Defining Corporate Social Responsibility
Corporate Social responsibility (CSR) is one of the most important aspects that every corporate and business house needs to take into consideration (Searcy 2017). In the opinion of Schwartz (2017), the idea behind CSR is to make sure that the organization has some positive influence in the society and it caters to certain needs of the society that needs moral action. In other words, the concept of CSR can be defined as the “positive steps an organization takes in the way it functions, to give benefits to the community, and ways in which it can return to the community from which it has taken so much to get itself established”. Furthermore, in the opinion of other scholars “CSR is now internationally used tool to measure and compare the firm’s performances economically, socially and environmentally”. Therefore, it can be said that the basic premise of the concept of the “corporate social responsibility” is to create a “sustainable business organization” which benefits not only the market and the business organization concerned but the community or the planet as well (Ji, Gunasekaran and Yang 2014). In the present times, the focus of the majority of the nations has shifter just from making profits to providing benefits to the society and the planet as a whole from which it takes so much (Ji, Gunasekaran and Yang 2014). The moral action of an organization largely creates the image of an organization in the global domain (Ji, Gunasekaran and Yang 2014). It is believed that every organization must have certain obligations towards the society and hence must plan actions accordingly (Lin, Tan and Geng, 2013). The world is constantly at threat due to the high emission of carbon and related pollutions that harm the environment and threaten the sustainable approach that is being undertaken (Benjaafar, Li and Daskin 2013). It is essential for the organizations to make sure that every approach taken by them for the process of production and manufacturing does not impact the environment in a negative manner (Makanyeza, 2015). The responsibility of the organization needs to be directed towards the sustainable nature of the entire work process so that the environmental issues are kept in mind (Crane, Matten and Spence 2013). It is a reflection of this more than 64% of the CEOs of the various business organizations are now investing more of the CSR aspect of their business (HuffPost 2018). The company Lego taking into consideration this aspect has drastically improved their CSR policies and it is a reflection of this they have been rated as the best company in the world with the most positive CSR with an impressive rating of “74.4 RepTrak points” (Forbes.com 2018). The aim of this report is to emphasize on the various drivers of CSR that an organization has to keep in mind such as consumer relationships and brand reputation, which motivate organizations to practice environmental or greener methods to improve company’s reputation and corporate sustainability.
The Importance of CSR in Today’s Business World
In the opinion of “Josiah Charles Stamp, 1880-1941, former director of the Bank of England”, “It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities”. Therefore, the various business organizations instead of dogging their responsibilities towards the society as well as the planet should focus on their responsibilities (Ji, Gunasekaran and Yang 2014). It has been assumed by several people that CSR activities are solely a deliberation for established businesses. One of the key drivers of CSR can be regarded the rising advancement of the concept of ‘ethical consumerism’, whereby customers have been making decision based on the probabilities of ethics and principles in the business processes (Visser 2016). Ethical consumerism signifies that consumers have been increasingly revealing their inclinations towards knowing the whereabouts of the products and if they have been distributed in an ethical manner (Visser 2016). It must be noted that the evolution of ethical consumerism has resulted in an immense growth of accountable and effective decision-making processes in the global market for decent and ethical products as well as services. However, the UK Co-operative Bank has defined this ethical business process and further included green products, ethical beverages, eco-travelling along with ethical personal goods and green investment (Visser 2016). Consumers in contemporary businesses play a significant role in acknowledging as well as adopting and further enhancing their level of responsibility and ethical practices (Coppa and Sriramesh 2013). The concept of ethical consumerism has led customers to gain more awareness and further demand clarity and accountability across the business operations. However, it must be noted that in this era of high-level visibility of ethical consumerism and rising rate of interest in moral behavior investigation, there lies certain level of ambiguity and uncertainty towards the factors that drive consumers to purchase ethical goods and products (Vinerean et al. 2013). It has been witnessed that consumers support specific brands because of the achieved advantages derived from the CSR activities Furthermore, a direct gain can take place through the varied perceptions of equality and parity of the strategies related to the prices set by the organizations (Vinerean et al. 2013). There are not sufficient data to identify the proportion of consumers who are seeking to obtain a reasonable price and the ones who are regarded as ‘socially accountable’ purchasers.
