion disposable cups going to the landfill.
And the disposable cups are made of 10% post-consumer fibre. I personally don’t call that “leading
in sustainability.” In a trash audit performed by Greenpeace in 2019, Starbucks also ranked
as the 3rd most polluting company in Canada, where I live.
Another name that comes up often in the world of CSR is Patagonia but in contrast, they
acknowledge at the top of their sustainability web page that “everything they make has
an impact on the planet.” On the environmental side, 64% of their materials are made from
recycled fibres and since 1996 100% of the cotton they grow for their clothes is grown
organically. On the social side, 82% of their line is Fair trade certified sewn impacting
more than 72,000 workers. They are also part of 1% for the planet providing support to
environmental non-profit organizations around the world. More importantly, Patagonia produces
videos engaging their customers to buy less and demand more
from their clothes.
But how do you figure out who is genuine and who is faking it? Well, to be honest you have
to educate yourself and use your own judgement to read between the lines of companies’
slick marketing. For me, a good rule of thumb is to make sure that I look at both 1) how
companies make their profit (for example what are the direct and indirect environmental
impacts of their products and services, my video on the sustainability analysis of iPhone
can help for example and how do they treat their people and suppliers in the process);
2) And secondly how they spend their profit (do they invest in their people, in sustainable
innovation or are they making their shareholders richer?) As fellow Youtuber “Our changing
climate” explained in a recent video, the money donated to charities can be misleading
and doesn’t tend to address the root causes of our sustainability challenges. Finally,
tools and frameworks like the ones I presented in previous videos can also be helpful to
make up your own mind in a rigorous way.
There is also a private certification of "social and environmental performance" of for-profit
companies called B-Corp. Companies get the certification by receiving a minimum score
on the assessment and by integrating B Corp commitments into their governing documents.
This will probably be the topic of another video.
The good news is, the companies that genuinely put their business at the service of the people
and the planet get the good-will of the market place and end up doing well by doing good.
As Interface’s late CEO put it, “there no amount of slick advertising, at any cost,
that we could have done that would have created the good will that this effort has created.”
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