Corporate Social Responsibility (CSR) and Sustainability: A Business Opportunity?

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Corporate Social Responsibility (CSR) and Sustainability: A Business Opportunity?

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CSR and Sustainability: A Business Opportunity?
Monday, September 21, 2009 - 9:30am


The Social Responsibility of business is to increase its profits.” Do Milton Friedman’s words still ring true today? Did they ever?

Perhaps Milton forgot one key word: good. The Social responsibility of business is to increase its good profits. By now, many of you have probably read Fred Reichheld’s “The Ultimate Question,” in which he discusses the difference between good and bad profits, and the measurement of a company’s “net promoter score” through the question: How likely is it that you would recommend this company to a friend or colleague?

Reichheld describes bad profits as “profits earned at the expense of customer relationships” (think deceptive promotions, unfair charges, etc.), and good profits as those that “are earned with customers’ enthusiastic cooperation.” In essence, good profits are best for the company in the long run as they create ongoing profits, true brand advocates and sustainable growth. It’s not too much of a stretch to include sustainability initiatives into the “good profit” category. So when it comes to sustainability, why do some companies seemingly go after “bad profits” with deceptive adverts and misleading green claims when they know it will come back to haunt them?

To put it another way, given that most companies will never be “green,” or at least not green enough, why do they continue to shoot themselves in the foot by talking about themselves? You’re an oil company, you will never be green! Perhaps the business opportunity they are after rests in shifting the conversation from “look how green we are” to “look how green we can make you be.” Consumers have always looked after their own interests, as they should, and it’s no different when it comes to sustainability. It’s all about me, me, me. How can I reduce my impact? How can I contribute to the betterment of society? How can I be more efficient with what I have? Your average customers aren’t trying to get you to save the world, they are much more selfish than that. They want to do it themselves, and hopefully save some money along the way.

So where exactly do companies go wrong? Many of them target the wrong message (complex, environmental jargon) to the average customer (who simply doesn’t care), only to have the message torn apart very publicly by the small group of stakeholders (NGOs, activists, etc.) who do care, resulting in negative press and a damaged reputation across all stakeholders. Companies aren’t responsible for saving the world, and customers know that, so stop trying to reach for an unattainable goal.

Don’t get me wrong, it is extremely important for companies to minimize the negative impact on the environment and communities in which they operate, but if you’re trying to gain a true business advantage from sustainability, that’s not where it’s going to come from. It will please the small (albeit growing) group of stakeholders that care, but what does it do for the majority of customers that don’t? Nothing. Should you still strive to run a more efficient operation? Yes. Should you do it because a small group of stakeholders are complaining about its impact on the environment? No, you’ll never please them. You should do it because it makes good business sense in the long run.

Focus your efforts today on helping customers lead more responsible lives and you’ll make some good progress in earning the trust, and more importantly those “good” profits you are after. Customers are interested, they just need your help in getting there.

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Keywords: CSR | Corporate Social Responsibility | Sustainability | development crossing | green marketing