“Businesses cannot be successful when the society around them fails” -Responsible Business Summit. This quote illustrates the evolution of businesses – from for-profit entities to organizations with meaningful connections. The definition of a self-regulating business model that helps a company to be socially responsible to itself, its stakeholders and the public is Corporate Social Responsibility (CSR). Companies that follow these principles often go the extra mile to give back to their employees, the community, and the world at large. But some companies treat CSR as a marketing tool because they believe it is necessary in our modern world to maximize their profits. How and why do companies fake CSR and fool people just for their own well-being?
First and foremost, why do companies use CSR as a marketing tool? In the past, it was believed that the only corporate responsibility of business is to cut all possible expenses in order to maximize profits; the logic is that a dollar more spent on community building or the environment would just decrease one dollar of profits. As we can see, the business world seemed selfish and not attractive to consumers. But the concept of CSR has changed the game. CSR companies claim to be aware of the social, economic and environmental impact they have on society. CSR calls for transparent and ethical business practices that attract employees more easily and help gain a competitive advantage. In addition, corporate social responsibility often earns media coverage. A full-page advertisement in the global edition of the WSJ costs nearly $400,000. Imagine if corporate social responsibility is addressed in the media, for half a page in WSJ, the corporation automatically saves $200,000 on potential advertising. Moreover, the other priority – sustainability – also shows that the company is environmentally friendly and cares not only about profits, but also about the future.
This last aspect refers particularly to the point that companies fake their CSR in terms of greenwashing. Greenwashing can be broadly defined as an organization falsely conveying to consumers that its products, services or operating practices are socially and/or environmentally responsible. Companies know that people are more willing to buy products that claim to be environmentally friendly. This is misleading and full of lies. Greenwashers’ advertisements state information that is completely untrue, products are labeled “organic”, “100% recycled”, “certified”, “recyclable”, but are not. For example, a paper company like Oji Paper Company claims to use 50% recycled content in their products when they use 0%. Plastic water bottles like Poland Spring, Evian and Deer Park all have “natural” on their labels. Plastic water bottles are designed for single use and are currently one of the biggest threats to our environment. In addition, one of the largest companies in the world, Walmart, has proclaimed to be “going green” with a sustainability campaign. However, according to the Institute For Local Reliance (ILRS), this campaign has done more to improve the company’s image than to protect the environment. “According to ILRS, Walmart routinely donates money to political candidates who vote against the environment. Also, every company is made up of people, so greenwashing/lying affects things like employee engagement, retention, commitment, attraction, or customer service.
On the other hand, there are companies that apply CSR principles effectively. These types of companies often resemble charities. For example: Combat Pest Control – Australia helps educate children in crisis areas, the fashion company Patagonia uses environmentally friendly materials in the production of its clothes and cares for its workers. But, isn’t it naive to think that companies can be 100 percent socially responsible?
Well, implementing successful CSR initiatives is far from easy. It requires excellent planning, leadership and the ability to communicate properly and effectively. Even a business with the noblest of goals will always be a business. And the goal of a business is to maximize profits. This idea can be illustrated with the situation that happened at the end of March 2021: the ship Ever Given, one of the largest ocean-going vessels in the world, was stuck in the Suez Canal for 6 days. The ship is operated by a Taiwanese company called Evergreen Marine, which claims to be sustainable, committed to ship efficiency, preventing pollution, saving energy, and ensuring people’s happiness. If this company is so responsible, why hasn’t it thought about the potential dangers in the Suez Canal? According to SCA officials, Egypt lost about $12-14 million in revenue for every day the canal was closed. The crisis forced companies to either wait or reroute ships around Africa, adding a huge fuel bill, with 9,000 kilometers and over a week to the trip between Asia and Europe. It was one of the biggest disruptions to global trade in recent years. Was it an oversight or did the company knowingly take the risk to try to maximize profits at any cost?
Now that our world and lives are changing in face of the COVID -19 pandemic, it is important that we prioritize and promote social change. Perhaps with the right oversight and regulation, CSR can become a powerful tool for social improvement and the fundamental problems with corporate use of CSR will be addressed. But the real questions remain: is there any way to motivate companies not only to seek financial success, but also to consider the social impact? What should we expect from companies in terms of corporate responsibility enforcement? Who should be responsible for regulating and monitoring CSR policies?