Corporate social responsibility - a business case

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Nike had to make a radical change in its way of doing business when found guilty of using child-labour in their supply chain. However having made several changes, Nike truly believes embracing CSR is a really competitive advantage with many future new market opportunities.

Similarly, Uniliver with its Sustainable Living Plan, ensures that selling a simple product such as soap helps saving lives. They have the largest hand washing programme in the world, thus helping spread higher hygienic norms and improve societal living standards. Project-Shakti is another of Uniliver’s projects that offers microloans to women in India; this is turns helps women increase their household and helps spreading access to hygiene. In 2012, they made $100 million in sales. These sustainable programmes and collaborations help Uniliver tap into local talents, that help them increase innovation and improve profits.

DuPont, a world leader in market-driven innovation and science, has cut costs by $2 billion in 10 years by using energy efficient equipment.

Coca-Cola also had to respond to criticisms of depriving people from water in India. Since their brand is everything they responded with amazing projects, among others community development programmes helping people fight AIDS in Zambia. I think is it important to note how powerful Coca-Cola is; They can be found everywhere even in the most remote and poor places worldwide. If NGOs cannot successfully access these areas, then Coca-Cola should arguably use its powerful marketing and notoriety to bring positive change and raise awareness of different social issues.

A last example of incorporation of CSR as a core to their business is IKEA with its IKEA Way, where they take full responsibility for their supply-chain and prevent child-labour or any other abuse. Moreover one of their many projects is collaborating with UNICEF; Save The Children. The big Swedish brand also features a programme that helps empower women. IKEA went “all in” proving us that sustainability does not have to be a compromise anymore. IKEA is able to produce beautiful, sustainable, cheap products while having a positive impact on the world and never-ending profits. They are now aiming for a zero-waste and a circular-economy. By 2020, with renewable energy such as solar panels IKEA will be producing more energy than what they will consume!

Arguments against the business case for CSR

There is a case against the fact that businesses should care about more than going about their business. CSR is an expensive, hard and long change to one’s company and older members might not understand why they have anything to do with it. As Adam Smith puts it “it’s only when business firms focus on their own best-interest that ultimately the best interests of society are served”. In addition to this view, Friedman- opponent of CSR, or Karnani for instance believe that focusing on CSR prevents the firm on focusing on their core business; profit maximising.

They both question the motivations and integrity underlying CSR, arguing that firms are profit-maximizers rather than committed to social responsibility and that CSR real motive is PR and hence should not be used as “a cloak”. Ironically Starbucks’ new campaign “RaceTogether” has drawn intense criticism pointing out that 16 of the coffee giant company’s 19 executives are white. This has questioned the motivations of the campaign; raise awareness or solely increase the brand’s cultural relevance?

Greenwashing has often been criticised too: Actions speak louder than words! Logically, if the public realises that firms are engaging in unauthentic CSR this can have the opposite effect on their brand and lead to a great deal of adverse publicity. Why would Annita Roddick sell The Body Shop to L’Oréal the largest cosmetics company? This raises scepticism.

A few arguments and critiques of CSR should not be overlooked.

Firstly the traditional view does not support the business case because it is seen as stealing from shareholders and it also assumes a trade-off between social and economic endeavour. Some might not support the business case because they find evidence for CSR benefits really weak or simply refuse to believe the data.

Denial is indeed a common reaction for issues that are simply too big. Others simply think it is too late to do something anyway, that the results are not fast enough or too small and that CSR footprint reduction is rather ridiculous.

Authors have asked themselves how with lower barriers to entry, and hence increasing fierce competition, firms can engage in expensive changes without cutting corners? If CSR is an expensive investment, how can penny-tight firms possibly engage in it?

Another issue that has been pointed out is that since there is not an agreed definition of what CSR is or isn’t it is up to manager’s discretion; It is what every firms want it to be (Vogel, 2009). Due to its very political and multidimensional aspect firms might be acting good in some ways and very badly in others. If there are no policies or code of conducts regarding CSR managers are biased in their standards and might abuse of their discretion (Bauer, 2014).

How far should firms go in caring; where is the line?

This of course involves a high part of risks, since firms do no necessarily know which issues to focus on, as backlashes are bound to arise if tackled issues are unpopular. Firms can move from hero-to-zero extremely quickly. How do you explain that Starbucks on their site praise themselves for selling “good coffee karma” and “making you part of something bigger” when in parallel they have been avoiding paying taxes in the UK for years? Or American Apparel’s founder has had several complaints for sexual harassments with his own models, their latest ad recently got banned for “sexualisation of children” yet they have outstanding labour ethics – 100% made in California.

Consumers and employees say they care for who they work and what they buy but how many actually do? I think the theory always looks better than the practice. At the end of the day consumers do not have time and energy to spend on the search for information, so inevitably purchase the cheapest and most convenient product. Only a few marginal workers actually stick to their values in the work place. We live after all in a capitalist-society where everyone is very self-centred.

A big danger with CSR is that the public may think that there is less to worry about, that big firms can handle it all. This is obviously not true since