Hi folks, Alex here. Most corporations are in the business of making money. But there

are many ways in which they can take responsibility for their socio-environmental impacts and

there is much to gain by doing so… This is often called Corporate social responsibility.

In this video we are going to talk about what we mean by CSR, why good corporate citizen

make a lot more profit and we’ll look at examples like IKEA, Starbucks and Patagonia

to see if we can figure out who is real and who is faking it. Ok, Let’s get drawing!

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Why CSR matters

into that.

This is why companies have to take corporate social responsibility seriously. This is a

representation of all the major socio-environmental scandals IKEA was involved in worldwide between

1981 and 2006. These were about waste, dangerous chemical use, child labour, poor working conditions

in factories, wood procurement, etc. And this is not because IKEA is worse than the others,

if anything, it is probably one of the more decent corporate citizens out there, but any

major corporation is under a lot of scrutiny. Add to that the fact that 40% of consumers

seek purposeful brands and trust in brands to act in the best interest of society, 70%

of millennials listed their company’s commitment to the community as an influence on their

decision to work there and 50% of millennials say they would take a pay cut to find work

that matches their values. CSR matters!

Definition of CSR

Originally, corporate social responsibility was a self-regulated way for businesses to

include philanthropic and charitable contributions in their organizational policies. With the

emergence of environmental issues such as climate change, toxic substances, plastic

pollution, etc., NGOs appeared, as well as industry-wide, national and international

regulations and social pressure became greater forcing corporations to address and report

on the way they were running their business.

Nowadays, when businesses report on their CSR, it usually includes their business ethics,

how much money they donate to charitable organizations, compliance with regulations, norms, standards

and labels, working conditions, how their business affects local communities where they

work, the environment, their supply chain and their carbon footprint.

7 benefits of CSR

In other words, Corporate social responsibility is about capturing opportunities and avoiding

risks. According to Bob Willard’s research, any company that embeds corporate social responsibility

within its DNA can increase its profit dramatically: by 51% for small and medium businesses to

81% for a large corporation. Mostly through these 7 benefits:

Increased revenue and market share due to better products and more customers

reduced energy and waste expenses reduced materials expenses from dematerialization

and substitution (see my video on circular economy for more details on this)

increased productivity and reduced turn-over because people like working for a company

that does good in the world and reduced risks on talent management, brand

image, compliance to regulations, customer demand, etc.

(there is a link in the description below if you want to find our more about that)

Essentially, corporate social responsibility is now another word for corporate sustainability

and it is just smart business.

Let’s looks at a couple of examples of what companies do. When searching online for companies

reputable for their CSR, I ran into Starbucks many times so let’s have a quick look at

Example #1 Starbucks

what they are doing. On the social front, they claim that their coffee is 98.6% ethically

sourced (meaning fair trade, there is no mention of organic), that they trained 200,000 farmers

and invested in farmer loans and emergency relief funds. Now, Starbucks has to do this

because the business of coffee growing is at risk altogether due to farmers worldwide

not having the financial means to adapt to climate change and the fluctuating price of

coffee. In 2019 before the pandemic, 2.8% of the drinks were served in reusable cups.

As an order of magnitude, this left more than 3 billion disposable cups going to the landfill.

And the disposable cups are made of 10% post-consumer fibre. I personally don’t call that “leading

in sustainability.” In a trash audit performed by Greenpeace in 2019, Starbucks also ranked

as the 3rd most polluting company in Canada, where I live.

Example #2 Patagonia

Another name that comes up often in the world of CSR is Patagonia but in contrast, they

acknowledge at the top of their sustainability web page that “everything they make has

an impact on the planet.” On the environmental side, 64% of their materials are made from

recycled fibres and since 1996 100% of the cotton they grow for their clothes is grown

organically. On the social side, 82% of their line is Fair trade certified sewn impacting

more than 72,000 workers. They are also part of 1% for the planet providing support to

environmental non-profit organizations around the world. More importantly, Patagonia produces

videos engaging their customers to buy less and demand more

Conclusion: Who's real? Who's fake?

from their clothes.

But how do you figure out who is genuine and who is faking it? Well, to be honest you have

to educate yourself and use your own judgement to read between the lines of companies’

slick marketing. For me, a good rule of thumb is to make sure that I look at both 1) how

companies make their profit (for example what are the direct and indirect environmental

impacts of their products and services, my video on the sustainability analysis of iPhone

can help for example and how do they treat their people and suppliers in the process);

2) And secondly how they spend their profit (do they invest in their people, in sustainable

innovation or are they making their shareholders richer?) As fellow Youtuber “Our changing

climate” explained in a recent video, the money donated to charities can be misleading

and doesn’t tend to address the root causes of our sustainability challenges. Finally,

tools and frameworks like the ones I presented in previous videos can also be helpful to

make up your own mind in a rigorous way.

There is also a private certification of "social and environmental performance" of for-profit

companies called B-Corp. Companies get the certification by receiving a minimum score

on the assessment and by integrating B Corp commitments into their governing documents.

This will probably be the topic of another video.

The good news is, the companies that genuinely put their business at the service of the people

and the planet get the good-will of the market place and end up doing well by doing good.

As Interface’s late CEO put it, “there no amount of slick advertising, at any cost,

that we could have done that would have created the good will that this effort has created.”

Outro

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