What Even is Corporate Social Responsibility?

This article is the first in a series of articles on corporate social responsibility in the Trump era

The idea of corporate social responsibility, or a corporation's initiatives to assess and take responsibility for their effects on environmental and social wellbeing, has found its place in the limelight over the past few years. Headlines like “Want To Engage Millennials? Try Corporate Social Responsibility” and “Rising Trend: Social Responsibility is High on Millennials' List”  abound. A common theme echoes: “Millennials prefer to do business with corporations and brands with pro-social messages, sustainable manufacturing methods and ethical business standards,” as stated by Forbes. Studies show that 70% of millennials are willing to pay more for products that make impacts on issues they care about, and that 87% of Americans will buy a product because the company stood up for an issue they care about. These findings have made corporate social responsibility seem like not just the right thing to do, but a surefire way to increase revenue.  

Are consumers, particularly millennials, true to their word in terms of gravitating toward companies that behave responsibly? Does corporate social responsibility have external financial benefits for companies? How is corporate social responsibility changing, and what does it look like in 2018? I’ll address these questions and more in the following weeks.

Before digging in to these weighty issues, it’s important we have a clear understanding of what we’re talking about. What sort of actions have traditionally comprised corporate social responsibility?

Corporate social responsibility, also known as corporate citizenship, exists because companies understand they have power. Corporate influence on political, social, economic, and environmental spheres is nothing new. Consider 1893, where American businesses forced Queen Liliuokalani of Hawaii to abdicate her throne, resulting in the dissolving of the Kingdom of Hawaii, its annexation by the US, and its eventual statehood.  

As Spiderman wisely taught us, “With great power comes great responsibility.” As such, companies are motivated by awareness of this power (and as the more cynical among us would point out, awareness of the importance of a good reputation), to wield their influence responsibly. Broadly speaking, corporations have responsibility in two arenas: (1) the direct manufacture of its products and the social provisions of its services and (2) corporate activism, the ability to act as a voice calling for larger societal change. The former category is what is traditionally thought of as corporate social responsibility, while the latter category, to be covered in the following weeks, has become increasingly relevant under the Trump administration.

The former category - the social and environmental impacts of a company, particularly its supply chain - typically comprise direct corporate citizenship. Social impact typically speaks to how the labor who make the product or provide the service are treated. Are they paid a living wage? Do they have safe work conditions? We’ve all heard the horror stories of “blood diamonds,” diamonds sourced from war zones in many African countries, where rebel groups will often fund their campaigns through diamond mining, often using forced labor and child labor. Along a similar vein, H&M and Gap have been criticized for sweatshop-like labor conditions. In some of their production centers, tens of thousands of workers have been found sewing garments in poorly-constructed buildings without proper fire exits or sufficient safety conditions. In stark contrast, apparel companies that promote their fair treatment of workers, like American Apparel and Everlane, distinguish themselves through their commitment to social responsibility.

Closely tied to corporate social responsibility is corporate environmental responsibility. The Harvard Political Review notes that, “A brief web search of the 30 companies on the Dow Jones Industrial Average reveals that each company makes some reference to sustainable practices on its website, and that the majority of these companies have web pages devoted entirely to sustainable environmental practices.”  Sustainability has become something to strive for, with Forbes and Newsweek ranking the world’s most “green” companies, from Anheuser-Busch to PepsiCo. While media reports on corporate social responsibility often focus on clothing and electronics manufacturers, it seems like every company out there is eager to publicize its environmental initiatives.

Now that we understand the jargon, I’ll further explore the history and efficacy of corporate social responsibility in the coming weeks.

Up next week: corporate activism, yesterday and today.