Comprehensive Social Responsibility
Published December 2020
In the early days, corporate social responsibility (CSR) meant donating a percentage of profits to charities, offering employees time off to volunteer in their communities, and perhaps hosting a workplace charitable fundraising campaign. In the 21st century, CSR has expanded to a whole-body experience for corporate entities. At companies that are fully committed to CSR, consideration of the common good is a function of every business decision they make.
Companies are now charged by the public with responding to current events—even when they are not directly related to the business—and improving conditions wherever they buy, sell, or manufacture. This extends up and down the supply chain; companies are held responsible for the organizations with which they do business.
For evidence of the more immersed corporate role in everyday issues, we need look no further than the overall corporate response to a chaotic 2020 (in which a pandemic killed millions globally and police-involved killings stoked new protests over racial inequities). Businesses rushed to the ramparts, committing their expertise to fight the virus or facilitate a transformed way of living, pledging billions of dollars to research, investing in diversity and inclusion efforts, and promising to review their own hiring and advertising practices.
CSR is a matter of enlightened self-interest as businesses recognize that attracting talent requires widening the pool of applicants and fulfilling their employees’ needs while on the job. Millennials and Gen-Zers particularly yearn to bring their whole selves to work and prefer employers that help them fulfill their desire to make the world a better and more just place.
The brand impact of good corporate social practices can hardly be overstated. In survey after survey, consumers express their preference for products and services delivered by companies with positive social track records.
Since 2015, when the United Nations articulated 17 Sustainable Development Goals (SDGs) for entities of all kinds to pursue globally, businesses have incorporated them into their CSR programs. These goals describe a world characterized by justice, equality, peace, and prosperity—and where the earth thrives unaltered by human commerce.
Once the entirety of CSR, giving and volunteering remain its bulwark—particularly for smaller enterprises. Offering the synergistic combination of workplace giving and incentivized volunteering helps promote participation in both and build engagement among staff. Research confirms that engaged employees are more productive and loyal than those who are disengaged.
Companies are learning that CSR is not complete when it is a sidebar operation of the enterprise, like the company softball team. Instead, it must be woven into the fabric of the entire enterprise, involving employees at all levels and various departments. Marketing, IT, human resources, finance, and other departments have roles to play in the success of a CSR initiative.
Although private sector volunteerism and giving have largely been American traditions, companies outside of the States are catching up. Global volunteering is growing rapidly—up by a third between 2018 and 2019 alone.
Businesses are becoming proficient at aligning their social good focus with their company values and culture. A company connected to water might work to save the world’s oceans while another that sells products produced in developing countries might be fixed on global poverty, health, or justice issues. Millions of organizations pouring their monetary, human, and physical resources into these efforts are magnifying existing initiatives and providing hope that some of the world’s most pressing problems can be managed, or even solved.
Pulitzer Prize-winning writer and author Thomas Friedman has said that today’s companies must have “the brains of a business school graduate and the heart of a social worker.”
The reverse has become true, too: Social good is now largely dependent on business. The power alone of FANMAG (Facebook™, Apple®, Netflix™, Microsoft®, Amazon™, and Google™) to provide social benefit, change global culture, and create large-scale change far outstrips those of most of the world’s nations. Consider how the Bill and Melinda Gates Foundation™, has helped eradicate age-old epidemics in Africa—something governments on the continent had been unable to do on their own.
With a need to attract talent, businesses have helped create social movements in the U.S. for normalization of LGBTQ+ issues and re-examination of racial inequality. These gains have not resulted primarily from legislation or government action. When the corporate sector adds a chorus of voices to a movement, it can amplify the sound even beyond the work of mere law.
COVID-19 and Black Lives Matter
The business case for demonstrating a serious commitment to CSR has been recognized for decades, but it has never been so urgent as in 2020. With a pandemic putting many businesses at risk, increasing unemployment, and shutting entire populations in their homes, Americans have looked to the private sector to help solve problems—from distributing hand sanitizer to providing universal broadband access.
Layered on top of COVID-19 is a national awakening about social justice issues following the killing of George Floyd by a Minneapolis police officer. The rejuvenated Black Lives Matter movement sparked a renewed commitment to racial equality across the nation. Dozens of high-profile companies responded with multi-million-dollar donations to racial equity organizations and initiatives, as well as re-examination of their own internal employment practices. Black Lives Matter messages began showing up in television advertising, in sports arenas, and elsewhere.
But CSR is more than simply responding to a movement with a statement or donation. CSR is a mindset that permeates an enterprise and infuses every aspect of its work.
In the wake of these two events, Best Buy™ CEO Corie Barry reflected the pro-social orientation of corporate American today. Recognizing that her company, like all others, needed to respond, she challenged the entire organization with a mandate to find and act on solutions.
