What
defines CSR?
In
a very crude form, any partnership, association or initiative taken by the
organization which is not the mandate of the organization but definitely serves
the community/society and provides benefits especially to the people at large
could be an instance of CSR. However, there are different approaches to look
into CSR. Firstly, CSR as a corporate philanthropy is the common perception
more often than not. It focuses on monetary donations and aids primarily to
those associations and organizations that work for community welfare and
development. Secondly, CSR as a risk management tool primarily focuses on
compliance and tries to mitigate operational risks. Finally, CSR as a value
creation focuses on innovation and promotes sustainable business model. This is
where the idea germinates which advocates that corporate success and social
welfare are not two different aspects but are two-sides of the same coin.
Potential
Business Benefits
The definition of CSR may vary from organization to organization. However, there are certain business benefits that can (rather are) expected out of the CSR strategy. Some of them are:
·
- Brand differentiation: Companies try to earn their fair share in the customers mind by involving themselves in various relevant CSR activities. For example, the longest running business rivalry of Cola Wars provides us with numerous instances where both Pepsi and Coke are playing on the sustainability proposition and water replenishment.
- Customer Engagement: Of course, you can try to gain unmatched response from your customers through the CSR channel. A very good instance would be the ad campaign that Walmart ran in 2008 to raise awareness about the environment and the product choices consumers could make. This often can be a “permissible” way to talk to customers.
- Innovation: Companies seek to innovate too with this link. Specially, SMEs can more often employ this to gain competitive edge.
- Human resources: CSR involvement can be an aid to recruitment and retention. People really want and love to work with the company which has a sound CSR policy.
Why ROI of CSR?
There
is no such thing as Free lunch, and of course there is no such thing as free
money. In business, every single penny spent needs justification, every penny
counts. There is no room for money spent without any cause. And by ‘cause’, I
mean business cause/value. It’s important to calculate the ROI on CSR
expenditures as well. Money spent for CSR is in no way like water poured on a
desert. Today when the pressure is
mounting from all sides to maximize returns, the alignment of CSR policy with
the company’s Mission and Vision has become all the more logical and strategic.
So the bigger question for today’s CSR practitioners is how to strike the
perfect partnership balance.
Quantifying
the benefits of CSR doesn’t just mean the net bottom-line impact that it has brought
about in the financial statements of the company. It has also to do with the
shared value creation that it purports to create. The practice of calculating
the ROI on CSR can also provide a better opportunity to company in question and
later lead to many such initiatives in the long-run. In my opinion, such
initiatives should not be left without a ‘post-mortem’ to give a fair picture
whether the company is in the right track or not.
Examples where the practice is seen
There are numerous instances where the companies have tied up there CSR activities with their core mission. Some examples are as follows (courtesy: http://www.socialbrite.org/2010/04/22/4-examples-of-corporate-social-responsibility-done-right/)
- Tyson Foods offers, a major company tying its corporate social responsibility efforts to its core mission. Tyson has committed its brand to efforts to relieve and ultimately end childhood hunger, and in the past few years been integrating social media into its hunger relief efforts.
- Greenopolis was developed to serve as an educational tool to teach people how to be more environmentally sound as they go about their daily lives. The goals for the Web site are summed up in its tagline: “Learn. Act. Reward. Together.” Greenopolis was created by, and is wholly owned by, Waste Management Recycle America, but operates independently. Greenopolis has a presence on several social media sites, offers a daily look at some interesting metrics (Total tons of WMRA recycled: 5,367,009), offers on-street recycling kiosks and has a rewards program (Think Green Rewards earned: 4,074,988) that lets people cash in points for small items.
- Honeybees are disappearing at an alarming rate — and that’s bad news for the global food chain- Haagen-Dazs. It decided to create a microsite to raise awareness about the issue: “Honey bees are responsible for pollinating one-third of all the foods we eat, including many of the ingredients that define our all-natural ice creams, sorbets, frozen yogurt and bars.” Again, smartly tying it back to the company’s core mission. The company is donating a portion of proceeds from its Haagen-Dazs honeybee brand to research on the topic, and it launched a modest Twitcause campaign through the #HelpHoneyBees hashtag, raising $7,000 in two days last November (“Bee Buzz generated: 643,748 tweets”).
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