The demand and need for green marketing is constantly on the rise as it the responsibility of an organization to make sure sustainability is maintained in the environment and the consumer needs are also met (Makanyeza, 2015). The consumers have a growing demand for greener products as they realize the need to ensure that the environment is not harmed in any means. Several companies like Murray, has been seeking to increase the proportion of green products that have been demanded by consumers. These customers have further been reinforcing and demanding corporations to create an increased rate of environmental friendly products. This will facilitate the process of diminishing the rate of carbon footprints and behavior towards the employees (Skard and Thorbjørnsen, 2014). The green products are the future of the marketing world and hence it is essential that the companies involve themselves in green marketing practices (Lin, Tan and Geng, 2013).
Drivers of CSR: Brand Reputation, Customer Relationships, Financial Performance, and Competitive Advantage
Project Gigaton of Walmart that takes the oath to reduce 1 billion tones of Green house gases, such a project from the leading organization shows that there is a need and rising demand for the organizations to go green and it has been realized by the leader in the market (News.walmart.com 2018). Walmart says in their official statement that they wish to reduce the emission level and if successful then it shall be equivalent to removal of 211 million passengers from the streets of U.S. They aim to achieve the target by 2030 (Searcy, 2017). Walmart is also a part of the RE100 initiative, which is taken up by various leading businesses to make sure that they completely avoid the use of non renewable source of energy (Graichen et al. 2016). Such approaches by the company increases its image in the overall public a feeling of brand loyalty is thus attached with them. The supply chain going green for the Walmart will further make sure that they completely remove all the carbon emission of the company and embrace a greener approach (Ji, Gunasekaran and Yang, 2014). The consumer demand has been the greener approach so a company like Walmart successfully combines their CSR approach with the consumer demand and this shall allow a greater growth of the company in the market.
When a company caters to the needs and approaches of the consumer, it is evident, that the consumers shall be loyal to the organization and gain trust on the company. The survey that has been evaluated in the article of Makanyeza found that during the random interception of customers at major superstores, customer knowledge and awareness have great impact of consumer ethnocentrism (Makanyeza, 2015). However, the author explicitly revealed the negative influence of consumer ethnocentrism on aspects related to consumer loyalty. It must be noted that this intense demand of cultural ethnocentrism and consumer consciousness have led few marketers indulge into unethical and aggressive endorsements of products to improve their brand image and recognition (Makanyeza, 2015). Walmart is a fine example and hence it is seen that the greener approach led to the more consumers and also a huger competitive advantage. The policies made sure that the organization was different from other in the industry and hence such an approach allowed them to gain huge competitive advantage. The company has revealed that its carbon emissions in terms of sales percentage has witnessed considerable decline. It further received Aspen Institute Energy and Environment recognition for encouraging corporate energy efficiency. The company further has acknowledged and invested in sustainable energy by aiding millions in renewable sources of power in order to reduce green house gas effluence (Makanyeza, 2015). However, the recent scandal in which the company Volkswagen was involved on the score of the “defeat devices” used by them to manipulate the emission rate of the vehicles manufactured by them reflects the impact of not following the various CSR policies of the business world. It is significant to note that the company fined more than £6.3 billion pounds in the various countries of the world because of the unethical practices followed by them (Knapton 2018).
