CSR & Sustainability – capitalism at its best

Want to kill two birds with one stone? Then you should aim for CSR (corporate social responsibility) and sustainable development.

How long will it take before all companies, like Timberland, will display not only economic but social and environmental results as well in their annual reports?

Not only does it enable you to make positive contributions to society and our environment, it makes money for you as well. Sounds to good to be true? No we are actually looking at capitalism at its best. And if you haven’t jumped on the band-waggon yet, it’s high time you do since customers are increasingly expecting companies to show they care about our world and not only their next quarterly results.

If you are not already doing it, start by making small changes that swiftly save money, such as switching off the light, and share holders will be keen to do more.

It’s easy to only look at environmental aspects since profits are swift. But sustainability also includes social and economic sustainability. Social sustainability can for instance be to have multicultural employees that reflect your customers in order to give them better service.

Makes you more profitable, attractive and competitive

To run your business the smartest way possible pays off. Hence the importance of CSR and sustainable development. Why does a company have social responsibility? Shouldn’t the state take care of that? The answer is for capitalistic reasons because consumers prefer to buy from enterprises they believe are taking their responsibilities, employees prefer working for such companies and more and more businesses chose to buy from responsible firms.

Small companies have an advantage

It’s interesting to note that many small companies have been into CSR and sustainable development for a long time with the simple difference that they called it common sense. For them it’s natural to keep expenses at a minimum and make sure that they create an environment that makes staff happy.

Adapt or die

The interest in sustainable products and services is increasing on a steady basis all over the world. Companies that don’t adapt to customers preferences and demands will simply see their market shrink and eventually die.

Long term thinking as opposed to swift results

How do you get multinationals to think long-term and not only focus on the next quarterly results? Is social responsibility a step in that direction? More and more focus is on not only economic but environmental and social results in order to determine if a company is prosperous. If not, a company can have fantastic quarterly result due to staff working 24/7 or causing environmental damage so bad the company will be thrown to the wolves once the public finds out. In other words what looks good on paper could turn out to be a pie in the sky. Companies like Vestas and Timberland hence account for not only economic but social and environmental results as well in their annual report.

Will companies be able to ignore CSR and sustainability?

How much longer will it be possible for companies to behave like in the past? Will consumers tolerate businesses that ignore the world around them and in fact have a detrimental impact on the environment and society? CSR is to use resources in the most intelligent way regardless of if we are talking about people, energy or commodities. And how much savings or gains you get is easily calculated. However, it’s important to be able to show what you are doing and not just talk about it.

Generally speaking companies are better than they realize when it comes to CSR and sustainability. Catch is that they are not good at communicating what they are doing and hence don’t get credit for it. Do you agree that CSR and sustainability is capitalism at its best? Are you into CRS or maybe you simply call it common sense? If so, have you already noticed that it makes money for you in various ways? If not, are you planning to get responsible and start making money by doing good?

(Photo: PhotoXpress – mashe)

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68 Responses to “CSR & Sustainability – capitalism at its best”

  1. Catherine Lockey Says:

    Catarina – this is sound advice for all corporations. Capitalism will be at its best when it is moved by the voices of its consumers. Since we are becoming a consumer based society smart corporations are already listening carefully to social media and responding appropriately by making changes. Take Burger King, for example, who stopped using palm oil from Indonesia as a response to social media concerns. Smart move for Burger King as their consumers are grateful for their response.

  2. catarinaalexon Says:

    Yes Catherine, it's a great concept isn't it. Do good and make money as a result. Am certain that Burger King has made money as a result.

  3. Subhasis.C Says:

    I completely disagree. CSR of corporations in industrial countries and in developing/underdeveloped countries are different. Capitalism is playing with us all. Making money by doing all this is a myth. Capital, in todays context, is ruthless. It does not work for the benifit of the commons rather work for the profit and more profit. probably you are bit confused and therefore suggest all temporary measures. It is a political issue. today there is no cold war and therefore capital is fee to do what it and its owners want to do with it. so do not hopemuch.

    sustainability? define it first. based on corporate world, suatainability is equal to profit and how to continue make profit. for Human development, this definition can not work.

