Episode 12: Corporate Social Responsibility with Andrew Winston (Winston EcoStrategies)
We know what you're thinking - "A socially responsible corporation? Surely you can't be serious." Well, we ARE serious, and stop calling us Shirley. Sustainability celeb Andrew Winston joins us to talk sustainability goal setting - what CSR is, why it matters, and how the world's biggest companies are incorporating it into their business models on a daily basis.
Episode Intro Notes
What We'll Cover
- What is Corporate Social Responsibility (CSR)?
- History of CSR
- Benefits of CSR
- Sample CSR initiatives by companies you know
- The CSR planning process
- About Andrew Winston
What is Corporate Social Responsibility (CSR) (1)?
CSR is where a company goes beyond what’s required of them and thinks about what actions they can take to increase social good. This could be better labor conditions, more environmentally friendly operations, helping the community, etc. These actions are not totally altruistic. Often these voluntary actions increase long-term profits and shareholder value through increased customer trust and declines in operating costs.
CSR is all voluntary and the company takes the initiative to integrate CSR actions into its business model and decision-making processes. The business self-monitors these voluntary actions and now, via sustainability reporting, there’s also customers and other stakeholders keeping them honest. CSR strategies encourage the company to make a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others.
History of CSR (2,3)
The term “Corporate Sustainability Planning” first hit the scene in the 1960s. Environmental issues received prominence during this period triggering the creation of numerous national and international environmental protection agencies. The earliest reference to “social auditing” was also in the early 1960s in a book by George Goyder called “The Responsible Company.” He proposes that a social audit can act as both a useful management tool and offer stakeholders a platform for challenging and influencing companies. The United Nation’s Code of Practice for Transnational Corporations in 1973 was an early attempt to define CSR business principles in terms of ethics, product standards, competition, marketing, and disclosure of information.
Poverty, population pressure, and social inequity started making waves in the 1980s. This is when the principles for sustainable development were established by the Brundtland Commission and key concepts associated with natural capital and measuring sustainability began to emerge. Many companies considered it necessary to introduce quality and environmental management systems around this time.
The 1990s saw the rise of CSR to further prominence in political and economic dialogue. This increase in momentum can be attributed to the concerns and CSR-oriented expectations of informed consumers, citizens, public authorities, and investors. Increased transparency of business activities added to the effectiveness of these forces.
From the 2000s on, we have seen the continued maturation of corporate social responsibility. More and more companies have adopted and begun reporting on CSR initiatives.
Benefits of CSR (4,5)
According to PWC, 76% of CEOs define business success by more than financial profit. That means that both businesses and consumers see the larger roles required for business within society. 64% of CEOs say that “corporate social responsibility (CSR) is core to their business rather than being a stand-alone program”.
Why do CEOs fundamentally care about CSR? To build trust with their consumers and to retain talent! A growing body of evidence tells us that companies with rigorous environmental, social and governance (ESG) programs outperform their peers. In 2015, researchers from the University of Oxford and asset management firm Arabesque Partners published a report that illustrated just how strong the link between sustainability and performance truly is. Their expansive review of more than 200 academic studies, news articles, books and industry reports determined that:
- 80 percent of studies found that sound sustainability practices had a positive impact on companies’ stock prices;
- 90 percent showed that effective ESG platforms lowered the cost of capital for companies;
- 88 percent indicated that good sustainability practices boosted operating performance for firms.
Sample CSR Initiatives (6,7)
Kroger recently published its set of 2020 Sustainability goals. These goals include increasing responsible sourcing (through sustainably raised seafood and cage free eggs), increased eco-stewardship (food waste reduction and large-scale recycling programs), and additional carbon reducing programs.
Unilever, one of the forefront leaders on CSR initiatives, has set a number of ambitious goals for itself in the coming years. This is part of their “Unilever Sustainable Living Plan.” They include:
- Cut its environmental footprint in half by 2030 through increased analysis into their GHG emissions, water usage, waste generation, and sustainable sourcing practices
- Improve hygiene and sanitation access for over a billion people by 2020
- Enhance corporate livelihoods by promoting fairness in the workplace, opportunities for women, and inclusive business practices
Unilever also has a Sustainable Agriculture Code where it details practices that it expects its suppliers to follow.
The CSR Planning Process (8)
When companies sit down to discuss how to integrate corporate sustainability planning into their business systems, Andrew suggests five areas to consider carefully in crafting an operational plan to reach science-based carbon reductions:
- Build good governance around the process to ensure internal accountability
- Develop robust plans to engage suppliers (and provide human and financial capital if necessary) to identify and spread best practices and technologies
- Invest in the development of solid measurement and metrics
- Establish interim goals and adjustments to the targets as climate science evolves
- Be transparent and open about progress
In essence, we’re saying companies should ask themselves: who’s the decision-maker, how will we spread best practices, how will we know if we’re making progress, how well will we adjust to changing science, and how open are we being with the world?
Traditionally, companies maximize short-term earnings and then get to these big shared environmental challenges. Andrew suggests that we need to flip priorities - operate in a way that tackles our largest issues first and then work our way backward to see how capitalism can do it most profitably. He recommends the following strategies:
- Fight the plague of “short-termism” in business
- Set bold, science-based goals (How much water to we need to put out this fire → how do we prevent the fire in the first place?)
- Asking heretical questions that challenge the way we do things (Can we cooperate with our competitors? Can we operate without fossil fuels?)
About Andrew Winston
Andrew Winston is a globally recognized expert on how companies can navigate and profit from humanity’s biggest challenges. Andrew’s first book, Green to Gold, was the top-selling green business title of the last decade, selling over 100,000 copies in seven languages. Inc. Magazine included Green to Gold on its all-time list of 30 books that every manager should own.
As founder of Winston Eco-Strategies, Andrew’s views on strategy have been sought after by many of the world’s leading companies, including Boeing, HP, J&J, Kimberly-Clark, PepsiCo, PwC, and Unilever.
Andrew has written three business strategy books - Green to Gold, Green Recovery, and now The Big Pivot. He is a regular blogger and contributor to Harvard Business Review online, the Guardian, Huffington Post, and his own popular blog at www.andrewwinston.com. Andrew has been quoted or appeared in major media such as The Wall Street Journal, Time, BusinessWeek, New York Times, and CNBC.