“I don’t have the answers,” she wrote, “but I am no longer OK with not asking the question: ‘If everything were on the table, what could Best Buy do?’ With that in mind, I am appointing a diverse group (by demography and level in the company) to challenge one another and—ultimately—our senior leadership team and Board of Directors—with substantive, enduring ways to address the inequities and injustices to which all of us bear daily witness.”
Best Buy committed to hiring 30% of their next employees from minority groups and to continue its effort to bring technology to everyone regardless of their ability to pay. That an electronics retailer would consider this part of their responsibility would have flummoxed corporate leads just 50 years earlier.
CSR manifested itself in myriad other ways in 2020. Here are a few examples:
- New paid leave policies were introduced for parents of children attending school virtually.
- Stipends were administered to those working from home.
- Employees gained access to free or low-cost counseling.
- Companies with the ability to do so aided in the temporary production of masks and other health supplies.
- Companies invested in Black-owned businesses and supported Black-owned banks that cater to minority communities.
- Corporate matches for employee donations doubled and tripled.
- Human resources departments boosted efforts to hire minorities.
As the numbers indicate, this is both a moral and business imperative. Consumers—led mostly by Millennials and Gen-Zers—are increasingly demanding that brands live up to CSR standards.
This was a response to a moment in history, but it is hard to imagine efforts will simply evaporate once the COVID-19 crisis is over and the urgency of the Black Lives Matter movement ebbs. It is likely that some stores will continue their early shopping hours for the elderly and special discounts for healthcare workers, that companies will continue to provide employees with free therapy, and that equitable hiring practices will continue to evolve.
Fifty years ago, a CEO of any Fortune 500 company would have identified building value for his shareholders—and it was always his—as the number one priority. Anything else would have been corporate heresy. Most would have indicated the same 20 years ago. Today, many CEOs list their employees as their top priority; Others identify their priority as creating positive change in the world. The impetus for this shift has come from the bottom up: from employees and the marketplace itself.
One result of this shift has been a boom in CSR programs.
The Corporate Role in a Purpose Ecosystem
Today, CSR is much broader and deeper. It is a critical part of the culture, a way of life inside the enterprise, a core value shared by everyone from the CEO down, and a philosophy that’s woven into the fabric of the company in thought and deed. CSR also reaches beyond an enterprise to connect with others as part of a purpose ecosystem that focuses on general social good. It recognizes that a company is a collection of people—employees, community members, parents, neighbors, and caring individuals who want to cooperate with others to benefit society.
The Purpose Ecosystem
The culture of an organization is defined by its values and habits, so that the concept of purpose transcends words in a boardroom and becomes part of the life of the corporate organism.
Chief Executives for Corporate Purpose (CECP) was founded in 1999 by actor and activist Paul Newman to promote a better world through business. World-class companies invited to join CECP are putting purpose at the core of their business strategy. Strategies target specific, time-bound results that are used to operationalize purpose. In the view of CEOs who have committed to this initiative, purpose makes their companies durably relevant to the world.
These companies ask employees to bring their whole selves to the workplace. In return, employees want their whole selves reflected in their work environments. They expect their employers to reflect their values and act on them. Consequently, companies are engaging in social good activities that support their people as well as their brand.
This approach to business has reverberated well beyond CECP members, according to the organization itself. Its survey found that 76% of companies have altered their corporate purpose statement in the last five years—most of them to reflect a desire to create positive social change.
Powering a Social Good Ecosystem
Many companies take advantage of software to facilitate corporate efforts fueling social impact and driving customer and employee engagement. These solutions promote social good goals and impact measurement, brand differentiation, stakeholder trust and loyalty, talent acquisition and retention, and a host of other positive effects of a robust CSR program.
As part of a broader social good ecosystem, each corporate actor in the social good space demonstrates its value as an employer and corporate citizen. That is part of the reason why CSR is no longer reserved for the corporate behemoths on the New York Stock Exchange or NASDAQ. Any enterprise that believes in making a difference as well as a profit can align its culture and behaviors around core values.
Recruiting and Retaining Talent
Prior to September 11, 2001, it was commonly understood among professionals in America that nonprofit organizations existed to do good and companies existed to make money. Employment decisions were based on individual priorities. The unfathomable tragedy shattered that framework and sent many people searching for a way to do both.
Companies now provide a launching pad for integrating social good into daily work life. For many employees, the search for the perfect job is predicated as much on a company’s values and opportunities to express them as salaries. This is particularly true of Millennials, who were in their formative years during and in the immediate aftermath of September 11. According to a survey by Cone Communications, 78% of Millennials say a CSR program directly influences whether they would take a job at an organization.
Corporate recruiters say this creates a new imperative for companies to promote their values internally and externally to attract and retain talent. That means:
- articulating it prominently on the website for internal and external audiences to see
- incorporating CSR into the recruitment and onboarding processes
- weaving it into the brand—not as an addendum, but as a core element of the enterprise’s essence
It is noteworthy that, amid all the efforts to engage employees, donating and volunteering remain the most popular. According to YourCause® & Blackbaud®’s 8th Industry Review, giving and volunteering have the highest engagement rate at 19%. The top quartile of the thousands of companies that offer pathways for their employees to donate and volunteer produce annual per-employee giving of $959-$1,559 and 34-66 hours of volunteering.
