Exploring the issues that shape today's business world.

Responsibility Is Calling

Despite conflicting opinions surrounding social issues, the call for Corporate Social Responsibility remains loud and clear. By Carolyn Tang Kmet | Spring 2017

CSR

More and more corporations are making front-page news these days for immersing themselves into the public debate over social issues. Starbucks, Airbnb and Target are all recent examples of companies that leveraged their brand strength and reach to broadcast their corporate values. What that means is, the role that corporations play in the public arena is shifting.

“A traditional economics textbook view of society is that profit-maximizing firms generally lead to efficient social outcomes, leaving governments to deal with externalities, public good provisions, redistribution or poverty alleviation programs,” explains Christina Hachikian, adjunct assistant professor and executive director of the Social Enterprise Initiative at the University of Chicago Booth School of Business. “While society has never been organized in such a simple way, this traditional view seems particularly stale in today’s world of increasing overlaps between the forprofit, governmental and nonprofit spheres.”

Today, there’s a greater expectation of and demand for businesses to be active in the public arena. In July 2016, in fact, the Public Affairs Council (PAC), a nonpartisan association for public affairs professionals, conducted a survey of major corporations to better understand how and why companies speak out on social issues. The survey found that 60 percent of respondents have experienced rising stakeholder pressure to get engaged in such issues. What’s more, 74 percent expect increasing pressure to get involved in social issues over the next three years. Not that it should be a surprise, but publicly traded corporations were more likely than private companies to experience growing demand to engage, and they also were more likely to be involved in efforts to support various social issues.

If you’re expecting this trend to fade, you might be disappointed. Just think back to the Super Bowl. Several commercials focused less on products and more on making bold political statements. Audi’s commercial advocated equal pay for women. Coca-Cola and Airbnb sparked discussion about immigration and diversity.

“It used to be that companies focused strictly on their products. However, in the age of social media and activist shareholders, that is changing,” says Melissa Arnoff, a senior vice president and chair of the corporate communications practice at Washington, D.C.-based LEVICK.

According to Hachikian, the next generation of corporate leaders will push for even greater corporate social responsibility. “Many of our students want to thread social impact through their lives and careers, and many of them aim to be future decision-makers, either from the C-suite of these large corporations or in deploying capital,” Hachikian explains.

There’s also a business case here. Nancy Goldstein, chief strategist at Compass(x) Strategy, a Chicago-based brand strategy firm and certified B Corp (for-profit companies certified to meet the highest standards of verified social and environmental performance, public transparency and legal accountability), says having a social mission definitely helps to attract top-tier talent. “People want to work for a company that consistently demonstrates through its actions that people really matter,” she explains.

What’s more, socially conscious companies attract consumers who hold the same values. “Consumers ‘vote’ with their purchases, and they’re willing to spend more to support a responsible brand or punish an irresponsible brand by switching to a competitor,” explains Holley Reeves, Ph.D., director of the research, insights and sustainability practice at Georgia-based Butin Integrated Communications.

Reeves adds that engaging consumers requires companies to satisfy calls for transparency and communicate their initiatives without boasting. “Each company has the opportunity, and the challenge, to define what sustainability means for their brand and find their unique voice in the space,” she explains.

Companies that engage in social and environmental issues, for instance, must ensure that their stand resonates both with the brand and their stakeholders. Arnoff highlights Target as an example. When the company announced that transgender employees and customers could use the bathroom of their choice, the move generated calls for boycotts and drew fire from officials in several states. But Arnoff points out that this decision followed the company’s history of supporting equal rights and breaking down gender barriers.

“Target’s policy was consistent with the message and core values it has been projecting for years. This is the same company that has supported same-sex marriage and parenting in ads and employee policies, and decided in 2015 to stop labeling toy aisles by gender,” Arnoff explains. “Target’s bathroom policy was true to who Target has been as a brand.”

CSR initiatives aren’t always just about business, however. “Sure, I find my staff are highly energized knowing we do good in the world—perhaps even more than if we sell a few more bar fridges or wine coolers, but shaping society in a positive way is the responsibility of successful companies,” says Jim Estill, CEO of Danby Appliances, a Canadian refrigeration and specialty appliance company. “This is why it’s called Corporate Social Responsibility. It’s the privilege and burden of success. Successful businesses have been given a great tool—the choice is how to use it. It’s good to be in a position to help.”

When Danby Appliances launched a refugee initiative (16 of the 150 people working at the Danby Appliances warehouse are refugees), letters, emails and tweets started pouring in from existing and prospective customers. Comments included, “It is wonderful that Danby is doing something to better the world... I am much more satisfied with my purchase knowing that Danby is doing good. Thank you.” As well as, “My brother and I just bought a portable dishwasher from your company… While we don’t have enough money to support refugees ourselves, we hope our purchase can lend a small amount to the cause.”

“I believe in gratitude. Grateful people succeed more,” says Estill. “I believe in abundance. Sharing will create more.”

In like mind, Northbrook, Ill.-based Allstate Insurance Company Chairman and CEO Thomas Wilson believes that corporations can and should do more to proactively address issues challenging society. Under his direction, the company has established several programs ranging from supporting youth initiatives to finding solutions to help domestic abuse survivors.

“Allstate recognizes that we—like other companies—are ideally positioned to address social issues and use our resources and influence to make a difference,” says Laura Freveletti, president of the Corporate Responsibility Group of Chicago and head of Good Starts Young, Corporate Social Responsibility at Allstate.

The most important thing with CSR is to ensure that the intentions are true. “Brands will have a harder time if they are perceived as capitalizing on an issue, or ‘cause washing,’” explains Goldstein. “It has to come from somewhere true. People are smart and they see through it. Maybe not right away, but eventually.”