Almost two years ago, the Time published an article describing why companies can no longer avoid their social responsibilities. It started the article with Nobel laureate Milton Friedman’s quote, who said “The Social Responsibility of Business Is to Increase Its Profits.” He described corporate social responsibility (CSR) as hypocritical window dressing and dismissed it as a suicidal impulse.
Sometimes, we wonder why so many people who get their Nobel prizes, really do get them. Obviously, Friedman probably didn’t deserve that prize, if he thought corporate social responsibility was hypocritical and suicidal. Nevertheless, his ideas find a lot of takers even today. That is probably why we are seeing global warming and increased pollution levels.
And of course, corporate social responsibility is not just limited to going green, but it includes a number of activities that leads to better communities and a safer world. We must also note that things have really changed from the times of Milton Friedman. Today, businesses can no longer operate without a strict corporate social responsibility agenda that works. In this article, we will discuss 5 important reasons why corporate social responsibility is important and we will thereby prove Milton Friedman wrong.
Corporate social responsibility provides a competitive edge
Most of us are in business because we are competitive in nature. If we were not competitive, our competitors would have usurped on our businesses. Today, we can remain competitive only if we are socially responsible. It is not just about having a “go green” campaign every year and sticking posters all across the work floor. Corporate social responsibility goes beyond that.
You will need to make sure that you find your unique cause and fight for it, with all the privileges that you as a company have. Companies usually have a lot of privileges as opposed to individuals. The very fact that a company can hire people legally is proof enough that it can do much more to a community. Making sure that a company has corporate social responsibilities is the surest way of making sure that it remains competitive.
Studies have shown that most successful companies are those which are socially responsible. When Chipotle released its “Pure Imagination” video that documented the horrors that farm animals endure, it struck a note with both vegetarians and non-vegetarians. And a lot of people began to buy burgers from Chipotle rather than from McDonalds.
Consumers prefer to associate with companies that are socially responsible
Consumers and clients like to view the company they deal with as an entity that cares for the community. No one wants to do business with a company that is solely obsessed with making more money. Such a company can no longer exist in a world that is increasingly becoming aware of social rights and morality.
When consumers look for social responsibility, companies that have no CSR policies often lose out. People do not want to buy from companies that encourage child labor. Instead, they prefer to buy from companies that treat their employees well. Likewise, it is being noticed that energy companies that often do not clean up oil spills suffer the same way.
British Petroleum (BP) has suffered a lot because of its carelessness towards protecting the nature after causing oil spills. In a survey, it was found that more than 89% of consumers prefer to do business with companies that not only make profits but also work towards improving the environment and the society we live in. 83% of consumers also felt that companies should donate more money in order to stay in business.
Great employees look for corporate social responsibility (CSR) while joining a company
While consumers are gung-ho about companies that are socially responsible, employees are not far behind. A shocking 32% of people were ready to quit their jobs if their company did not donate money to charities. Obviously, employees feel they are a part of the company and they do not want to be associated with a company that refuses to part with its profits to the disadvantaged.
65% of employees were also ready to quit if their companies were engaging in activities that harmed the environment. If only companies took care of the environment, we would not be experiencing the global warming we are experiencing today. Even more positively, 83% of those who were interviewed were ready to quit their jobs if their company used child labor.
It is often noticed that those companies which practice CSR tend to have a high degree of employee morale and loyalty. Corporate social responsibility policies help companies to avoid attrition, recruit great employees and increase productivity and efficiency. Employees want to work at great organizations, and not in companies which do not care about the environment or the society.
Capitalism cannot focus solely on profits
It is becoming increasingly common for companies to not work with other companies that only think about profits. If a company has engaged in activities that are seen as discriminatory, immediate fallouts can be witnessed. When Abercrombie & Fitch’s CEO said unpleasant things about overweight people, it was pretty obvious that Abercrombie’s ratings and shares would go down.
Many companies also do not like to associate with such companies. For a very long time, business has only been about profits. The more profit a company made, the more successful it was deemed to be. Such antiquated ideas are no longer in vogue and companies that are capitalist machines without CSR are often ignored by investors and consumers.
It is becoming increasingly important for companies to have a strong CSR policy in order to remain in business. The better your corporate social responsibility policy is, the more successful you will likely be. In fact, doing good things to the environment and the society can actually help you make more money.
Corporate social responsibility gives companies long term advantage
If you have heard about the word ‘sustainable’, you will understand why corporate social responsibility is important. No company can remain sustainable if it does not sustain the community it lives in. If we are to make profits from a community, we should ensure that the community we work from is prosperous. Prosperity is not only in terms of economics but also in terms of health.
By keeping a community healthy, clean and happy, we will ensure that we remain in that community as a fixture, for a long time to come. If we operate from a diseased community, sooner or later we will have to down the shutters. Corporate social responsibility is thus a long term goal which will help a company to remain sustainable as an income generating entity.
Companies should think about the long-term benefits when they part with money. Donating money and spending on social causes are like investments. They bring profits back and also earn community respect and support. When we talk about corporate social responsibility, we are just talking about a community surviving for a long time.
Engage in corporate social responsibility and win valuable friends
Companies that address society’s problems will always find a way to network with the right kind of people. Most policy makers usually respect companies that have something to offer to the communities. Thus, your CSR policy may help you to lobby with local authorities as well. Moreover, your corporate social responsibility helps you to get media mentions and be featured in mainstream newspapers.
All that can be achieved without expensive PR strategies. In fact, CSR itself is a great PR strategy. Companies that have something to give back to the society are talked about more often even on social media. This ensures that you will never be out of people’s conversations. One of the reasons why we must engage in corporate social responsibility is because it gives us people’s good will. Good will is very important to overcome difficult times.
Companies that do not really care about their societies often are given the cold shoulder when they are in trouble. We operate within communities and it only makes sense to nurture the community that nurtures us. Thus, it is important to have a strong CSR policy in order to be able to build good will among both consumers and clients. Whether you are a B2B or B2C organization, having a corporate social responsibility policy will help you to stay afloat for a longer time than you ever imagined.