Is Your Company Really Doing CSR?

“My company donates, therefore we do CSR.” Not really.

The rainy season has officially been declared in the Philippines. And with the usual downpour of rain comes the downpour of support and donations from kindhearted Filipinos in and out of the country.  The country is not wanting for generous people. We have seen generosity at its finest after super typhoon Yolanda (International codename Haiyan) hit the country in 2013.  

When your company donates cash or goods for those severely affected by natural or manmade calamities or sends employees to volunteer for a cause-oriented project, do the donation and volunteered time mean your company is doing Corporate Social Responsibility (CSR)?

To answer this question, let us turn to how CSR is defined.

The United Nations International Development Organization (UNIDO) defines Corporate Social Responsibility as a “management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.” Put simply, CSR is how a company balances its business operations while being a good corporate citizen. 

To understand what good corporate citizenship is, we need to see a corporation as a person who works, earns a living, dutifully pays his/her taxes, follows the law, and works for the good of the community.  In other words, CSR is a company doing what it is supposed to do 

Do I do CSR when I donate?

So going back to the first question: if a company donates to charity and engages its employees in cause-oriented activities, does it practice CSR?

Not quite.

According to World Bank Philippines Country Director Motoo Konishi, “CSR is not about dole-outs or charity or handouts to the society. It is what corporations do to solve social problems that help create a sustainable society that in turn increases business and profits.”

So giving to charities is strictly not CSR. What these companies actually practice is Corporate Philanthropy which is defined as charitable donations given by companies to nonprofit organizations. These donations can either be in cash, in kind, or for the use of the company’s facilities or volunteer time of its employees. Companies usually create foundations to handle the management of these programs. 

Corporate Philanthropy is part of the overall CSR program because CSR goes a step further than philanthropy. CSR is the company’s expression of its purpose for existence. UNIDO calls it the “company’s effort to achieve a balance of economic, environmental and social imperatives (Triple-Bottom-Line Approach), while at the same time addressing the expectations of both shareholders and stakeholders.”

It is important to distinguish CSR as a strategic business management concept, compared to Corporate Philanthropy, while it is charity, can be done by any company without taking into consideration the nature of their business in relation to the community. For this reason, any CEO needs to identify what program he wants for his company.

For example, an agricultural company can sponsor scholarships and donate cash and groceries for victims of a fire or typhoon. That would all fall under Corporate Philanthropy.  But if the CEO wants his company’s charity to be more strategic and aligned with his company’s business, it would be better to focus the programs from a simple college scholarship to a more specific scholarship for agriculture majors in college. Other advocacies that the CEO of the agricultural company could consider are the following: environment protection, sustainable agriculture, ISO 14001 certification, and vegetable feeding program in communities with a high incidence of malnutrition among others. This is doing CSR.

Long-term benefits of CSR

There is no law mandating companies to implement a CSR program.  Even though it is not compulsory, many companies invest a lot of resources to craft and maintain a CSR program.  Some even set up an entire department or foundation for this purpose alone.  

A strategically crafted and properly implemented CSR program can bring a lot of advantages for a company as studies have proven.  

For starters, CSR projects gain tax breaks.

But more important than the temporary monetary benefit, CSR enhances the public image of the company, especially among its current or future customers and future workforce.  

Gallup’s report “How Millennials Want to Work and Live” reveal how millennials relate with companies that they view as not only profit-driven but also embrace and champion worthy causes and are sensitive to socially relevant issues.  

Moreover, the report finds millennials are three times more likely than any other age group to have changed jobs in the last year, the least likely to believe they’ll be in the same job in a year, and the least engaged of all employees or customers.

The same study poll found that 67 percent of respondents aged 18 to 29 and 49 percent of those aged 30 to 49 see global warming as a serious manmade threat.  This is a huge chunk of the consumer base.  This also means millennials make up the largest portion of the workforce today and are worth US$1 trillion in consumer spending. About 73 percent of this same spending group says they would spend more on sustainable products. 

Consumers value a socially responsible company

The 2017 Cone Communications CSR Study revealed that 87 percent of consumers would purchase a product because a company advocated for an issue they cared about and more than 75 percent would refuse to purchase a product if they found out a company supported an issue contrary to their beliefs.

Jerome Daclison, corporate affairs head of the Philippine Business for Social Progress (PBSP) said in an interview with the Manila Standard that “consumers tend to patronize companies which do CSR because of the perception that they too are being given the chance to give back by buying a product or availing of a service of such companies.” Consumers today have high regard for companies that engage in CSR programs.  He said this view cuts across generations and is not a monopoly of Filipino millennials.

Consumers would most likely patronize companies that uphold CSR principles because of the perception that when they buy products of such companies, they are, in effect, fulfilling their duty to do something good for the community.

Daclison said companies before were more confined to philanthropic activities or the usual one-time big-time dole-outs. He said companies today are more responsive to do “more strategic interventions that require inter-industry collaboration to provide a more sustainable solution to societal problems in the country,” Daclison said.

“The new millennium drove companies to answer the call for business sustainability. These have led to businesses viewing social development not only as an add-on activity but as an integral part of their business operations,” he added.

Apart from looking at the outside to ensure brand loyalty from socially conscious consumers and the workforce, the Cone Study mentioned reveals a very powerful insight that may impact the future of a company’s viability. 

Asked to rank the most important business practice they would like the company they patronize the goods and services, respondents of the Cone Study identified being a good employer as their top priority.  Consumers would love to support a company that values its workforce. This shows that the highest CSR advocacy that people want to see starts in the company’s own backyard—how they care for their own people.

“Being a good employer has always served companies well in terms of recruitment and retention, now those practices can also yield broader positive business benefits,” said Alison DaSilva, Executive VP of CSR Strategy at Cone Communications. “Companies should now showcase their internal efforts to enhance their reputation and gain crucial points in the eyes of consumers,” she added.  

It does not require an advanced MBA degree to know where to focus on a company’s marketing and promotional efforts.  If millennials form a significant part of a business’ market base and human resource bank, a CSR program that appeals to their sensitivities would bring a lot of dividends for the company.

In the process, employees learn to appreciate the company for its service to the people, and the company eventually gains the employees’ loyalty. Moreover, the experience gives employees a sense of purpose, not to mention pride and joy in being of service to one’s fellowmen.

Giving for giving’s sake does not work anymore, especially in an age where past corporate activities are but a Google away.  People would always look for a company’s motive behind every act.  A one-off gift giving will work just like it isa flash in the pan.  But if companies look to exist beyond the numbers in their financial statements and instead work as a group of socially responsible and sensitive corporate citizens, then they would ensure not only their own viability and sustainability but their market’s and community’s sustainability as well.

*This article was published in The Corporate Magazine’s printed June-July 2019 Issue.