What Is Corporate Social Responsibility and Why You Should Care
The Low-Down On CSR For Manufacturing Businesses
While the impassioned words of environmental activists like Greta Thunberg and her supporters strike fear in the hearts of those who care deeply for the future of our planet, for many people in business, this new wave of environmental militarism is nothing more than a nuisance that threatens the future of business as we know it. Wherever you lie on the continuum of environmental concern, there are some very good reasons to take Corporate Social Responsibility (CSR) seriously, particularly in the field of manufacturing.
As exciting as Industry 4.0 is – with its promise of greater efficiency, enhanced productivity, and higher-quality products for consumers (not to mention better bottom-lines for manufacturers) – there is also a dark side which people do not like to talk about. Namely, the inevitable cost to the environment that technological advancement brings in its wake. Toxic by-products from the manufacturing industry are known to harm the air we breathe, pollute our water supplies and leech into the soil in which we grow our produce – and that’s before we’ve even considered industrialization’s contribution to global warming, deforestation and mass extinction of vulnerable species.
With the proliferation of online resources that educate and inform the public, as well as environmental summits such as the UN Climate Change Summit, the G7 summit (and crusaders like the afore-mentioned, Greta Thunberg) – it is becoming harder than ever before to ignore this negative impact or deny that it exists. But even if the health of the environment is not something that keeps you up at night, there is another side to all this that might make you sit up and take notice. CSR can also go a long way towards keeping your customers happy.
If you do not yet have a good CSR program in place and are wondering whether it is really worth the bother (it is) this article will guide you. Read on to understand what an effective Corporate Social Responsibility plan for a manufacturing company might involve and how this can actually propel your business forward, rather than – as feared by many – harm your profitability.
Also look out for part two of this 2-part series, where we give you tips and concrete examples of how to create a successful CSR campaign, following the lead of some of the world’s biggest manufacturers.
What is CSR?
CSR is how an organization or business takes responsibility for the way in which its decisions and activities impact on society and the environment. CSR is your chance to demonstrate, in a very concrete way, that your company is trying to have a positive impact on the community in which you operate, society as a whole, and on the planet at large. While the specifics of how this is done will vary from company to company, the underlying motivation should be the same – to demonstrate to your customers that you are taking ownership of your responsibility to help better the world.
For many companies, this means making a concerted effort to contribute to sustainable development – including the health and welfare of society. It also means taking into account any expectations held by stakeholders and acting in compliance with environmental laws and international norms of behavior.
In part two of this series (coming soon to our blog), you can inspire yourself by reading more about some of the incredibly creative and forward-thinking ways in which manufacturing industry-leaders are trailblazing the CSR path, gathering an ever more devoted and loyal following as they go. In the meantime, let’s examine whether it is worth your investing time and budget into developing a CSR program for your manufacturing business.
Is CSR Worth the Effort Involved?
In short, yes! Even if you, or the management of your company, do not actually care that much about social or environmental issues, the way your actions are perceived by customers can make the difference between your success and failure as a company. A manufacturing business is no different than any other in terms of customers. Like all business sectors, your manufacturing operation needs to attract and grow a loyal following as part of your effort to secure enough sales to keep you viable. Professor Barie Carmichael from the University of Virginia Darden School of Business pointed out that today, there is a “growing expectation of business’s role in society on a global basis. People are shifting their attention from products and services to the companies behind those products and services.”
The world in which you do business has changed. Consumers are waking up – and yes that does mean your customers too. Consumers today – whether they are individuals or other businesses themselves – don’t just buy products they like, they also want to know the companies behind these products share values they can relate to. By choosing to act in a way that is not only good for your bottom line but also benefits wider society, your business can build that all-important trust amongst consumers all along the supply chain – something that is not so easy to do these days. When you figure out how to gain your customer’s trust you stand to enjoy huge gains – consumers will turn to you first when making a purchase decision, they will be more loyal to your business and they will also tend to advocate for you and defend your company’s reputation when necessary. According to a report by Brand Keys, a loyalty increase of 7% can boost lifetime profits per customer by as much as 85%, and a loyalty increase of 3% can correlate to a 10% cost reduction, depending on the sector. Customer trust and loyalty is not something to be sniffed at!
