Corporate Social Responsibility in the time of Coronavirus
Corporate social responsibility (CSR) often falls to Boards, and can sometimes get overlooked, particularly during a crisis. Yet businesses will be remembered for their responses and behaviour during the coronavirus pandemic for years to come. Large global conglomorates have had CSR departments for years, responding to a growing desire from consumers that their brands do more than simply supply their product at a market-appropriate price, but in many businesses, it is down to the leadership to ensure that good corporate citizenship is considered. Research indicates a growing trend for consumers shifting loyalty to other brands which are perceived to be good corporate citizens, even if their product costs more. This shift in emphasis is usually attributed to the rise of millennials as a dominant consumer group, who are considered to be the most engaged with ideas of ethical, moral and sustainable responsibility.
Research into this area suggests that it is not simply a question of making sure the business does its recycling. Millennial consumers are often described as ‘incredibly cynical’ – that is hyper-engaged and able to recognise authentic acts of responsibility, from those that are little more than window dressing. Authenticity is key – organisations should be able to demonstrate clear, direct actions where they have placed social benefits ahead of profitability. Businesses can no longer solely exist to return profits to their shareholders – they must instead strive to add value for all stakeholders – shareholders, yes, but also employees, communities, and the world at large.
Good corporate governance is not just key for attracting and retaining customers. Millennials make up approximately 50% of the workforce, and will make up 75% by the year 2025. They show a marked preference for working for businesses with a clear sense of purpose, and a demonstrable track record of corporate social responsibility. Nearly three quarters of millennials say they would take a pay cut to work for a socially responsible company. Energy companies have reported difficulties in recruiting the best talent into their oil and gas sectors, with millennials preferring to work on new technology or renewables. CSR has become necessary not just to woo consumers, but also to attract talented individuals to businesses.
The forced-disruption of covid-19 offers two potential avenues in terms of CSR. Some businesses, looking to cut costs, may cut their CSR programmes. Alternatively, it is an opportunity for businesses to act as the good citizens they want to be for the betterment of all their stakeholders.
Many businesses will be judged on how they responded during the Covid-19 crisis, and many have jumped on the bandwagon to embrace CSR – but there should be a warning attached. Millennials are, for the most part, savvy consumers who have grown up in the era of fake news and social media. Consumers are increasingly adept at detecting cynical attempts to create a socially responsible ‘gloss’ on their activities. Consider the cynical responses to Elon Musk’s claims that Tesla had supplied 1,255 ventilators to hospitals in the US. Commenters on social media were quick to point out that the units in question were actually BPAP machines (non-invasive breathing support equipment) and question why someone had gone to the effort of sticking Tesla logos over the logos of the actual manufacturer. It was almost as though Tesla had seen the opportunity for some good publicity, and leapt at it. While businesses of Tesla’s stature should absolutely be using their global supply chain infrastructure to support governments in this time of crisis, using such an act deceptively and potentially as a way of ‘demonstrating CSR’ will often backfire.
The best advice is to ‘think local’ when considering increasing CSR engagement during the pandemic. Think of responsibilities to employees, suppliers or even existing CSR partners, and your local community, before dreaming of big attention seeking headlines.
Supporting employees is a key indicator of being a responsible employer, and in the coronavirus pandemic this can range from guaranteeing salaries (as Microsoft did for their hourly workers), or offering 0% interest loans, to simply supporting them through the challenges posed by coronavirus – be that encouraging flexible working to support those with increased demands on their time, or supporting safe working conditions. UK retailer, Next, have committed to only processing a set number of orders per day to protect warehouse staff and enable them to socially distance at work, often closing the online store before 9am as the daily order limit is reached. In contrast, Amazon has come under fire for not doing enough to ensure warehouse staff are able to work safely.
Suppliers are another key stakeholder within the business ecosystem who should not be forgotten. Committing to paying small suppliers’ (who may not have the cash surplus to see through the crisis) outstanding invoices, or even payments in advance in anticipation of future supplies are just some ways businesses are ensuring their suppliers will still be in business once the pandemic has passed.
For those businesses who already partner with not-for-profit organisations, or encourage their employees to volunteer, the sudden changes cause by the pandemic may leave those projects high and dry. However to simply pull the plug on those organisations would be a mistake. Most charities will themselves be potentially struggling, but also looking to pivot, to provide a different level of support to their communities throughout the crisis, and would benefit from continued support. Take for example an educational charity, which may wish to divert funds originally planned for an away day or trip to offer food support to those entitled to free school meals.
Even global businesses will have a link to specific locale, and the current crisis offers opportunities for businesses to strengthen their ties to local communities. Whether by supporting food banks, encouraging staff to offer their time to support community initiatives, or pivoting production facilities to produce sorely needed products – anti-bacterial hand gel, visors, masks or other PPE, there are plenty of ways to provide support locally.
Of course, not all businesses will have available resources to continue supporting projects as before. This will not necessarily mark them out as ‘irresponsible’ in the minds of consumers. However, communication is key. Being honest with stakeholders about what can be offered and what they might need will ensure that the interaction is authentic, and it is authenticity above all things that consumers respond to. Trying to ‘claim credit’ for scaled back or past actions will not win any hearts, or minds. Speaking with stakeholders to understand what they need, and delivering that solution is crucial to ensuring the response to the coronavirus is authentic, with a focus on delivering what is most useful, rather than what is most likely to garner publicity.
If you would like to confidentially discuss how The Norman Broadbent Group could help you overcome your business or people challenges, please contact Angela Hickmore, Group Managing Director