    Thanks
    Subhasis

  4. catarinaalexon Says:

    Presumably you live and work in a developing country Subhasis? In quite a few developing countries CSR is confused with philantrophy and sponsorship.

    In the West however, companies increasingly have to incorporate CSR and sustainability since the customers demand it.

    I'll give you an example, China's largest export market is Europe. European customers are increasingly demanding that companies they buy products and services from take responsibility for society as well as the environment. If a company doesn't, they will buy products from another company even if they are more expensive. Once China starts noticing the financial affect of this they will start doing CSR and sustainable development.

  5. Michael Herrler Says:

    Interesting discussion!

    I would add that not only in developing countries the definitions of CSR, philanthropy (and in this context sponsorship and donations), and sustainable development are often intermingled.

    I believe that philanthropy is not sustainable, instead "creating shared value for all stakeholders" will ultimately lead to sustainability.

    It becomes more and more important for businesses to create a dialogue with their consumers and have them actively involved in finding new solutions to existing problems – which goes back to the earlier discussions on "crowdsourcing" and "personalized product design".

    In general, the definition of sustainability is linked to a long-term vision. Unfortunately, today most companies have short-term goals that are tied to quarterly performance.

    The challenge on the consumer front is that, in particular during a recession, people look primarily at their own wallet and sustainability issues like "melting ice caps" become very distant problems.

    I strongly believe that companies have to think about new value systems, but at the same time they have to ensure to make profit.

  6. Emmanuel Orban Says:

    Catarina

    I believe that what you describe yourself as a reaction to customer demand is just good marketing. I do not see why you do call it "social responsibility". I guess it deserves this word some definition. In the time of my grand father, most large companies were more or less regional (say Europe in my case). Their top managers and owners were living in the same area than their employees and face to face meeting between employees and capital owners were no exceptions. So managers were socially responsible. They were supporting schools, local associations, sometime spending on building housing or taking polytical roles. A good profitable company was making 6% and the major part was returned to local investments. When the hard times came, many of those managers have done their upmost to keep people jobs, sometimes burning all their own cash.
    Today, I see and study the education given to masters in engineering or business administration. It's designed to just teach them how to make money for shareholders and themselves.

    Of course listening to customers and developping activities to make savings is smart especially if you stick to it the nice word of corporate social responsibility (and feel confortable with your consciouness). I'd rather see managers thinking that their prime responsibility is to create jobs and develop human beings in a balanced world. I would say then they are socially responsible. When in 2009 the number of millionaires grew at the same time than unemployment because of the financial crisis, what did CSR to help it?

  7. GuyW Says:

    A good article, Catarina. Interestingly, McKinsey (and others) have undertaken research into the financial impacts of CSR and, more broadly, ESR to companies.

    Apart from the fact that properly implemented environmentally conscious programs reduce a company's costs (saving on utility usage, waste disposal, etc.), investment professionals seem to believe that they enhance a company's valuation by around 5% due partly to improved brand value of the company and also to better employee retention (and, therefore, costs) as employees are increaingly more satisfied working with a company that is demonstrably caring about its environment and community.

    What's more, building ESR/CSR policies will help companies even more in the future as resources become increasingly scarce and costly. It's not just a matter for the developed world, but a way in which those in the developing world can build long-term solid businesses, too.

  8. catarinaalexon Says:

    Excellent comment Guy. Just wish to add that companies with a CSR strategy that works also take care of their employees very well. Keep them happy and motivated which makes staff perform better and improve results i.e. killing two birds with one stone.

  9. catarinaalexon Says:

    Agree with you about how our forefathers took care of their employees in the past Emmanuel, which was good. But those times are over.

    CSR and sustainable development are not something I invented. They are well established phenomenas. So, in what you describe as a hard world, I would presume you find it welcome that companies are increasingly taking responsibility for society and the environment.. Companies with a CSR strategy that works take care of their emplyees and educate them to develop their potentials and careers. Jobs are created when a company makes money and grows. Nothing will ever change that fact. So CSR and sustainability has a positive impact on job creation.

  10. catarinaalexon Says:

    Michael, don't you think that once CSR and sustainability becomes a must for all companies businesses will be forced to think long term?