Socially Responsible Brands
A Nielsen® study found more than half of Americans say they would pay more for a product if they know the company that produces it has a commitment to social value. Examples of this include food brands that support fair trade practices and jewelry importers that pay fair wages to women from underdeveloped countries.
Brands that develop sustainable reputations for social responsibility are intentional, comprehensive and, most of all, dedicated to integrating it into their corporate DNA. Brands whose meaning and purpose revolve around social responsibility make business decisions through that lens.
While CSR commitment might have once been viewed as the antithesis of profitability, there is hardly a distinction today. A study by the household brand Unilever® found the market for brands that make clear their commitment to the issue of sustainability is $1.28 trillion.
This has clear ramifications for marketing departments, which must champion a brand’s social responsibility commitment to attract consumers and engage employees. An integrated marketing communication approach across platforms with consistent messaging and a unified voice is necessary for communicating the company’s commitment to doing good. This can only happen as a result of continuous and sustained effort to weave social good into the fabric of the enterprise.
Marketing guru Philip Kotler says one of the fundamental shifts in marketing over the past 60 years has been from product-centric to consumer-centric, and now, in its third iteration, to human-centric. “Marketing 3.0 is the stage when companies shift from consumer-centricity to human-centricity and where profitability is balanced with corporate responsibility,” he writes.
One of the keys to engaging employees in the good works of a company is to train them on employment and social good programs as part of their onboarding experience. The YourCause & Blackbaud Industry Review found that 87% of employees inspired to donate to causes through the workplace return as annual donors.
Enveloping them in a culture of commitment is also key, and explains why employees in companies’ headquarters are two-and-a-half times more likely to make charitable contributions through their employer than remote employees who may not feel as highly engaged.
Although fundraising for causes and volunteering in communities remain the most powerful engines of employee engagement in social responsibility, sponsorships remain powerful tools that also benefit the brand. Companies aligning themselves with social good can derive secondary reputational benefits from their affiliation. Increasingly, though, that is not the primary motivation.
While this was once only a focus of marketing departments seeking ROI for the company brand, it is part of a larger CSR rubric today. Nonprofits that fear asking for sponsorship (or attempt to manufacture some marketing value for their sponsorships) are failing to understand that, in many cases, their corporate sponsors just want to do good. The ROI companies increasingly seek is community-based, not marketing-based.
Examples of corporate sponsorship include:
- ongoing support for nonprofits through regular giving, in-kind support, and pro-bono expertise
- event or campaign support that offsets costs and boosts a nonprofit’s operational revenue (this includes everything from providing auction items to underwriting a segment of the event)
As a result of sponsorship, companies may enjoy benefits to brand awareness and net promoter score, tax breaks, employee engagement and satisfaction, and a reputation for commitment to an issue or community.
According to the CECP’s Giving in Numbers report, companies report the following benefits from their sponsorships:
- Improved reputation/trust score (28% of respondents)
- Improved brand perception (26% of respondents)
- Attracting and retaining the best candidates and employees (16% of respondents)
- Increased customer loyalty (15% of respondents)
- Acquisition of new customers (8% of respondents)
- Other or a combination (7% of respondents)
Cross-Functionality of CSR
Already, the cross-functionality of CSR is apparent with marketing, sales, and HR functions represented in the list above. For CSR to have real meaning, it cannot merely be cross-functional; it must permeate all aspects of an organization.
In his influential book, The Corporate Social Mind, Derrick Feldman writes:
The Society for Human Resource Management (SHRM) sees a role for HR and IT in the management and implementation of CSR by:
- Implementing and encouraging green practices
- Fostering a culture of social responsibility
- Celebrating successes
- Sharing and communicating the value of corporate social responsibility to employees
In fact, according to CECP’s 2018 Giving in Numbers report, the most common departments that members of the community investment staffing team reported to include:
- Communications/Marketing (23% of respondents)
- CSR/Citizenship/Sustainability (22% of respondents)
- External/Public/Corporate Affairs (16% of respondents)
- Human Resources (15% of respondents)
- Community Affairs/Relations (9% of respondents)
Clearly, many different departments are taking the CSR lead in their companies. CSR as a separate function has not only ceased to be the norm, but it is also no longer the most common arrangement. Eventually, one might expect “CSR” to disappear from the lexicon (and instead be simply seen as a normal part of business).