The Role of Ethical Consumerism in Promoting CSR
The brands need to constantly market themselves in a way that enhances the brand reputation. The prime objective of the branding and communication departments remains to make sure that the brand enjoys good image in the market and people consider the brand as a trusted one (Skard and Thorbjørnsen, 2014). The practice of greener supply chain and production methods make sure that the organization keeps developing a pro-environmental image in the market in which it is catering to. The consumer demands need to be met by every brand and it is the responsibility of the organizations to make sure that the best of the services are provided to the brands (Tinne, 2013). The pursuance of CSR that has a far reaching impact on the overall scenario that is prevalent in the world ensures that the image of the brand is heightened in the public. However, at times it is seen that organizations indulge into practicing green washing techniques. Green washing refers to the deceptive practice of the companies to display their activities as environmental oriented but in reality, it is actually not (Tinne, 2013). Walmart has not used green washing in their CSR approach and their Project Gigaton is truly an effective project and subsequent steps are being taken to make sure that the target of reducing the emission is achieved by the year 2030. – However, there are companies who have implemented green washing such as General Electric (GE) (Cox et al. 2013). A typical example of a business organization which used the concept of “Green Washing” is the company Volkswagen (Knapton 2018).
The consumers in the recent times are aware of the impending crisis in the environment and hence it has to be made sure that the various CSR campaigns are aligned with the needs and demands of the organization. The consumers prefer to spend more money on products and services that are green in their nature and add positively to the environment (Biswas and Roy, 2016). It has been reported that a major section of Generation Z have immense inclination towards companies which produce ethical and eco friendly goods and services. There has been a rise from over 50% in 2014 to almost 75% of customers preferring products that have positive influence in the environment (Forbes.com 2018).
If companies try to cover their wrongdoings by showing their non environment practices as green approaches then people shall understand. When the customers come to know about the practices as being false, they completely lose faith on the company (Greenstone, Kopits and Wolverton, 2013). The misleading claim that an action is directed to the betterment of the environment is something that shatters the faith of the people (Cox et al. 2013). The consumers are attached to a company and this attachment is removed completely when the green washing practice comes out in the public (Krupp, 2017) .The consumers prefer to buy products that are less harmful to the environment and they have considerably become more socially responsible in their purchase pattern and behavior (Skard and Thorbjørnsen, 2014) The consumers want the organizations to act responsibly towards the duties that are assigned to them in terms of the aspect of CSR (Saeidi et al. 2015). There have been instances where it is seen that companies have invested considerable of amount for the implementation of certain CSR campaigns that are oriented towards the development and preservation of the environment Greenstone, Kopits and Wolverton, 2013). Walmart is an organization that has taken certain steps for the betterment in their approach towards the CSR campaigns (Kesavan, Bernacchi and Mascarenhas, 2013). The project Gigaton is a step that is radical and ambitious in nature. The project shall make sure that the carbon emissions are reduced and the supply chain of the company goes greener in its working process (Krupp, 2017). Walmart has confirmed that it is taking help form various non-governmental organizations and the Environmental Defense Fund to make sure that the emission toolkit is well designed and it works to achieve the desired target of emission. Around 80% of carbon emission in the US is from the supply chains of various retailers and Walmart is considerably one of the biggest units in it (Greenstone, Kopits and Wolverton, 2013). The decision to cut down the emission on their part has been mainly to make sure that the impact and harm done to the environment is reduced substantially. Citing the example of Walmart, PepsiCo has also joined in making the environment more sustainable (Krupp, 2017). The company has indulged into the practice of sustainable agriculture for its products so that the land use, water resources and other aspects of environment are well taken care of by their approach. The practice of Walmart needs to be highly appreciated because they have constantly kept their motive fixed and all their CSR have been targeted to enhance the quality of the environment. The PepsiCo has engaged more than 24000 farmers in their pursuance of sustainable agriculture (Pepsico.com 2018). The agriculture that is being practiced by the company makes sure that the least of the impact is left on the environment Makanyeza, 2015). The raw material for the soft drinks giants used to create a huge impact on the overall land use and the usage pattern of water and other raw materials. The sustainable agriculture has made it sure that such practices are incorporated and the agriculture is done in such a way that the least of the impacts is left on the environment. The farm animals that are an important part of the supply chain process are taken special care of by the PepsiCo (Biswas and Roy, 2016). The company aims to make sure that the fertility of the land is not wasted and those involved in the practice shall receive their due share in the process. The raw materials make for the supply chain of an organization and it is seen that the various organizations leave huge impact on the environment in the process. The supply chain management needs to be well maintained for the organizations so that it leaves low impact on the resources base of the environment and the carbon emission is reduced (Tinne, 2013). The carbon emissions acts as a push away factor for the consumers as the customers do not want to get involved in purchasing any product that has an extensive negative impact on the environment.
