Posted by: itm2011 | May 16, 2011

If Bono Can Find Time To Be Socially Responsible, Then What’s Your Excuse?


Emily Sabo

Do you believe you have a responsibility to look out for your fellow man? Do you give some change to the homeless guy in the subway station or pick up the trash that somebody just casually tossed on the ground? Your answers to these questions depend  on not only what kind of person you are, but also what kind of society and culture you’re immersed in. Some societies are deeply rooted in collectivism while others more individualistic. The same can be said about companies. In this day and age, companies lean more toward a collectivism attitude as they are being pressured by society to establish a strong corporate social responsibility (CSR) plan. This plan needs to benefit both the company and society as these two entities should work together and complement each other. Forming the “right” plan is not always easy. The company needs to be aware of their influence on society and society’s influence on them in order to be successful in their CSR plans.

Why is CSR Beneficial?

Supporters of CSR believe it is beneficial for four reasons.

  • Moral Obligation

Moral obligation can be easily explained by two points- do the right thing and abide by the law. Lessons our mothers taught us as kids are still relevant to us as adults in a business setting. In my opinion, every person and business needs to have a strong foundation in moral obligation. Think of all the situations that could have been avoided in history if only the people had followed the law.

  • Sustainability

Sustainability seems to be the big buzz word of today. As more and more people become aware of the impact we are having on Mother Earth, reduce, reuse, and recycle has taken on greater meaning. Major corporations need to take steps to offset their carbon emissions and start taking advantage of solar and wind power.

For example, McDonald’s has reduced its solid waste by 30% by changing what they wrap their food in. They are saving money and helping the environment simultaneously.

  • License to Operate

License to operation means that in order for a company to do business, it must have permission from the government, society, and/or stockholders, and must cooperate with their demands. If a company gives back to society, its business and all its partners will thrive.

  • Reputation

CSR will improve a company’s reputation. In my mind, nothing bad can come out of being socially responsible. Consumers will take notice and reward a company by being loyal customers. Brand image greatly dictates a company’s success. For example, G.E. has enacted a program where they donate money to struggling schools close to their facilities. The graduation rate has doubled in some of the schools. The G.E. employees feel good about helping kids in need while the schools and students receive much deserved donations and mentorships. The people in that community will turn around and support G.E. through sales just as G.E. had helped them.

How to Choose the Right Issues

When a company is first forming their plan, they must open their eyes and find the right social issues to focus on. The right social issues are issues that intersect with the business or industry. A good place to start is with inside-out linkages. These are the aspects of the community that a company affects through its daily operations. For example, if the company produces a lot of chemical waste, they need to research how the disposal of those chemicals affects the neighboring communities and environment. On the other hand, outside-in linkages are issues in society that affect corporations. When choosing what issues to focus on, a company should think about whether they will be creating a shared value. Will both society and the company benefit? It may be a great cause, but is it the best one for your company to put time and money into?

Avoiding Failure

Many company’s CSR plans have not lived up to its full potential. The initial steps have been taken, but then it seems to stop short. Two problems have caused this. First, companies “pit business against society.” What the company doesn’t realize is that these two are “interdependent” on each other. The whole point of being socially responsible is to have a “help me, help you” relationship with society. Second, a company’s CSR plan typically isn’t tailored specially to that company. Generic plans aren’t the answer in this situation. It must be geared toward each individual company’s strategy in order to be successful. To me that seems like an obvious point. Why haven’t companies always customized their strategies? Too lazy? Through customization, a company can separate itself from its competition. It will be helping not only the business, but also society.

Sometimes it takes a scandal for a company to get its act together. For example, in the 1990s Nike was in the spotlight after the New York Times broke a story on abusive labor practices at some of Nike’s Indonesian suppliers. Placing the blame on large internationally recognized corporations helps bring light to an illegal or frowned upon practice even if the company isn’t directly related.

Forming Strategy

After choosing the issues a company wants to focus on, they must form a social agenda. The social agenda is comprised of actions and programs that offer the business economic benefit as well as social benefit. The agenda can include generic social issues that only affect society, value chain social impacts which are directly impacted by the business’s day-to-day, and social dimensions of competitive context which are factors affecting competitiveness.

A company’s CSR plan can easily get lost in their day-to-day operations. By integrating business and society, a corporation can really focus on the social issues that directly affect them as well as the issues the corporation is causing in society that need to be fixed. A “healthy” society leads to a successful company and vice versa. This idea is base on the principle of shared value which means that choices must benefit both business and society.