SHRM offers a long list of small initiatives HR professionals can take as steps in their CSR journey. A small sample is listed here:
- Recognizing departmental efforts to recycle paper, cans, and bottles
- Establishing food collections for victims of natural disasters
- Encouraging reduced energy consumption by subsidizing mass transportation, incentivizing carpooling, and staggering work times
- Allowing remote working arrangements
- Increasing the use of video conferencing to reduce travel
Change management expert Rita Garza, director of the CSR consulting firm Aveniras Consulting, says companies must “remove the firewall between departments that exist due to the historic belief that CSR needed to be intentionally separated from Marketing, Communications, and other lines of business, to maintain its integrity and independence… Companies must fully integrate CSR into all lines of business, fostering collaboration between the CSR department and other teams.”
The authority for interdepartmental support for CSR activities derives from corporate leadership. Company leaders must commit completely to the CSR mindset and follow their employees’ lead with respect to company priorities and causes. Gone are the days when the CEO directs the company to support a particular cause because it is near and dear to his heart.
Communicating and Involving Employees
Engaging employees in the work of CSR creates a virtuous cycle of appreciation and involvement. A study by the British group Business in the Community found that 80% of employees who volunteer through the workplace are fully aware of the organization’s community investment policies—about two times more than those who do not volunteer. This leads to further volunteerism and charitable donations, as we have already seen.
Increased giving and volunteering rates are good for society, no doubt, but they also more deeply engage employees in the workplace. Employees (human beings with families and neighborhoods and lives beyond the workplace) have a desire to contribute positively to the world around them. No wonder 88% of employers believe effective employee engagement programs help attract and retain talent, according to America’s Charities Snapshot Employer Research.
Two elements of employee engagement through CSR are critical to its success:
First, staff must be actively involved in CSR policy development and implementation and must be part of the effort to infuse it into the organizational culture. Top-down approaches to CSR are considerably less likely to promote engagement because they fail to connect with employee interests and priorities. Nonetheless, leadership must demonstrate their full buy-in and support CSR efforts with budget, staff time, and overt encouragement.
Second, engagement must be strategic and sustained, rather than episodic and ad hoc. One method is to make established organizational values a topic of daily internal communication through signage, intranet discussions, and communication from leadership.
The ancillary benefit of value-driven social engagement is the impact on recruitment and retention of employees—and, ultimately, the bottom line. Employee Benefit News reports that it costs employers roughly 33% of a worker’s annual salary to hire a replacement. With a median annual salary in the U.S. around $48,000, each worker retained saves the company $16,000 per year. A recent study conducted by the consulting firm PwC revealed that the most committed employees are 87% less likely to resign than those who are disengaged.
Productivity numbers are harder to pin down, but the McKinsey Global Institute estimates that “connected employees” are 20%-25% more productive than those who are disengaged.
Volunteerism is a major element of any CSR initiative and one of the most impactful on employee engagement. Companies across the globe offer their employees time off, often in branded gear, to volunteer in their local communities through a wide variety of endeavors. Often, through their CSR program, companies focus on an organization or issue on which to bestow their sustained volunteer support. Episodic community volunteering includes hands-on activities, United Way Day of Caring outings, Martin Luther King Jr. Day activities, National Volunteer Day programs, and more.
The YourCause and Blackbaud Industry Insights Report found that volunteer ratios have remained constant at 8.7% since 2017 and that only three percent earned dollar matches for their volunteering. The median number of hours volunteered annually per employee is nine, suggesting that there is ample opportunity for organizations to boost their engagement in the community.
Volunteerism is a massive benefit to a nation’s social welfare, particularly in the U.S., where volunteering is most common. The Bureau of Labor Statistics values to time of average volunteer labor at $25.43/hour, meaning that 50 volunteers offering their free labor for six hours contribute $7,500 worth of good.
The top categories for volunteerism initiatives are:
- Human Services
These same top five apply (in a different order) to categories of giving.
Giving: The Backbone of Support
Ask almost any nonprofit or issue advocate what they need more than anything and the answer will almost always be money. Although CSR has bloomed in recent years into a significantly more robust commitment to making the world a better place, charitable donations remain an important backbone of support.
According to America’s Charities, workplace giving campaigns raise roughly $5 billion annually, of the roughly $300 billion total raised for charity. About half of charities identify workplace giving as a growth area that they intend to pursue in the future.
The YourCause and Blackbaud Industry Insights Report found that companies with fewer than 1,000 employees and those with more than 100,000 employees donate the most. Employees of the top 50% of companies in the smaller group donate an average of $2,285 to the five categories of charities identified as volunteer favorites, with education as the top beneficiary.
Engagement by Employee Type
Most companies, according to the report, offer the following methods of giving to their employees:
- Oﬄine giving
- Oﬄine match
- Credit card giving
- Credit card match
About half of companies offer:
- Cause cards
- Payroll giving
- Payroll matching
About one-third of companies cover the credit card fees for giving, which adds an $800,000 benefit to charities annually.
According to the CECP’s Giving in Numbers report, STEM and disaster relief are the two fastest-growing areas of support, as each becomes more prominent in U.S. life.