The Need for Green Marketing in Today’s Business World
The consumer buying behavior is marked with an extreme sense of importance that is given to the brand that is being purchased or invested in (Tinne, 2013). The performances of the brands pave the way for them to be successful in the market. The quality of the product and service that a brand provides creates the position of the brand in the market (Armstrong et al. 2015). The trust of the consumers is not achieved in a single day and it takes considerable time for the people to trust a brand. Repetition in the purchase of product from a brand reflects that the brand is getting popular in the market and people are taking a liking to it (Greenstone, Kopits and Wolverton, 2013). The brands need to understand the demands of the consumers and act accordingly so that they can directly connect with the audience and make a mark for themselves. The idea of evolving a brand image lies deep in understanding the needs and demands that are present in the market. A thorough market research is required in order to understand the needs of the market (Saeidi et al. 2015). The financial performances of the brands hugely depend on the popularity of a brand in the market and the way it is perceived by the people in the market. The financial growth of a company occurs when people keep resorting to them for services and products and when they are found to be ethical in all their approaches (Saeidi et al. 2015). The CSR plays a major role in making sure that the image of the company is kept in high regards in the market. The idea of CSR and its proper implementations makes sure that the company is not making profits but also spending in certain areas that is making the world a better place to live overall.
There are multiple reasons for a company to pursue a CSR campaign that is effective and leaves imprints in the society. A CSR campaign brings with them various important attributes for the organizations. The primary reason for which most of the business organizations use the concept of the “corporate social responsibility” is to conduct their business in the most ethical manner (Knapton 2018). In the present times, the planet as well as the society forms a major area of interest of the various business organizations. It is often seen that the various business organizations often take the help of unethical practices to enhance their profits and thereby end up causing damage to the planet. A typical example of this is the recent business scandal of Volkswagen and their “defeat devise” (Knapton 2018). Therefore, the various business organizations design their CSR policies in a bid to provide the maximum amount of benefit to the planet and the society. Another reason for the perusal of the CSR is the concept of the “enhancement of the brand image” (Knapton 2018). It is significant to note that in the present times the customers have become ethically more conscious and like to opt for the services or the products of a business organization with an ethically sound reputation. Therefore, it becomes paramount for the various business organizations to maintain a sound CSR policy. Moreover, according to a survey conducted by “Mr. Doug Miller” in the year 1999 reveals that “The dying role of the state is an another driver or CSR because of the diminishing participation of the state, the stakeholders are benefiting and their exceptions are rising”. Furthermore, according to another survey conducted in the year 2002 by “Ernst and Young” reveals that “about 94% of companies believe in CSR. It influences about 70% of all consumers and their purchasing decisions” (Knapton 2018). These in short are some of the major reasons for the perusal of the CSR policies by the various business organizations.
Case Studies of Leading Companies: Walmart and Lego
To conclude, it is important for organizations to have an approach that caters to the needs of the environment and society. The CSR campaigns lead the company to take up the responsibility towards the society in which it is situated. The main idea behind the CSR campaigns remains the fact that the companies need to think of ways in which they can benefit the environment. Given the present scenario of the world where environmental issues are always soaring high it is essential that the companies take up green initiatives to make sure that the impact they leave on the environment is positive. The environment needs care and attention from the organizations in order to sustain. Practice of sustainable development has t be incorporated in the organizations and that can only done by making sure that the CSR campaign is aligned in that specific direction. The supply chains of organizations lead to putting huge impact on the environment and such an impact further damages the environmental quality. CSR is a responsible behavior and should be practiced without any manipulations. Global organizations such as PepsiCo and Walmart have successfully taken up CSR steps that are leaving a positive impact on the environment. The consumer’s demand for greener goods needs to be catered to and in the production of such materials it is expected that the overall carbon emission shall subsequently come down.
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