Corporate Social Responsibility

In the world of business, the first decade of this new millennium seems to reflect one sad story of corporate greed and mismanagement after another. We've gone from the Enron and the WorldCom scandals, to the mortgage collapse that hurt so many over-extended homeowners before bringing down giant firms like Fannie Mae and Freddie Mac, and now the wider financial crisis that threatens everyone.

But there's another story that I like about this decade. It's the rise of corporate social responsibility -- the idea that businesses should be involved in making the world a better place and not just focused on maximising profits.

When you look at the business landscape it appears such a contradiction, doesn't it? While some executives have ruined lives through greed and incompetent leadership, others are seeing their role in a new way and steering their companies in refreshing directions. I think society is much better off because of it.

Firms in the near future will be judged much more on the effectiveness of their environmental policies, for example. In many ways corporations are becoming important partners of government and of the social services sector in our communities. Many companies today are involved in charitable activities and in volunteerism.

Bill Gates, whose charitable foundation has given millions to health care and community-improvement projects around the world, recently wrote an article for Time magazine called "Making Capitalism More Creative" (link below) that offers some clear examples of how companies can make the world a much better place.

He cites the (RED) campaign, where companies like Hallmark, Dell and others sell (RED)-branded products. When consumers buy these products, the companies donate a portion of their profits to fight AIDS. Gates argues that firms can and should do much more. He calls on governments to provide greater incentives to firms that launch ideas like these. Simply obtaining more recognition in the public arena is a big plus for companies that are willing to be graded on their social responsibility initiatives.

I like Starbucks' aggressive three-point strategy in corporate social responsibility: the company says it wants to achieve more "ethical sourcing" for their coffee (not take advantage of farmers in poor coffee-producing areas); contribute to communities and reduce Starbucks' environmental footprint. For me, the best aspects of the company's approach are the key performance indicators Starbucks has employed to measure its success in these areas; as the saying goes, "What gets measured, gets done." For example, Starbucks keeps track of how much coffee it purchases each year over year from Fair Trade Certified farmers, how much water and electricity it consumes per square foot of retail space each month, how many dollars are given in charitable contributions ($18 million last year), and so on.

Next time you're in a Starbucks, pick up their "Of Coffee and Community" pamphlet. One could dismiss it as another public relations exercise, but I found it to be a good read. It shows tangible steps.

Many companies today support charities. Others are nourishing the arts in their communities or providing funding for social service projects, like assisting the homeless. In Canada this is the case with the RBC Foundation and Goldman Sachs Canada Inc. Both give money to the LOFT Community Services organization, among others.

There are many more examples to remind us the world is getting better, despite the dark clouds overhead.

Other link:

Bill Gates in Time: "Making Capitalism More Creative"

Photo courtesy of Sanja Gjenero

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