According to the YourCause and Blackbaud Industry Insights Report, many companies facilitate charitable contributions for their retirees, who are much less likely than full-time employees to take advantage. Those who donate do so on average four times more than the average full-timer.
Nearly all companies that run a workplace giving campaign offer a corporate match—most often a dollar-for-dollar match—as an incentive for employees to give. CECP found that a quarter of employees, on average, participate. The matching concept was created by General Electric Company® in 1954 and has been responsible for more than $1 billion of giving from that company alone.
Matching gifts offer numerous benefits for the company, including:
- more money raised for social good
- incentivized employees knowing that every dollar they contribute will yield a greater amount
- reflected employee interests and priorities
- a democratized process of deploying the organization’s charitable resources
- increased employee loyalty and enhanced recruitment
- a reinforced reputation as a socially responsible company
Employee Engagement Through Volunteerism
There is a great deal of research describing how employees are engaged through company-organized volunteer activities. The YourCause and Blackbaud Industry Insights Report suggests that predictive modeling can help employers plan volunteer activities most likely to inspire employee participation by monitoring where they direct their donations.
The report found that companies consisting of 10,001–50,000 employees have the most active volunteer pools. Employees in the upper half of companies in this size range average 23 volunteer hours annually—significantly more than any other group.
Engagement data suggests a synergy between workplace giving and volunteering with respect to their impact on total engagement. Companies that offer giving and volunteering have the highest participation rate: 19%.
Although paid-release time and flexible scheduling remain the most popular kinds of volunteer arrangements offered by domestic employers, that may be changing, particularly as work becomes increasingly remote. Offering pro bono service and employee expertise was the fastest-growing volunteer offering over the last few years.
As we have noted, people generally (and Millennials especially) believe that corporations can and should be engines for social good. America’s Charities Snapshot Employee Research found that nearly three-quarters of workers believe it is “very important” or “imperative” that their workplace culture be supportive of giving and volunteering.
Affinity and Resource Groups
One of the most powerful engines for empowering and engaging employees is the affinity group or employee resource group. These voluntary collections of employees with similar interests or backgrounds are rife with benefits for the cause of employee engagement. These groups are often built around racial, ethnic, or gender identity; age; previous experiences like veteran status; and life experiences like motherhood. They can promote a company’s diversity and inclusion efforts, develop social connections within the company, and expand opportunities for professional and personal development. Employee engagement rates at companies that use the software to organize these internal connections are 12 times higher than those at companies that do not offer them.
Employee resource groups require a principal to help organize and link the group back to company practices. They provide a voice and freedom to like-minded employees as well as offer a pathway for employees in large organizations to connect and feel more welcome within the rubric of company policies and practices. Companies can benefit from hearing about issues that bubble up from these groups.
Employers must also ensure that there are clear guardrails on the practices of their internal resource groups. For example, external activities like affinity group volunteer efforts must adhere to company branding guidelines.
The HR group SHRM, while noting their many benefits, cautions that affinity groups must be monitored and buttressed by a comprehensive policy framework to avoid creating divisive cliques.
Engagement on a Global Scale
As Imagine Canada wrote in its new report, Wake up call: Navigating New Pathways for Corporate Community Investment in Canada, “The economic challenges that await us are vast, but there are real signals of change. Companies in many ways have responded with unparalleled support for communities in the midst of the pandemic. More funds have been allocated to causes of racial equity in the last few months than in the previous decade. Funders are finding that some new practices they took on in response to the pandemic are exposing them to new ways of working that are worth keeping going forward. Canadians are saying they expect business leaders to speak out on social issues like racial injustice, income inequality, and climate change, and companies are starting to figure out the best ways to do so.”
Volunteer engagement is twice the rate in Asia as in North America and Europe. Total engagement remains greatest in the United States and Canada, where employees support charities financially at a rate four times the next most active continent. These behaviors are affected by culture and politics. For example, more communitarian European societies generally support those in need through the government rather than the private sector.
The influence of American companies overseas is beginning to have an impact on philanthropy. The CECP Giving in Numbers study found two-thirds of domestic-based corporations directing gifts across international borders. Indeed, more than one-fifth of their contributions benefit those outside the States. For multinational companies based abroad, the bulk of their CSR activities are not in the form of financial support but in volunteerism. Generally, though, domestic U.S. companies report 50% more engagement than their global counterparts and inspire their employees to give and volunteer more.
Global companies demonstrate their commitment to improving world conditions best via sustainable development goals. Contributors to the Giving in Numbers report found that: “SDGs almost immediately gained traction as a normative policy framework among many sectors and stakeholders. Things looked different in the sustainability/CSR space and only recently have the SDGs evolved from being a buzzword to becoming a framework for sustainability conversations on the global level.”