    As I wrote, CSR & Sustainability is capitalism at its best. To quote you "companies have to think about new value systems, but at the same time ensure to make profit". A good CSR & sustainability strategy allows companies to do good and at the same time make money.

  11. subhasis Says:

    Hi, yes I am from India. a developing country. I am bringing a new dimension in the debate. Firstly,what is the total population of the entire west and what is the total number of consumers in West as against of developing and under developed country? Secondly,In West, people are more aware of their rights and they can demand. so it is easier for the corporations to make leser number of people /consumers happy as against of exploiting more ignorant people and societes.

    Look at south east asia, africa, middle East countries where people live like animal with less than a $/day. Here both multinationals and national corporations are not confused at all. They spend money for advertising their products in local languages but their CSR not even looked at the need of the people. So people ( even illiterate/semi literate and educated people) spend their hard earned money to bye these products without knowing the consequence, for example, LUX-body soap products of a multinational company captured 90% of the market of India including Rural India. Even if they capture 15% middle class of India, they are done. what they are doing for even such 15% middle class in India?

  12. subhasis Says:

    2nd part
    How ever to me, it is the challenge before the corporations to capture markests. they make the west Happy and exploit rest of the world. I am not against of making profit but at what cost? Find out what Monsanto did with Indian farmers. What does PEPSI is doing here in India? Please do not tell me that they are confused. All brilient people they hire and (mostly Indians), if they do not understand the social issues, it is unfortunet and I do not believe that they are confused.

    It is a matter of the principles, how capital moves and dictate terms. How and frow where capital will gain/earn profits.

    Your concept is good but should be appropriate for the world as well where people like us also live.

    Thanks
    Subhasis

  13. catarinaalexon Says:

    Don't worry CSR and sustainability will become a must for Indian companies as well. Just a question of how long it takes.

    At the moment a lot of companies in your country don't want to devote money to it since you are still developing your economy and Western countries didn't have to do that when they were developing.

    Besides, I doubt that the majority of Indian customers are currently demanding that companies they buy from take social and environmental responsibilties. But they will.

  14. keyuri joshi Says:

    A very thought provoking post and discussion! I believe you are correct that CSR is a growing trend but it has a long way to go. Consumers are a very powerful entity and can make all the demands that they want of a company to do this or that. Consumers are also very sensitive to sincerity. How do we know a company is sincere in "the greater good" as opposed to sincerely intersted in duping customers to gain profits. In this "going green" era, everyone seems to be jumping on the bandwagon for what their company is doing for the enviornment. What's sincere and what's noise?

  15. catarinaalexon Says:

    Agree with you Keyuri. That's why it's important that more companies start doing what Vestas and Timberland are doing i.e. post not only their financial but also social and environmental results in their annual reports.

  16. Jeannette Paladino Says:

    Companies are learning that CSR is good business as well as good for the environment. My two nephews own one of the leading green building consulting firms in the U.S. and were largely responsible for writing the LEED standards that rate companies on sustainability. Major companies are competing for the highest LEED ratings administered by the U.S. Green Building Council http://www.usgbc.org/ which is holding its Green Build Internatlonal Conference and Expo in Chicago Nov. 17-19. Companies with LEED ratings for their buildings not only save money on energy costs, and create positive work environments, but are eligible for tax breaks and other incentives. Green build is definitely a huge movement here in the U.S.

  17. catarinaalexon Says:

    Interesting Jeannette, didn't know about that organisation. Or that green build is a huge movement in the US. Super!

  18. Julie Weishaar Says:

    Hi Catarina,

    I think you hit the nail on the head when you said consumers are demanding CSR and social responsibility and because we are becoming more and more a society driven by consumers, it is in the best interest of companies to listen to what their customers want and do the best they can to give it to them. Saving money is the icing on the cake.

    Thanks for our insightful article.

  19. Susan Oakes Says:

    Back in the 80s and 90s the companies I worked for were trying to come to grips with what was then termed "cause related marketing" which I think was an earlier model but didn't really come to much.

    The challenge for companies is to deliver to shareholders and some let's face it do not care enough as long as they receive the return they want and the growing expectations of customers. I also think at the moment it is somewhat dependant on the industry they are involved in as to the pressure from customers.

