A corporation can enter into a contract, spend money in candidate elections, even sue or be sued. For quite some time now, corporations have legally been treated as people, just like you and me. Interestingly, over the past twenty years or so, the parallels between firms and human beings have extended far beyond merely a legal sense.
Consumers have become attuned to the personalities of the companies they purchase from. Transactions are not merely economic, but instead are intrinsically viewed as support, and no one wants to support a profit-hungry-giant exploiting child labor laws across seas. Nowadays, integrity and civic duty hold as much real estate in the heads of CEOs as anything else, and with good reason, the impact of a firm’s reputation on its performance is profound. This Forbes article provides an overview on the benefits of corporate social responsibility (CSR), but if you’re still wanting to learn more, my former Professor, John Maxwell, has researched the subject over the last two decades and has highlighted his findings here.
Is this really a good thing though? Shouldn’t firms focus on maximizing profits? Isn’t it their primary duty to serve their stockholders? Why shouldn’t we just leave all the civic responsibility to nonprofits, who specialize in this type of thing? These are common concerns, economically, looking at the allocation of scarce resources, firms that produce hardware or sell copy paper don’t seem like the most efficient organizations to carry out acts promoting the social good. In his paper covering the self regulation of pollution abatement, Maxwell shows that sometimes CSR can actually lead to the most economically efficient outcome. Although, the overall net benefit/harm of CSR on the economy is a conversation for, well, economists.
The bottomline is for the rest of us, it’s a really beautiful thing to watch. The role of businesses has evolved, and companies that have embraced the responsibility are making very real and positive changes in the world, and they’re being rewarded by consumers for it. The same invisible hand driving innovation in free markets is now also promoting social justice, which ultimately forces us to recognize that there exists a general attitude of wanting to do good in the world. At the very least, that’s something to think of and smile about.
Let’s look at Huntington Bank for example, in Huntington’s Community Impact Report, in reference to CSR Huntington writes, “To us, it means recognizing the people around us as neighbors, friends and family. It means treating every individual like the individuals they are. It means remembering our roots in the community, working for the common good of the neighborhood…,” and, for Huntington, those words take many forms, examples include revitalizing neighborhoods with vacant lots to create affordable housing in Cleveland, Ohio, partnering with Salvation Army and United Way to provide backpacks to students of low-income families in West Virginia, or housing the homeless in Pittsburgh.
Other firms, such as Genesys encourage their employees to think about what CSR means to them. Genesys writes, “Rather than focus on supporting a particular social issue or organization, we give employees the freedom to choose how and when they give back. When people are personally invested in a cause, the giving comes from an authentic place and the possibilities are endless.” Genesys provides bikes to help Cambodian children go to school, and is working to alleviate hunger in Australia.
Interested in bringing CSR to your company? This article from the Harvard Business Review outlines some of the most effective strategies.
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