SDGs have captured the world’s imagination so urgently because they represent some of the most fundamental inequities present on the planet. They represent aspirational goals that every enterprise can adopt and strive toward. They include ending poverty and hunger, promoting good health, providing quality education and clean water, committing to gender equality, and more. The 2018 PwC SDG Reporting Challenge found that a staggering 72% of companies refer to SDGs in their annual corporate report and that 70% of those identified one or more priority goals for their company. As of 2018, 10% of the world’s largest companies were adopting or creating new products/services or delivery models to support SDGs. This number will likely be a vast understatement in a post-COVID-19 world.
On the other hand, many companies, though conceptually supportive of SDGs, are struggling to produce a business justification for developing solutions to world problems. As more of their counterparts produce best practices in this area, the hope is that their concerns will ease and the marketplace will demand to see their commitment to these issues.
The Four Categories of Global Action
With SDGs as a backdrop, long-term commitments within CSR to the critical issues bedeviling humankind can be expressed in four broad categories. They are:
- General Philanthropy: Donations and volunteering usually fall into this category, spanning the full spectrum of community, national, and global causes. This might involve volunteering to build affordable housing, funding an AIDS education program, raising money to build a hospital in another country, teaching financial literacy, donating food to a food pantry, mentoring in schools, or a host of other giving and volunteering activities.
- Human Rights: Human rights initiatives require companies to think deeply and honestly about the labor employed across their supply chain. Although a company itself may not employ children, pay starvation wages, or discriminate based on race, color, religion, ethnic origin, gender identity, and so on, it needs to be sure that its vendors (and its vendors’ vendors) don’t either. Companies must also avoid supporting governments that commit human rights violations.
- Environmental Action: Initiatives aimed at overall sustainability on the planet include reducing pollution and greenhouse gas emissions, slowing climate change, and easing the environmental impact of each enterprise. There is plenty of room in this sphere for bold, large-scale efforts, but the beauty of initiatives in this area is that any company of any size can contribute in little ways like reducing, reusing, and recycling; installing solar panels, capturing rainwater, composting, offering remote work options that reduce transportation emissions, etc.
- Economic Responsibility: Companies have recognized that building the bottom line cannot come at the expense of everything around an enterprise. Companies accepting economic responsibility pursue profits within a framework of sustainable practices. This is different from environmental stewardship in that it co-prioritizes the profit-making element of the business while remaining a conscientious corporate citizen.
Percent of Unique Charities by SDG
Although employee participation in giving and volunteering efforts globally lag behind domestic efforts, the gap is closing. The average annual donation per donor jumped 32% from 2018 to 2019, according to the YourCause and Blackbaud Industry Insights Report.
Trends by Industry
For a variety of reasons related to average income, size of companies, the mindset of those who typically enter the field, and the ferocity of competition in the industry, different industries produce different levels of engagement in support of social good activities. For example, energy, financials, industrials, and IT produce the highest average per capita charitable gifts, while communications, financials, utilities, and IT have the highest total levels of engagement.
Engagement by Industry
The communications industry stands out in its employee giving for this one quirky reason: Although corporate matching gifts in other industries accounted for one-third to one-half of all money raised, communications workers delivered almost all of their donations themselves, almost completely without a match.
Where the CSR commitment is fully present in an organization, permeating all aspects of the enterprise, one would expect that employee giving would reflect the organization’s priorities. According to the 2018 Giving by Numbers report, 42% of companies reported that the highest allocation of employee giving corresponded with the program area identified as the company’s top priority.
Alignment to Values
In this 2020 business world, this concept is accelerating. More than 85% of the S&P 500—a collection of America’s largest companies—create sustainability reports outlining their commitment to operating with minimal impact on the planet. These are words, of course, and must be supported by actions, but acknowledging the issue and publicizing a commitment to it are positive early steps.
Nearly every company develops mission, vision, and values statements. Value-setting is powerful when the statement of values drives an enterprise-wide commitment to them in every operational aspect.
True alignment occurs when core values intersect with business strategies. For example, a company with a stated dedication to diversity and inclusion establishes ties in minority communities, listens to people in those communities, and develops products and services they need. This company also ideally makes positive efforts to hire, mentor, and promote minorities. Likewise, a company selling products to women lives its values if it promotes positive body images in its marketing and offers generous parental leave for employees. Companies demonstrate a true commitment when they empower their CSR committee to overrule business decisions that contradict stated values.
Toms®, a popular shoe company, says it is in business to improve lives. It has also given away nearly 100 million shoes to communities in developing countries. In 2019, Toms announced it would dedicate one-third of its net annual profits to a charitable fund managed by an in-house team to the causes the organization cares about most. This is an example of a company living its corporate values.
The United Nations’ 17 SDGs have gained popularity with businesses’ CSR initiatives, too.
“It is critical for all of us to take a step back and look at our giving and engagement more holistically and strategically. In doing so, we will see that there is a tremendous opportunity to align and map the work that we are already doing and plan to do, to the larger global goals and efforts,” says Andrew Troup of Blackbaud.