  20. catarinaalexon Says:

    Glad we agree Julie.

  21. catarinaalexon Says:

    That's unfortunately true Susan. However European and US consumers are increasingly demanding that companies take social as well as environmental responsibility. If not they buy from another company even if they have to pay more. That's why companies, like Timberland, are reporting not only financial but also social and environmental results in their annual reports.

  22. Christian Paulsen Says:

    Catarina,

    The smartest companies are striving for sustainability and CSR. It is capitalism at it’s best because it balances short term needs with the long term. My experience is in manufacturing. There I see smart companies that work to recycle but more importantly they work to reduce the raw materials and packaging supplies needed to sell their products. This is more sustainable and helps the bottom line.

    Thanks for helping to get the message out there that CSR and sustainability are good business.

  23. catarinaalexon Says:

    Glad we agree. Out of interest, what are manufacturers in the Mid West doing when it comes to social responsibility? According to JP Morgan's recent survey most American companies concentrate on the environment and mainly recycling. So I would be interested in knowing how companies in your area take their social responsibility.

  24. salvatier Says:

    I'd love to hear what you think about this new report on green marketing: http://adage.com/u/sVYxZa

  25. keepupweb Says:

    I agree also. It's interesting how the Internet is in some ways almost forcing companies to be accountable. Once it's found out that a company has been duping consumers, it doesn't take long before it's discovered and the word rapidly spreads through the Internet. More and more companies are aware of not only their social responsibility but how quickly word of their actions spread.

    As usual, another thought provoking article Catarina. You certainly have a lot of us thinking!

  26. Rob Berman Says:

    Companies are just really beginning to geg CSR. Many are starting to advertise what they are doing. Wal-Mart was maligned for their practices. Now they are lauded.

    Rob

  27. catarinaalexon Says:

    Thank you Sherryl. Isn't it fantastic how taking social and environmental responsibility actually makes money for companies? Really hope this trend continues forever since it will benefit the whole of mankind.

  28. catarinaalexon Says:

    Actually believe there is more pressure on companies in Europe than in the US to take social and environmental responsibilities. But it's spreading since many, above all affluent, customers, do care about our world and react negatively to companies not taking their responsibilities.

  29. Christian Paulsen Says:

    Sustainability:
    -Recycling has been big for some time now.
    -Reducing the amount of packaging required has been a focus even longer. Reduced packaging reduces the natural resources required.
    -Conserving utilities including natural gas, electric, and water has been popular as well.

    CSR:
    I've seen more & more companies making big contributions to relief efforts. While they get some nice PR, I doubt they get a real payback so I view these efforts as truly motivated by CSR.
    -Hurricane Katrina and more recent flooding are good examples. I've seen Unilever & Nestle make huge financial donations, match employee donations, and donate food & water products.
    -A smaller US food company, Lance Inc did something really neat a couple years ago. Archway Cookies abruptly closed their doors and laid off all manufacturing employees with no notice or severance. Lance purchased Archway several months later. Lance then gave all those people who were laid off a severance-even those who would never work at the Archway plant again. They had no obligation other than wanting to do what was right.

    I think that the best manufacturers are taking steps like these to be sustainable and to be good citizens.

    Thanks for asking.

    Chris

  30. keepupweb Says:

    I think Wal-Mart is a great example of a company that is becoming socially responsible not because it's the right thing to do but because of consumer pressure. Regardless of their motivation, it's a step in the right direction.

  31. catarinaalexon Says:

    Glad we agree.

  32. Veronica Says:

    Catrina -a thought provoking and attention getting article. Very useful, however, in starting this discussion on CSR. At first glance, it may seem rather cynical to link CSR, sustainable development and capitalism, as it may be thought of as a marketing/PR angle to CSR.

    I agree that not only is the extent of 'CSR' discussion different between developed and developing countries. Indeed there is still a strong philanthropic angle in both worlds rather than a triple bottom line of economic, social and environmental concerns.

    Regards.
    Veronica

  33. catarinaalexon Says:

    Veronica, isn't it wonderful that for once we have something "capitalistic" that is actually a benefit to society and our environment. The fact that companies make money doing good will increase the number of companies that get into CSR and sustainable development.

