Corporate Social Responsibility and Sustainability

Grade Level: 
6, 7, 8, 9, 10, 11, 12
Keywords: 
Corporate Philanthropy
Environmental Stewardship
For many companies, treating the environment well is important to business practice and image, and this is reflected in their Corporate Social Responsibility (CSR) programs. Not only is it socially responsible practice, it is good business. The clothing brand Patagonia is an example of a company with a strong CSR practice focused on sustainability. Patagonia's efforts to reduce their carbon footprint is evident in their environmentally friendly practices.

Authored by Elliot Dunbar

 

Definitions

The term Corporate Social Responsibility (CSR) has a fluid definition, and can vary across different corporate programs that benefit the community (Chandler, 2015). In simple terms, CSR is any action a corporation does to benefit the relationship between a corporation and the community, and to make a positive difference in the community with employee engagement, financial support, and volunteerism. Corporate social responsibility is a business trying to do well in the community through responsible actions.

While environmental sustainability is usually a part of corporate social responsibility, CSR does not only focus on sustainability. For many companies, treating the environment well is important, and this value may be reflected in their CSR programs. For example, to counteract the damage Ford's car industry causes to the environment, they try to practice sustainability and community responsibility in their CSR practices in order to be as environmentally friendly as possible. They are trying to limit the harm they make on the environment, and do so partially through corporate social responsibility.  

In another example, the clothing brand Patagonia has a corporate model centered on reducing and recycling, and their efforts to reduce their carbon footprint is evident in their environmentally friendly practices.   

 

Historic Root

The brand Patagonia was started by Yvon Chouinard, an avid mountaineer, rock climber, and skier. Chouinard began manufacturing equipment for the growing climbing industry. His love for climbing was matched by his care for the environment, and he wanted to create a product that was long lasting, reusable, and did the least damage to rock walls he was climbing.

Eventually, Chouinard built a business that not only made climbing equipment, but also produced outdoor clothing for extreme conditions. As the company evolved, it became primarily known for its outerwear and adventure apparel. But as the company grew slowly, it continued to focus on sustainability and environmental friendly practices.

Yvon Chouinard describes Patagonia as “a holistic approach to business. You are taking care of the damage that you do as much as you can, and you are involving your customer” (Beckett & Cameron, 2012). Because of this philosophy, Patagonia focuses on quality and longevity of products, rather than cutting costs. The company believes this is important for their social responsibility because it keeps job security, products lasts longer, and it reduces overall waste.

Patagonia not only believes it is their role as a corporation to promote change, but they also value education for their customers through environmental articles in their catalogues. They encourage customers to repair their Patagonia equipment and clothing and only purchase items if necessary, and to buy used products whenever possible. This is all an attempt of Patagonia to be ethical and responsible to the environment and the community.

 

Importance

Ethical corporations are vital to our society. When a company chooses to support the community and be responsible, they choose to support ethical business practices. In the case of Patagonia, customers are confident that the products they buy are not made using sweatshops, do use ethically sourced materials, and come from environmentally conscious factories.  These are important elements of corporate social responsibility and sustainability because this provides companies an opportunity to raise awareness and make changes for environmental rights.

Through Patagonia’s CSR model, they have teamed up with nonprofit organizations and other companies to create a sustainability index that provides customers with evidence that a company is using ethical practices. Without the help of corporations, this information would not have the ability to be put into action, and there would be no pressure from competition to be more environmentally friendly. Pressure from other businesses is one of biggest motivations in a company’s corporate social responsibility. By connecting philanthropy to the business sector through CSR, Patagonia is able to make environmental changes in the fashion industry, and the business sector as a whole, by encouraging other companies to follow in their footsteps and be environmentally friendly.

 

Ties to the Philanthropic Sector

Corporate social responsibility is an opportunity for companies to make a difference in the community. By using available funding from the company’s profits, CSR programs are able to make investments into the nonprofit sector and help promote positive change in the community. Corporations have a strong influence on the economy and have more funding than nonprofits to change policy, allowing them to be change agents.

Companies benefit financially from this practice too. Many consumers, especially young adults, seek ethically sourced products when they have an option. In this case, the sustainable practices attract business and reach key stakeholders. Not only does a CSR program benefit the company’s bottom line, social responsibility is a direct link between the business world and philanthropy.

The relationship to philanthropy can be measured in the added support of nonprofit organizations. Some forms of CSR are practiced through corporate foundations and employee giving. Through these outlets, corporations direct funding to nonprofit organizations that are making changes in fields related to the company’s business.

The connection to philanthropy makes CSR one of the biggest proponents to the public good in the business sector. CSR gives companies a way to benefit the community, and it provides a bridge between the business and nonprofit sectors.

