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“For-Profit” Organizations: How Corporate Social Responsibility is the Catalyst for Growth

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Author: Kris Chennaiah, MBA, PMP  

Corporations are driven by profit and the goal to maximize shareholder wealth.

In order to achieve these primary objectives, corporations generally invest in the following:

1. Research and development to drive innovation in products and services
2. Recruiting and training top talent
3. Marketing and branding
And …

4. Corporate social responsibility (CSR) initiatives

Corporations implement CSR initiatives as a way to demonstrate their corporate culture and values by supporting the local environment and the needs of community. By giving back to society and living their values, corporations spread awareness of their brand and create a loyal following. CSR initiatives therefore are not counterintuitive to the goal of generating profit, but instead, support this goal through strengthening the corporation’s brand image that becomes a catalyst for growth and profitability.

For example, by supporting local education initiatives, creating learning opportunities to transfer skills to underprivileged residents, or promoting environmentalism, corporations can improve their posture among the local communities, and breakdown barriers to entry and acceptance.

Conversely, it is not acceptable for a for-profit company to profit from poverty, unless it operates within ethical principles and its activities present mutual benefits to both the society and corporation. All too often, corporations export harmful operations that neglect the health and well-being of local residents, all with the aim of increasing profits at the expense of others.

Real social responsibility is demonstrated through a corporation’s ability to support the community in which it operates through offering employment to local residents, promoting environmental sustainability, and empowering positive change.

The case for CSR is clearly represented in Unilever, a multinational corporation that promotes consumer goods worldwide. Unilever implemented its Unilever Sustainable Living Plan (USLP), as a response to the challenges of poverty in the world.

In promoting its goal to improving living conditions of local residents, the USLP defined three stretch goals:

1. Help more than 1 billion people to improve their health and well-being by year 2020

2. Reduce its environmental footprint of making and using its products by half by year 2030, and

3. Enhance the livelihoods of millions of people by year 2020

Unilever employs a series of CSR initiatives toward achieving these goals that include supporting the environment and global communities, and promoting positive change. One such CSR involves Unilever cutting waste and reducing use of energy, raw materials and natural resources. As a result, Unilever is able to successfully cut costs and create efficiencies, all which translate into higher profit margins.  In fact, Unilever reported to have a cumulative cost avoidance of over 600 million pounds through improved eco-efficiency in its factories since 2008. The case of Unilever represents a fusion of for-profit growth and positive environmental change.

As caution, in drawing the line between taking care of shareholders and corporate responsibility, corporations should be careful not to overinvest in CSR programs, and instead seek partnerships with non-profit organizations in pursuing cost-effective initiatives that have a relatively large social impact. In addition, shareholders need to be fully engaged in recommending and participating in the corporation’s CSR initiatives. Shareholders are therefore, often effective in rallying up a network of partners to pursue the most cost-effective CSR programs that yield the greatest positive impact with respect to social issues and environmental sustainability.

Enlightened corporations understand the importance of establishing CSR initiatives that run alongside their corporate objectives.

The result? Positive brand recognition, and uniting profitable growth with positive change.

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