  34. catarinaalexon Says:

    Good points Mika.

  35. AGRIH DAUDA. Says:

    Ignoring coporate social responsibility is a symptom of human rigth violation and the foundation of civil insecurity and the frame work of oppression and suppression that provides uncomfortable profit for shareholders. in the midst of a fantasy world, filled with illusion that ends in the unknown, which makes companies a glorified picnic for unrealistic service to humanity.

  36. catarinaalexon Says:

    Good points Agrih.

  37. catarinaalexon Says:

    My pleasure Alan. The reason more and more companies will move into CSR and sustainablitiy is simply because they make money doing so. No other reason.

  38. cheryltherrien Says:

    I think many companies do practice this, but they do not communicate it to their customers. It may be looked upon as common sense and so it is not promoted as anything special or different. As a consumer I look for these things when making my purchases. If the company does not note it, they may be losing business and not be aware of it.
    My recent post Celebrating Life

  39. catarinaalexon Says:

    Glad you agree, Cheryl. Companies must let their customers know what they are doing form the environment and society. If not, they may lose out on customers who want to buy from responsible companies. Even Chinese customers prefer such companies.

  40. becc03 Says:

    It would be great if everyone did get on this bandwagon. Money saving and profits aside, we all have a responsibility and seeing big companies get in on the act can only be good news.
    My recent post The Bitch is Back!

  41. catarinaalexon Says:

    Glad you agree, Rebecca. That companies can make money doing so should be an incentive for them to take responsibility.

  42. jacquiegum Says:

    I think we are hearing more about this as of late. I also tend to direct my business to folks who have established a good CSR policy.
    My recent post Where’s the Justice… In a Mustache?

  43. catarinaalexon Says:

    True, Jacqueline. Also prefer to buy from companies that are into CSR and sustainability.

  44. patweber Says:

    Actually for a year, when I was in a tee-shirt business, we gave a portion of our revenue to one of the veteran associations. That particular shirt was popular! I've often thought about setting a goal for me and my small speaking and writing business to introduce a change where some of my profits (or revenue) would go to some worthwhile cause.

    It's good advice Catarina but I think there are so many issues at least with USA corporations right now, this CSR may be off the radar screen at the time.
    My recent post Planning Your Blog around the Holidays by guest blogger Scott Huntington

  45. catarinaalexon Says:

    Excellent idea,Pat. You should give a portion of your profits to some good cause. Could be the veteran association again. Doing so definitely make customers buy. Hope US corporations get into CRS and sutstainability big time, soon again. In Europe it's almost essential.

  46. Doreen Pendgracs Says:

    I had not given much thought to the issue of sustainability until I became immersed in the world of fine chocolate. Having now visited a selection of cocoa farms and seeing how the farmers live and work, I now seek out chocolate makers who put an emphasis on sustainability in their chocolate operations. That makes the end result chocolate more expensive, but it is worth it knowing you are helping the farming families when you buy it.
    My recent post hire a professional proofreader to ensure your book is the best it can be

  47. catarinaalexon Says:

    Spot on, Doreen.

  48. akandrewwriter Says:

    I can't imagine any business these days thinking they can ignore CSR. I think if nothing else the goodwill in itself, combined with the economics has to be a tipping point. Business is as much about image as anything else, so to not have that in mind in this 'green' climate is unbelievable. Many corporations are trying to turn themselves around, but real results are important not just a lip service.

  49. Greg Says:

    I guess this is where a good PR firm comes in?

    Catarina – what's your background in business? Your ideas are so powerful I'm wondering where you got them.

    And speaking of business, would be fun to hear what Catarina thinks about Google's Adsense or if you've had any success with this ancient animal. That's the topic of the hour at my blog!

    Cheers,
    Greg

  50. Suzanne Fluhr Says:

    I think even big corporations in the US are finding out that CSR is a thing. Walmart has had to direct an entire ad campaign to trying to respond to growing criticism of its business model (take maximum advantage of your low wage workers and leave government and food pantries to take up the slack). Their attempts at trying to appear "human" in their ads are laughable.
    My recent post The High Road to Taos, New Mexico

  51. TheGirl Says:

    Social responsibility, is hence another "selling point" for businesses. Such as Buy here and 10% of proceeds will support such charity. I get it, in this day and age, people are wary of such corporations like Walmart who seem to take and take. But being a skeptic, I know that most businesses never give back even 10% of what they get.
    My recent post Affluenza: an epidemic!!

