Let’s talk CSR and CSI.

Why companies usually do CSR instead of CSI. Curious? Go ahead and read to find out more!

First things first. What is CSR?

Corporate Social Responsibility (CSR) consists in the way an organization decides to make a positive environmental, social or economic impact in the world, as well as how a business devotes time, experience and meaningful effort with the scope of causing public well-being.

Consumers tend to choose businesses which take such voluntary actions over the others, which ultimately leads to positive reputation building.

Therefore, by rebuilding the company’s reputation, it can attract more customers and even win back the ones it has lost, thus increasing profits and not having to take illegal or unethical actions any longer.

Levels of CSR:

source

What is CSI?

Corporate Social Irresponsibility (CSI) draws the attention towards the „elephant in the room”, meaning that it points out unethical practices that a company hasn’t eliminated yet, while trying to cover them up by applying CSR actions.

Confused? Here is an example to help distinguish the two.

Nestle, the world’s largest and diversified food and beverages company has launched initiatives over the year to reduce emissions and become more sustainable. These above mentioned would fall into the Ethical layer within the CSR pyramid.

However, when you analyze the company from a CSI (Corporate Social Irresponsibility) perspective, you realize Nestle uses palm oil in almost every product it produces! Everyone knows palm oil extraction is not only one of the most polluting industries in the world, but it destroys orangutan habitats as well! Now, isn’t this outrageous?

Basically this company (and obviously not just this one, but almost every company that exists) covers up its unethical practices by adding initiatives of „corporate social responsibility” to enhance its reputation and ultimately increase profits.

Find out more information about Nestle’s clash with orangutans here

Benefits and risks of adopting a social purpose strategy

1st. Benefits

• Better customer relations: customers are generally attracted by companies who are known to be responsible. Tilburg University in Netherlands has conducted a research which concluded that consumers are willing to pay up to 10 per cent more for products that are responsibly produced.
• Profit growth: responsible actions that become known by publics attract more customers, which ultimately leads to increasing profits.
• Environmental development: by replacing materials that are harmful towards the environment with biodegradable and reusable materials the company will be able to address environmental challenges.
• Attracting and retaining employees: by taking actions such as paying employees with the living wage instead of the legal minimum wage, the company will no longer have to deal with all the work and time consuming activities implied by coming and going staff members; employees are also more likely to want to work for companies which reflect their own values and concerns.
• Improving public trust and brand image.

2nd. Risks

• Increased costs: it is obviously much more expensive to be sustainable.
• Consumers perception of Greenwashing: many people are aware that companies might label products as „healthy” when the reality is quite the opposite, or label a product as „bio” when it isn’t.

Let’s take a look at the „ETHICS model” that might help you implement a social purpose strategy:

• Step one: Evaluate the dilemma: this step is crucial as it provides the justification for the application of the model and the framework as well. Why should I implement a social purpose strategy in the first place?
• Step 2: Think ahead: the various outcomes of each possible course of actions need to be thought through, therefore each option needs to be independently evaluated in order to determine all forseeable positive or negative repercussions.
• Step 3: Help: receiving help from consultants is an important step, as receiving consultation regarding relevant industry standard practices ensures the right actions are being taken.
• Step 4: Information: this step implies consulting regulation, law and various literature sources, therefore looking up for information from available sources. The counselor in charge is to seek information from current and relevant literature.
• Step 5: Calculate risk: calculating how each action might influence a counselor’s liability and fulfillment of responsibility is essential, therefore the counselor needs to consider the identified stakeholders and assess its exposure to risk or liability.
• Step 6: Select action: the counselor needs to determine which actions are the most ethical and practice them according to budget.

Now, tell me your thoughts. Would you consider implementing a social purpose strategy? Would you find it relevant? Leave a comment below!