Strategic CSR is all about forming a strategy that will set a company apart from its competitors as well as lower costs. By targeting a small number of issues, the company will reap greater benefits. Inside-out and outside-in linkages work together in this kind of CSR. Nestle is an example of a company that combined these two elements. In the 1960s, Nestle wanted to introduce their milk business into India’s Mongo district. People in that area were very poor, and living conditions were grim. The local cows were producing poor-quality milk, and refrigeration was scarce. Nestle wanted a thriving business there, so they stepped in and created shared value between the region and themselves. Nestle built refrigeration centers and sent experts to teach the people how to care for their cows as well as irrigate the land properly. Only 180 farmers were involved back in the 1960’s, and today more than 75,000 supply quality milk. Both the company and the region are reaping the benefits. This process has been repeated in other corners of the world including Brazil and Thailand.

One company that has focused their entire business strategy on being socially responsible is Whole Foods Market. Whole Foods Market is a grocery store committed to only selling healthy products that are both organic and natural. Their customers care about the environment and what they put into their bodies. They are the only Fortune 500 company to offset their electricity consumption entirely.

CSR requires change and dedication in a company. Its whole mindset needs to shift from me to we. By developing a plan and sticking to it for the long run, a company and its community will see positive change and new opportunities and relationships arise.

Successful Apparel & Accessory Companies

As stated above, both Nestle and Whole Foods have been successful in their CSR plans. These companies understand the fact that quick fixes are not the way to go. To ensure commitment to being socially responsible, some companies have even been built their foundations on being socially responsible including Ben & Jerry’s, Newman’s Own, and Patagonia.


There are also several notable fashion and accessory companies who have been founded on sustainability and philanthropy principles. TOMS shoes was founded in 2006 by Blake Mycoskie. After seeing the conditions Argentinian children lived in, he wanted to help make a difference in their lives. TOMS shoes mission is One to One. For every pair of TOMS shoes purchased, a pair is given to a child in need. Since 2006, they have given away over one million pairs of shoes. The shoes will protect the children from disease, helping them have a long and healthy future. The canvas shoes are based on the alpargata commonly worn by Argentinian farmers. I have several pairs on TOMS and can honestly say that they are extremely comfortable, and now with the huge following, they are considered fashionable. It also makes you feel good that you can help a child in need just by buying a pair of shoes.

(RED), which also launched in 2006, is a company devoted to helping people with AIDS and HIV receive treatment. Well-known companies including Gap, Starbucks, and NIke have teamed up with (RED) to offer (PRODUCT)RED. When a customer purchases the products, up to 50% of the profits go to the Global Fund. Since 2006, the Global Fund has used $170 million to touch the lives of 7.5 million people fighting HIV and AIDS. The Global Fund is not only making a difference in the lives of the infected people, but also in the life of the society. With treatment, these people can continue to care for their families and jobs and live a quality life.

The apparel company, Edun, aims to stimulate economic   growth and trade in Africa. The majority of the product is produced in African factories. The workers are taught how an apparel factory operates in hopes that they will use their new skills to strengthen trade and the African economy. Edun was founded in 2005 by Bono and his wife Ali Hewson. The celebrity connection has caused the fashion world to take notice, and now their apparel is being sold athigh-end retailers including Saks and Barneys. The price range is higher than that of TOMS shoes and (RED), so Edun reaches an untapped wealthier market.

Conclusion

Corporate Social Responsibility requires commitment from the entire company. It is not always easy to transition into being more socially responsible, and a company may experience a few set backs along the way. Once they have a strong plan in place that works for them and society, a company will start to see change. By studying the plans of successful companies such as TOMS shoes and Whole Foods, executives will see the vast opportunities and benefits that can arise out of having a healthy relationship with society.

Relevancy

This article has a direct connection to my major, International Trade and Marketing. ITM is focused on teaching students the role of companies in an international setting and how these companies exchange good over borders. Since companies with an international clientele are involved with many more people around the world, they have more outlets to be socially responsible. As students, we need to learn the steps it takes to make a company socially responsible as well as successful. Though we focus on international companies in class, the principles discussed in the article are applicable to both international and domestic business. Even if the issue isn’t present domestically, it can still influence positive change in the homeland. Overall, I feel that the article is very relevant in this day and age. Everybody is worried about the negative impact we are having on the planet. But what about the negative impact we are having on society? Today’s businesses are changing their ways and now not only care about their own quality of life, but also the quality of life of people around the world.

Sources

“Bono’s Edun Brand Promotes Conscious Consumerism.” Make Luxury Count. 26 May 2009. 12 May 2011. <http://makeluxurycount.com/2009/05/26/bonos-edun-brand-  promotes-conscious-consumerism>.

“Our Movement.” TOMS Shoes. 12 May 2011. <http://www.toms.com/our-movement>.

Porter, Michael E., and Mark R. Kramer. “Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility.” 01 Dec 2006. 20 Apr 2011. <http://hbr.org/2006/12/strategy-and-society/ar/1>.

“The Red Idea.” (RED). 12 May 2011. <http://www.joinred.com/aboutred>.

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