  52. catarinaalexon Says:

    Could not have said it better myself, AK.

  53. catarinaalexon Says:

    Greg, you don't need a PR firm to get results with CSR and sustainability. My background in big business is on high levels all over the world. Click on About or have a look at my Linkedin profile for more information.

  54. catarinaalexon Says:

    Glad you are of the impression that big US corporations are getting into CSR. That would be a welcome development.

  55. catarinaalexon Says:

    Exactly. The best reason to get businesses into CSR & Sustainability is that they make profit by doing so. Hopefully more and more companies will find out that's the case.

  56. Susan P Cooper Says:

    I smiled and thought about how I invest. I use CSR as a starting point. If a company, any company, isn't doing their part in social responsibility and helping the environment I am hard press to invest or use that company in the future. So to answer your question. if a company is engaged in CSR, they should and very very soon. Just my thoughts. :-)
    My recent post Gift From Santa: Story (Podcast)

  57. Oksana Frewer Says:

    That is very provocative question. Indeed it is a business model that existed and works well. Anyway, behind any model is the profit.
    My recent post Colours are… the silent stimulus

  58. JeriWB Says:

    Who wouldn't support doing good? But too often corporations tout their good deeds to much more fanfare than they deserve. As a consumer, I do try to take my business to companies I feel are good. For instance, I don't shop at Wal-Mart anymore. Recently, they've been airing an advertisement about how great they are as an employer. Please. Costco doesn't need to do that because their actions speak louder than words.
    My recent post Book Review: Rapunzel by Molly Greene

  59. catarinaalexon Says:

    Good idea, Susan. The more investors that do what you do the better.

  60. catarinaalexon Says:

    Glad you agree that profit is the main thing when running a company, Oksana. Hope that CRS & sustainability becomes a business model that is more the norm. Not least since it enables a company to make profit.

  61. catarinaalexon Says:

    Jeri, you are a good example of the new type of customer behavior that is becoming the norm all over the world. Eventually companies will have to be responsible if they want to be successful.

  62. catarinaalexon Says:

    Debra, you are right that things have changed dramatically since that evaluation, Can't help wondering if the outcome of it was determined by corporate America? Even in far corners of our world customers are now keen on buying from responsible companies.

  63. Pamela Heady Says:

    It seems like more and more companies are actively embracing CSR by going green, donating to charities, supporting the arts in communities or education in schools. I worked for a municipally-owned performing arts center that had serious corporate support because of their CSR. Not only did they support the arts monetarily, but they were visible in the community, embraced local art in their corporate atmosphere and were very green-focused when the headquarters were built. Not all companies are there yet, but it's refreshing to see the ones that are.
    My recent post Bacon & Beer: My Two Favorite Food Groups

  64. catarinaalexon Says:

    Yes, it's a good development, isn't it, Pamela. Good examples you make. Let's hope more companies jump on the CRS & sustainability bandwaggon.

  65. enjambedline Says:

    I love this article. It makes so much sense. My son is majoring in Environmental Sustainability in college yet I still remind him to turn off the lights. Businesses as well as individuals need to be more mindful and many habits are in need of change, not only to increase profits, but to protect the earth, our only home.

  66. Pat Amsden Says:

    I think CSR is a must and is happening a lot. Certainly I think many industries are going paperless in a way that couldn't have been imagined years ago. The books I write are ebooks and are published through Amazon. I may go to offering POD but it's increasingly common to have books created on computer and sold as downloads through various platforms, Amazon right now. The local colleges now are mainly paperless and the hospital I work in now does a lot more on-line from looking at X-rays to reading reports. There are many more examples.

  67. catarinaalexon Says:

    Thank you, You are so right that adopting CSR and sustainability is not only about profits but protecting the earth.

  68. catarinaalexon Says:

    Glad you believe in CSR, Pat. Good examples about going paperless.

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