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These days, the idea of corporate social responsibility (CSR) is experiencing a tremendous surge of popularity in the United States. Contrary to the obvious trend to be more responsible, CSR is no longer a movement just to ward off accusations of insidious third-world labor practices. In case you are not familiar with the CSR movement today, it basically involves a company’s effort to minimize its impact on the environment, better engage employees and take care of them in ways going beyond a paycheck, as well as giving back to the community. Some say CSR is about helping people and the planet.
Although still a relatively new phenomenon in the U.S., Europe has been ahead on the CSR curve for some years. The European Commission launched CSR Europe in 1995. It is hard to give a particular reason with certitude as to why. However, there are some general trends which have influenced the European position. Strategically, Europeans tend to take more of a “horizon approach” to issues so their focus is further out. In the U.S., our business focus tends to be more on quarterly results or maybe two-to-four years when it comes to politics. This difference has Europeans looking to address environmental issues now, even if the impact will not be experienced in the near-term. The other major trend that influences the European approach to CSR is the socialist political background that influences people’s welfare concerns and the approach that European business brings to bear.
So what’s happened in recent years to convince U.S. businesses to care more about CSR? Research shows that a lot of the change is being driven by environmental awareness. Hurricane Katrina devastated New Orleans in 2005, and Al Gore released his film “An Inconvenient Truth” in late 2006. Toyota shifted the market when they released the hybrid Prius. These causes and reactionary events play into the big picture corporations are now creating with new and inventive CSR programs.
Another aspect of the CSR movement especially relevant right now relates to the supply chain. Recently, Mattel and other toy manufacturers had to recall more than 20 million toys right as the holiday shopping season began. Although these companies are battling use of unsafe materials, it was not that long ago that Nike was dealt a blow when it was discovered that children were assembling some of its products. Manufacturing is often one of the first places a company looks when it revamps its commitment to the environment and safer labor practices.
As a result of these and other stimuli, the U.S. Fortune 500 is transforming before our very eyes. Wal-Mart, with 1.9 million employees, successfully mandated its suppliers reduce packaging by 5 percent, which reduces transportation costs and saves money. UPS implemented a right-turn policy enabling trucks to idle less, thereby emitting fewer toxins into the air while saving money and increasing efficiency. Home Depot launched its EcoOptions section showcasing “green” home products. And possibly at the heart of it all, Whole Foods continues to grow from a small, hippy grocer into a $5 billion mega-food retailer that crisscrosses the United States, educating consumers and upping the demand for organic and locally grown foods. Timberland issues a “nutritional” label with its shoes that gives customers information about the materials used in the shoe. These changes are being made because the companies believe they are doing the right thing and the market is rewarding their efforts.
Even industries that might seem uninterested in CSR are finding merit in pursuing CSR initiatives. A classic example is the Aerospace and Defense industry, which is not known for its softer side. In Aerospace and Defense, three major CSR pushes are occurring: mentoring math students (i.e. Raytheon’s Math Moves U program), reducing waste (Northrop Grumman recently won an award in California for its efforts), and minimizing energy consumption. Each of these efforts generates enormous benefits for the industry. By mentoring, the companies are attempting to increase the pool of U.S. engineers and building morale by giving employees a way to give back to their communities. By reducing waste in manufacturing, the companies decrease the use of materials and limited resources and decrease the cost of materials required to manufacture product. Minimizing energy consumption means the companies save money and reduce carbon emissions.
Despite the progress across various industries, the fashion industry has work yet to do. Even though the Nike incident still reverberates, few fashion companies and retailers went beyond addressing the legal and marketing issues that employing child labor inflicted. Patagonia, however, is one notable exception. The clothing company has consistently pursued technical innovation to produce environmentally sensitive clothing manufacturing processes and materials. The company allows customers to return their clothing when they are done wearing them. Patagonia has used organic cotton for years, created a fleece out of recycled plastics, and the list goes on. Another well-known traditional retailer is looking at how to leverage CSR as a way to connect with existing customers and gain new ones. It sees CSR as a way to form an emotional bond by looking into incorporating organic cotton and using more renewable, non-traditional materials in its products.
It’s Not Just About the Product
Retailers impact CSR with the products provided as well as the buildings used to sell their goods. Wal-Mart and JCPenney have emerged as leaders in developing new store models that save energy and use sustainable building practices. In 2005, Wal-Mart built an experimental store in McKinney, Texas, that uses wind energy, solar panels, shaded parking areas (which reduce heat), increased recycling of materials, and smarter material usage during the building phase. JCPenney is shaping the CSR scene from a building sustainability perspective. The EPA recognized JCPenney as the 2007 Energy Star Partner of the Year for Energy Management. This makes JCPenney the first retailer to receive the award for energy management.
Each company has the opportunity to help solve the problems CSR addresses. Some companies have been accused of green-washing – making these companies seem environmentally concerned just to sell product. Even if that is the case, is it relevant if they are improving what they sell or reducing environmental impact? The trick is to measure that impact. It is relatively easy to claim good intentions and more challenging to deliver on them.
How Technology Helps
Business intelligence (BI) methodologies are natural partners with companies wanting to become better corporate citizens and leaders for corporate social responsibility. BI is used to measure financial performance, supply chain, personnel and much more. BI has a role to play to help company executives determine if they are meeting their CSR goals – whether green initiatives, supplier validation, energy reduction, charitable involvement or improving employee morale.
BI can help companies track whether CSR initiatives are having the expected financial impact (cost reduction or revenue generation) as well as help track material waste reductions and carbon-footprint minimization. These are accomplishments that merit celebration and recognition in annual reports, quarterly reports, press releases and corporate social responsibility annual reports. Good, validated business intelligence adds a level of trustworthiness to the information being reported and can help a company move from sound bites to results customers will appreciate and reward.
Companies can use BI to launch, promote and sustain a CSR program. BI with good information input shows progress and gives companies regular insight into CSR performance. The insight allows companies to respond faster and make a bigger, more positive CSR impact.
What the Future Holds
Based on recent trends such as the “greening” of America, it’s clear CSR will play an ever-increasing role in everyday business decisions. Strategic companies will use CSR as a way to gain financial, marketing and brand advantage. The most successful businesses will be those that find a way to marry making money with doing the “right thing.”