3 Reasons Why Corporate Social Responsibility Matters

I recently returned to the office after the birth of my second child.  While I was away, the Occupy Wall Street movement began and I had the luxury of hearing a lot about it while I was at home.  It was during this same period that Republican presidential candidate Mitt Romney made the controversial statement during the Iowa straw poll that corporations are people.

While the news media and pundits may criticize the Occupy Wall Street movement for its relative lack of coordination and youthfulness, its message is an important one.  “The 99%,” as they call themselves, are, in part, asserting that corporations are not people, and that the quest for greed has marginalized and devalued human beings and the environment.  However, Romney’s position is not without merit: the Supreme Court has twice determined that corporations have some of the same rights that individuals do and that, because corporations are made up of employees, these entities do indeed have certain protections under the constitution.

So are corporations people or are they not?  Who is right, Romney or the 99%?

The question is moot.  What is truly important is that, if corporations are considered people, then how corporations behave as global citizens becomes paramount.  People have a responsibility to each other; our social and moral laws exist to keep anarchy at bay and to encourage the success of all.  Corporations can, and should, operate from a similar social and moral position, and one of the easiest and most comprehensive ways for them to do so is by adopting the practice of Corporate Social Responsibility, or CSR.  Companies that utilize CSR and CSR reporting are making changes and incorporating good global citizenship into their corporate profile while also experiencing increased profits as a result, a position that should ideally satisfy the 99%.  Major players in the CSR space include Walmart, Coca-Cola, Procter & Gamble, and other sizeable corporations who, through their social and environmental efforts, are making a difference in the way we do business.

And this difference is critical.  The other thing that occurred while I was away from the office was that our 7th billion person was born.  The majority of scientists now agree that humans are the most likely cause of global warming and in recent years increases in population have resulted in food shortages, increased population density and pollution, and fears that the Earth cannot sustain a human population of this size.

Corporate social responsibility does matter, now more than ever.  Here are some of the reasons why:

1. Ability to Leverage Change
One of the greatest benefits of corporations adopting CSR is that they have a far greater capacity to leverage change than an individual.  While each of us can make changes in our lives to promote our own financial, social, and environmental health, corporations can do so on a global scale.  Consider a behemoth like Walmart, for example, whose adoption of supply chain sustainability has led to industry wide shifts as their suppliers begin to adopt their own sustainable practices.

In the blink of an eye, a corporation can take advantage of new trends or technology and make a significant impact.  For instance, in 2008, concerns were raised about the safety of bisphenol-A, or BPA, a common chemical that is found in plastics, tin food cans, and other epoxy resins.  Within a few months of research released by the FDA and others, Sunoco, a producer of gasoline and chemicals, had decided to stop supplying the chemical to companies intending to use it in products sold to children.  Likewise, the six largest US manufacturers of baby bottles also agreed to eliminate BPA from their products.  As a result, an industry-wide change took place as consumers began to demand BPA free products.  Now, it is common to see children’s toys, water bottles, and other plastics bearing the “BPA free” sticker.

2. Wave of the Future
Increased social pressures have meant that more and more companies are moving toward CSR.  This is not a trend that shows any signs of slowing down; in fact, corporate sustainability reporting has increased significantly in past years.

Historically, companies that have been late adopters of market change have found themselves lagging behind and in a position of lost market share.  By adopting CSR, companies can take advantage of the green economy wave:

• Potentially attracting new customers
• Limiting decisions that could have a poor environmental and social impact
• Reducing repercussions for a company’s brand or reputation

3. Appeal to Investors & Customers
CSR is also gaining momentum among stakeholders.  One of the primary reasons companies may choose to begin a CSR program is to attract new investors, many of whom are looking for companies who have a more attractive social and environmental position (http://www.csreurope.org/press_releases.php?action=show_press_release&press_id=8).  Customers are also becoming increasingly savvy about CSR issues and the adoption of CSR practices may mean the difference between a leading and a lagging market share.  Consumers with an interest in social and environmental issues make up approximately 30% of the consumer market, an estimated 41 million Americans, or a $290B (and growing) marketplace.

At Renewable Choice, we work with you to help measure, manage, and improve your CSR.  Talk with one of our business development consultants today to see how we can assist you in developing and reporting your CSR program.

Be sure to check in again to read the second part to this blog where I will discuss three more important reasons why CSR matters

Amy Haddon is Director of Business Operations for Renewable Choice.