Profits and CSR Should Go Hand-in-Hand

brand strategy, Business Strategy, corporate social responsibility, CSR

Companies that “do good” outperform those with lesser commitment to Corporate Social Responsibility (CRS) by 120% – 150%* Customers of all kinds (B2B and B2C), in all countries, are becoming increasingly socially-conscious and, increasingly, are starting to make buying decisions with an eye to how the companies behind the brand treat the planet, their people, their prospects and patrons.

In some quarters, however, there is increasing cynicism about the triple bottom line approach. Some articles’ authors even go so far as to the query, in the most critical of tones, whether or not companies are doing good simply for the sake of increasing profitability. I was discouraged to read the following article intro on Lifehack.org, as it appears representative of a growing number of posts:

          “Over the last few years, Corporate Social Responsibility (CSR) has become
such a buzz word for business people with companies sprouting all sorts of CSR
initiatives, but are companies really embracing CSR because they believe in it or
are they in it for entirely selfish reasons?

            Are they really acting out of some kind of moral duty or is the reality still that they
only care about the bottom line?”

I would hope that all companies care about the bottom line, including Not For Profits (NFPs need revenue; they just can’t have retained earnings). If corporate entities aren’t profitable, then how on earth can they continue to employ people, support the products and services consumers purchase, give back to their communities and invest in the R&D necessary to make their products more effectively – in ways that are less harmful to the planet?!

Case in point: Clorox uses a self-reinforcing triple bottom line growth strategy. This led to the 2009 introduction of a new natural product line: Green Works.

That same year, Clorox ceased transporting chlorine gas, opting instead to change the formula in its industrial strength products to eliminate the potential for deadly accidents, not to mention lessening its exposure in the face of growing regulatory requirements.

The resulting sustainability-related cost savings in Year One: $118 million – most of which was given to the Sierra Club, its Green Works partner.

Over the past five years this initiative has continued to make Clorox money and, thankfully, has spawned the introduction many other earth-friendly products… and the category continues to grow. Not only has Clorox’s approach helped improve its own profitability, it has prompted other manufacturers to become more green. That sounds like a triple win to me.

If other companies are also able to increase their bottom line by making this world a better place, or by improving the ways in which they impact the planet, then we should all stand to applaud.

Luckily, ‘Protecting the planet and the people who live on it’ (or at least not causing harm) has become table stakes in most of the developed economies… and increasingly so in the developing ones, too. This has, unfortunately, led to some companies’ actions not living up to their words. In the wake of much “green washing” press, customers are now seeking tangible proof that companies are “doing good”.

They want evidence, in the form of advertising, web site content, news releases, etc., that organizations are…

  • Producing their products in fair and ethical ways,
  • Treating their employees well,
  • Reducing their carbon footprints and conserving resources wherever possible, and
  • Contributing to their communities (and giving locally – which is more important to some consumers than sending money overseas).

It’s a tall order, but for companies that can put their money and actions where their mouths are, rewards will be huge… and not just in terms of those oh-so-desirable profits.

 

* HavaMedia Labs, de Chernatony, Inc. Magazine, The Economist, etc.