The hope is that synergies across sectors can accelerate the work. Considering the urgency of issues like climate change, Impact 2030 may represent the last chance to prevent irreversible damage.
Values in the Supply Chain
Companies are measured not just by how they treat their employees, but also how they treat their communities. Every large organization that sources raw materials from elsewhere now must answer for the impact of its total operation on the entire planet. In 2020, the supply chain is viewed by the public as part of a company’s sphere of influence, and so must be incorporated in its social responsibility.
The clothing company Patagonia® does not manufacture a single stitch of clothing. Instead, it designs, develops, distributes, and markets clothing, leaving the manufacturing to others—in many cases, in developing countries. The apparel industry has a long history of low pay, exploitation of workers, job discrimination, pollution, and a host of practices that would fail any social responsibility test.
Knowing this, Patagonia takes steps to “manage the impacts [their] business has on the workers and communities in [their] supply chain.” Its Fair Trade Program pays a premium for every item produced, which goes directly to the factory workers who create the product. It has earned accreditation from the Fair Labor Association for its commitment to improving labor conditions in the factories that form its supply chain. It has taken steps to prevent exploitation of migrant workers in countries that produce their apparel and begun a pilot program to promote organic farming of food and fibers used in clothing.
None of these initiatives have a significant impact on, or are directly relevant to, the company’s operations in the U.S. They are all efforts to ensure that the values of the company as expressed by its behavior in every other aspect of its operations extend through the supply chain into all the tentacles of its business.
Response to COVID
During the COVID-19 pandemic, the supply chain has come into play in a mostly positive way. Hundreds of companies turned their operations on a dime to respond to the crisis, sometimes without consideration for the short-term bottom line. Alcohol companies produced hand sanitizer. Hospitality companies made rooms available for the influx of health care workers in New York City. Apparel companies sewed masks. Car insurance companies offered rebates. Thousands more companies donated millions of dollars to help laid-off workers in their industries.
In 2020, this is simply expected. A survey by the China Europe International Business School found that 94% of people believe that businesses have an ethical responsibility to help combat the coronavirus pandemic. The insurance company Aflac® found that Americans believe companies should prioritize making contributions to society over making a profit—and by a wide margin. Nearly half of respondents to Aflac’s survey said it is more important for a company to help make the world a better place than to make money for its shareholders. Just over one-third believe the opposite. Even 40% of shareholders agree.
Enterprise experts in supply chain and logistics sectors were particularly useful in getting products in sudden demand, like toilet paper and surgical masks, quickly to market. While the U.S. government provided a stimulus package that offered short-term relief, businesses provided a sustained response that helped carry the country through its intermediate and longer-term effects.
While those gears are in motion, a company’s top priority must be to care for its own employees: the lifeblood of any enterprise. How a company treats its employees—even those laid off or furloughed—will be remembered and studied in business schools for years. Generating a sense that employees can count on their employer even during the worst of times can promote loyalty, engagement, and productivity in the long term.
What that has meant for most employers is new flexibility in the where, when, and how of work life. For example, employers are recognizing that parents at home with children may not be fully available from nine to five but can work at other hours. Some employers have introduced more accessible mental health support for employees. Many companies kept employees on the payroll, at least temporarily, while the company idled.
For corporate volunteerism, as with everything else that involves in-person appearances, COVID-19 has created a period of readjustment. A corporate HR department is unlikely to approve a mass gathering of employees to serve in a soup kitchen while a vicious virus lurks. But corporate volunteerism has continued through video screens and at drop-off sites. Here are some examples of the types of volunteer activities employee groups continued to perform:
- Raising money and collecting supplies for food pantries, schools, and health care operations
- Reading to children and leading them in exercise classes
- Leading financial literacy, budgeting, saving, and debt reduction classes
- Offering in-kind services like website design and digital marketing
- Packing and delivering meals to elderly neighbors
Environmental, Social and Governance Criteria
As we have noted, a real purpose-driven organization takes its social responsibility path in all directions at once. Increasingly, companies are being examined not only for their ROI and PE but also on their ESG across three dimensions of social good: environmental, social, and governance. These criteria provide a set of standards by which socially conscious stakeholders can measure a company, whether for investment, product purchase, board service, or business partnership. The environmental aspect is straightforward: It measures how well a company performs in its relationship to the natural environment. Social criteria measure how a company manages relationships with employees, customers, communities, and in the supply chain. Governance criteria measure operational functions like the company’s leadership, commitment to CSR, financial and operational controls, shareholders’ rights, and compensation fairness.
The metrics based on ESG cover a wide variety of behaviors such as energy use, waste, and pollution; commitment to charitable donations and volunteering; employee health and safety; the human rights records of suppliers; transparent accounting; avoidance of conflict of interest; and fair trade practices. Many socially conscious investors employ these determinants before investing in companies.
