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In the past, it was a common belief that a business’ only responsibility was its financial success. However, with a trending concern for the future of our planet, we can see this view growing increasingly outdated. As such, many corporations are turning their attention towards Corporate Social Responsibility (CSR).
CSR is a critical concept that tackles the disregard for environmental stewardship and social responsibility by companies. It is a term used interchangeably with Environmental Social Governance (ESG). This concept encompasses the ways in which firms operate beyond profit targets to achieve 'people' and 'planet' goals within the Triple Bottom Line (TBL) framework. TBL refers to a holistic business approach that not only meets shareholders' economic expectations but also manages the environmental and social impacts on wider stakeholders. In this way, businesses are seen to exceed in their practices, turning their focus away from the goal of economic gains.
With the rise of CSR in the corporate world, there is hope that a new ‘norm’ will be created, if businesses are held accountable for prioritising their profits at the expense of people and the planet. As a result, firms can no longer afford to neglect ESG. Furthermore, an increase in socially responsible behaviour could be expected, due to the additional positive impact ESG tends to have on business’ economic performance. For example, a firm may practise CSR by decreasing the damage they cause to the environment, such as by using more efficient energy sources, or producing less waste. These changes vary in size and complexity, but all share the same aim. A wide-spread change (but one that is not necessarily popular amongst consumers) that you are likely to be familiar with is the rising cost of plastic bags in supermarkets, which encourages customers towards undertaking ‘greener’ habits. According to the UK government, the charge has cut down plastic bag sales by 95% in major supermarkets. The average household now uses approximately four single-use bags a year, down from an estimated 140 per year.
We can also observe CSR progress through Nike’s Flyknit footwear range. The company stepped away from their traditional production methods reducing waste by 80%, and in doing so created a new range of footwear. It is important to note the success of the Flyknit range amongst consumers- it is valued at $1 billion. In both these cases, CSR is effectively demonstrated as companies implement environmental concern into their actions. They successfully reduce destructive waste contributed by their practices, whilst simultaneously boosting financial performance. In this way, CSR is paving the way towards a win-win situation for shareholders and wider stakeholders.
Check out this article to see CSR in practice with examples that you might just recognise
However, with the growing imperative for compliance with CSR goals, companies may be seen trying to ‘cheat’ their way into the good books. This is a concept known as ‘greenwashing’; when companies purposefully market themselves as behaving more eco-friendly than they actually are. The fast-fashion contributors, H&M, have been associated with greenwashing since Quartz’s unveiling of their unethical business. After estimations predicted they produced 3 billion garments per year, most of which were quickly discarded, H&M attempted to improve their brand image with their ‘Conscious Collection’, marketing garments as sustainable using an industry-developed measure; the Higg Index. However, H&M was found to be greenwashing, labelling clothing articles as environmentally ‘conscious’, and often charging more for them, when the reality was the complete opposite. H&M have since tried to recover from the unsustainable narrative that then surrounded the business, taking donations of any old clothes for recycling. Adding to the deception, a Changing Markets investigation tracked clothes donated for recycling. Tracing them from Oxford Street to a wasteland outside of Mali; apparently H&M had not learnt their lesson. H&M have been sued for their greenwashing, exemplifying why businesses need to be more transparent and less deceptive if they want to successfully meet targets outlined by the triple bottom line framework.
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