Furthermore, research by Cone Communications revealed that 90% of the people surveyed would purchase from a company because it supported an issue they cared about, and 75% would not buy from a company that supports an issue that goes against their own beliefs. As far as the environment is concerned, their research highlights that 92% of consumers have a more positive image of companies that support social issues and environmental efforts.
As we can see, consumers in their droves are showing a strong preference for handing over their hard-earned cash to socially responsible companies as this allows them to feel that they are in some way, doing their part to help society and the world. In fact, evidence supports the fact that the more socially responsible the company, the more supportive the community and consumers become.
Take the example of TOMS shoes whose CSR campaign included the promise that for every pair of shoes the customer buys, another pair would be donated to people in need. This ingenious campaign went viral, helping propel the company to behemoth status in the world of merchandising. TOMS has now diversified into sunglasses and coffee (the purchase of which provides water where it’s needed), and it keeps on growing and succeeding. As this example shows, corporate social responsibility is an economically-sound move as well as an ethical one. Not only does it facilitate social change but it also helps build trust and raise awareness of a company’s activities.
If there was ever an optimum time to get on the CSR bandwagon that time is now when the market is dominated by the Millennial and Generation Z populations, for whom social responsibility is critical. Most millennials believe that companies should invest in the betterment of society and actively seek out solutions to issues we all face – this includes environmental as well as social issues, such as poverty and unemployment. In this atmosphere, it pays for manufacturers not only to get more responsible but to actively share how they are attempting to make a positive impact on the world. Showcasing efforts at social responsibility is an effective way to target millennials and convert them into consumers or retain them as customers.
In the competitive business arena, it is not just consumers and potential customers whose opinions matter, but also current and prospective employees. To stay competitive you need a skilled and motivated workforce and it is becoming more complicated than ever to attract one, particularly in the manufacturing space. As baby boomers retire in growing numbers, the up and coming workforce is not large enough to completely replace the retirees which will mean that companies will need to compete to attract high-quality skilled workers. The market will be even further narrowed as the skills needed evolve with advancing technologies. According to Carmichael, when people consider a job, they look at the company’s core values but also – and more importantly – at whether the company is actually doing anything concrete in support of those values.
What’s In It For You?
Customer engagement is just one way in which your business will benefit from CSR but there are other tangible benefits reported by companies who are actively implementing CSR programs:
● Innovation: Looking for new ideas through the lens of a CSR project can take a company to unexpected places. For example, Unilever was focused on sustainability and their research led them to develop a hair conditioner that uses less water.
● Cost Savings: By implementing controls on waste and extra packaging, for example, manufacturers can save money and watch their bottom line growth while also contributing to the health of the environment.
● Brand Differentiation: As described above, consumers look for brands that are socially conscious and actively contribute to making the world a better place.
● Long-Term Sustainability: By investing in the future of the planet, for example, and working towards sustainability, a company is also ensuring their own long-term sustainability.
● Employee Engagement: As well as engaging customers, CSR is also a great way to get employees involved in causes that matter to them, building their loyalty to the company as well.
What Now?
As a manufacturer, you already know that failure to move with the times can vastly hamper your business success. In the era of Industry 4.0, factories who do not keep up with technologization risk becoming obsolete faster than ever before. This is also true of CSR. Today’s consumers are already voting with their wallets, favoring companies who demonstrate active involvement in CSR projects over those who do not and this trend is only predicted to increase as Millenial and Gen Z populations grow to economic maturation. If you are not already thinking about your social responsibilities, now would be the time to start.
Digital performance monitoring solutions like those offered by Visual Factories, can be an important cog in this wheel of change. By gaining greater visibility over all your operations, you can reduce wastage, become more economical and efficient and properly evaluate the efficacy of any efforts you make towards becoming more environmentally proactive.