For a long time, this kind of socially conscious investing was considered a trade-off against profit and sustainability. Today, consumer demand is driving businesses to excel in both operational and social measurements—that is, to do good as they do well. As Aflac found, 70% of consumers say that large companies have a special responsibility for helping to make the world a better place.
Employees as Stakeholders
The information economy has also produced specialized high-tech jobs that leverage significant profit-making potential. The talent to fill these positions are in demand, highly valuable, and difficult (as well as expensive) to replace. Employers learned quickly that they would have to serve their employees, rather than the other way around, to be successful.
This thick stew of employee empowerment has turned staff members from servants to stakeholders. More than half of those in the workplace today say that they want “a job where [they] can make an impact,” and three-quarters of those in school agree, according to the nonprofit Net Impact.
CSR serves the role of addressing employee concerns and preserving that collective sense of purpose. As company ambassadors, employees are critical in promoting organizational reputation. Their engagement is paramount, particularly with websites like Glassdoor™ offering megaphones to the dissatisfied.
The quality of a company’s CSR efforts now rivals salaries and benefits when viewed as a recruitment tool for new staff. Companies tout the depth, breadth, and authenticity of their CSR programs to the new wave of prospective employees in recruitment and retention efforts. The YourCause and Blackbaud Industry Insights Report found that, once on board, immersing new employees in the company’s social good programs is critical to their ongoing engagement.
The Whole Self
Philanthropy is often conflated with charitable giving, but while the latter is necessary for the former, it is insufficient. Employees bring their knowledge, skill, expertise, tools, connections, and physical and mental abilities to work every day and can do the same for philanthropic efforts. Companies providing employees with time and support to volunteer may leverage even more charitable value than they can with donations.
One benefit of volunteering long understood by nonprofits themselves is the engagement synergy that exists between giving and volunteering. Many nonprofits develop robust volunteering efforts knowing that engaged volunteers are more likely to support the organization financially and otherwise. Local Habitat for Humanity affiliates, for example, invite unskilled volunteers to help build houses despite the added staff costs of training and supervising them compared to hiring skilled labor. These affiliates know that swarms of inspired volunteers turn into Habitat champions and donors.
According to the YourCause and Blackbaud Industry Insights Report, 75% of companies offering both giving and volunteering opportunities to their employees saw double the engagement of those who only offered one or the other. It is a virtuous cycle: When donors volunteer, they give more; when volunteers donate, they volunteer more.
Engagement Rate Distribution
This powerful combination is compounded by matching gifts, which are used by employers for volunteering as well as giving. Staff incentivized to volunteer by matching dollar contributions from their employers volunteer more often and for more hours per episode. The match creates a positive double whammy of free labor and unrestricted funds for the cause.
Although monetary contributions alone no longer dominate CSR efforts, they are still a major element of any program. As revenue-generating machines, corporate entities have access to this precious resource at scales that nonprofits cannot come close to rivaling. Company philanthropy efforts driven by employees, often through matching gift policies, can generate torrents of resources for social good while more deeply engaging valued employees. The most common match is one-for-one with some upper limit (i.e. a company would match an employee’s gift to a selected charity of $100 with $100 of its own). Upper annual per-employee limits for large companies can reach $10,000, and companies often restrict eligible donations to those that align with the focus areas of its CSR program.
Affinity groups also serve to bolster the whole-self investment of employees in the workplace by acknowledging their differences and allowing them to flow into those groups that serve their needs and induce pride in their identities. Amazon, for example, operates a dozen affinity groups around several attributes, from Amazon People with Disabilities to Women in Finance.
At its core, CSR is nothing more than groups of individuals coming together inside a business and attempting to make the world a better place through every avenue available to them. Although CSR programs are becoming business imperatives for talent recruitment and retention; employee engagement, productivity and loyalty; customer loyalty; brand reputation; and other benefits, the bottom line is a better world.
Companies have learned that authentic CSR requires the leadership of corporate management but not their control. For that, employees must drive the bus, aligning with organizational values and culture. No longer a sidebar to core business functions, CSR is part of a company’s lifeblood—owned by everyone in the organization.
Blackbaud Vice President of Corporate Citizenship and Philanthropy Rachel Hutchisson says businesses must prioritize four concepts to make CSR work:
- Audit the company’s existing pro-social activities, which could be scattered and non-strategic.
- Listen to people inside the organization at all levels before devising a CSR strategy.
- Conduct deep and honest conversations about company values.
- Be willing to change, unhitch traditions, and evolve.
Coalescing around the United Nation’s sustainable development goals while continuing to produce profits and shareholder value has demonstrated that businesses can be positive forces for pro-social change. Increasingly, consumers and employees are demanding no less. Events of 2020 offered up a unique opportunity for corporate America to demonstrate what it can do—and it has stepped up to the plate.