When exploring the benefits and challenges of CSR, it is important to understand that philanthropic action is not entirely selfless, nor is it entirely selfish. Apart from business motivations, values are what make CSR effective. Companies that focus on making an impact, efficiency, and sustainability are more likely to receive the varied benefits of CSR programs than those companies that practice it for the financial gain. Values give meaning to motivations.

 

Key Ideas

Corporate social responsibility and sustainability are important to corporations for a variety of reasons. Motivations that affect corporate social responsibility are social power, public image, money and wealth, and conformity (Crowther, 2018). Other aspects that make these areas important are values, which give motivations meaning, and stakeholders, who help drive a CSR program.

For some corporations, CSR is a way to gain social power. The “green movement” is a popular social and environmental cause, and consumers are attracted to supporting companies with ethical practices. Companies can use their CSR to increase their social capital and attract customers who support green initiatives. By making these green changes, they gain an edge in the community and make themselves more marketable, thus increasing social power.

Another motivation is public image. Companies that focus on being green in their practice are seen well in the view of the public. Being socially responsible gives corporations something to brag about to the public. Public image is crucial for business as generations become more progressive.

Other CSR motivations are related to money and wealth. Many environmental practices focus on the reuse, reduce, recycle, repurpose model, which in turn saves money on materials. Patagonia is a good example, since they repurpose used clothing to either make new products, or to fix and reuse. Reusing materials is good for the environment and lowers cost, and this sustainable social practice can help a company financially.

The last motivation is conformity. With the increasing competition in the business sector, and the growing green movement, it is important for companies to match up with competitors. While the true purpose of CSR is for the organization to be philanthropic, companies may become philanthropic out of pressure to be competitive in the market and conform to ethical practices and meet expectations of customers. The conformity motivation is one reason for Patagonia’s work to maintain the sustainability index. They want to hold corporations accountable.

While making decisions about actions toward corporate social responsibility and sustainability, companies must be aware of the stakeholders who are impacted (Laszlo, 2003). In terms of the environment, stakeholders include employees, local communities, and nature. This list is not exhaustive, but represents the areas that will be directly affected by sustainability.

Employees are major stakeholders because sustainable practices happen with them. Whether it is reducing waste, sharing information, or designing new products, social change starts with the workers of an organization. Local communities are stakeholders because they directly benefit from the positive impact that an organization makes. Local communities are also likely consumers who support the company. Nature is a stakeholder in the case of Patagonia, because a company's environmental practice either harms or helps nature.

A CSR program can make a company more effective in business and can influence more impact in the community. When motivations are based on principles and values rather than financial gain, an organization can receive the benefits of a strong CSR imitative as well as build goodwill in the community. Lastly, by putting stakeholders in the forefront of decision making, a CSR program will be able to cater to those who care about the program, and be able to enhance innovation as a company.

 

Important People

  • Yvon Chouinard: Founder of Patagonia and a leader in CSR focused on sustainability
  • Steve Howard: IKEA’s Chief Sustainability Officer who has increased efficiency in IKEA’s supply chain management, and focuses on green energy practices
  • John Viera: Global Director of Sustainability and Vehicle Environmental Matters for Ford Motors; a leader in CSR who has promoted innovation for product transportation

 

Related Nonprofit Organization

  • Sierra Club: to explore, enjoy and protect the planet; to practice and promote the responsible use of the earth's ecosystems and resources; to educate and enlist humanity to protect and restore the quality of the natural and human environment; and to use all lawful means to carry out those objectives
  • National Park Foundation: As the official nonprofit partner of the National Park Service, the National Park Foundation generates private support and builds strategic partnerships to protect and enhance America's national parks for present and future generations. 
  • Nature Conservancy: The mission of The Nature Conservancy is to conserve the lands and waters on which all life depends. 

 

Reflection Questions

  • Why is it important for corporations to care about philanthropy?
  • Why is it important for them to care about the environment?
  • What can companies do to improve their CSR related to sustainability?

 

Bibliography

  • Beckett, C., & Cameron, S. D. (Directors). (2012). Growing the Sustainable Company [Motion Picture].
  • Chandler, D. (2015). Corporate Social Responsibility: A Strategic Perspective. New York: Business Expert Press, LLC.
  • Crowther, D., & Seifi, S. (2018). Redefining Corporate Social Responsibility. UK: Emerald Publishing Limited.
  •  Laszlo, C. (2003, Sept 15). The Sustainable Company: How to Create Lasting Value through Social and Environmental Performance. Booklist. Vol. 100 Issue 2, p189. American Library Association.
 
This briefing paper was authored by a student taking a philanthropic studies course at The Lilly Family School of Philanthropy.