Is Your Company Socially Responsible Enough?

Last September, Patagonia founder Yvon Chouinard made headlines when he announced that he would donate his company to fight climate change. “Earth is now our only shareholder,” he wrote in a widely circulated letter. “Instead of ‘going public,’ you could say we’re ‘going purpose.’ ”

Few companies have put their profits where their purpose is quite like Patagonia. Chouinard and his family are putting their entire company into a specially designed trust and non-profit so that all its earnings—some US$100 million annually—go to save the planet.

But the outdoor clothing retailer isn’t alone in standing up for a cause. Take Nike’s famous ads with quarterback Colin Kaepernick. Or Delta Air Lines’ defence of voter rights in Georgia. Or the thousands of other corporate pronouncements over the past several years on issues as wide-ranging as race, gender and the environment.

Yet as headline-grabbing and seemingly mainstream as these public displays have become, some critics question whether companies are doing enough. When a company like Apple has a market valuation of US$2.3 trillion—which would make it the seventh wealthiest country on the planet—what level of responsibility does it have to address society’s ills? Moreover, which ills should companies tackle, and how should they do it?

These questions were at the heart of a survey of 1,120 Canadians commissioned by Smith School of Business that gauged what Canadians expect businesses should contribute to social and environmental issues. The big takeaway: many think companies need to prioritize a lot more than their bottom lines.

Survey says . . .

The survey, conducted by Proof Strategies, put a battery of questions to Canadians 18 to 84 from across the country. To the question of whether businesses should do more than they do now to solve society’s problems and help meet the needs of people, 52 per cent of respondents agreed. (Another 32 per cent somewhat agreed.) On average, respondents said that businesses should dedicate 21 per cent of their profits to important social issues.

As for which issues are most urgent, respondents weren’t in agreement. Fair wages topped the list, with 45 per cent saying it must be one of the top three priorities for companies, but 19 other issues were also cited, including food affordability (23 per cent), gender equality (19 per cent), economic development (16 per cent) and net zero carbon emissions (13 per cent).

Some respondents did agree, however, that businesses should be punished for letting them down. About one in five (18 per cent) said they decreased their spending entirely with a brand because of its bad behaviour towards others, or the brand’s position, or lack of a position, on an important issue.

Others went further than that, particularly young people. Canadians 18 to 24 were four times as likely as those 65 and over to ask that an authority (such as a government agency) police or regulate the company. They’re also nearly three times as likely to protest a company that disappoints them.

So how should businesses respond to the issues that Canadians care about? Close to one-third of respondents strongly expect CEOs to take a firm position on social issues. About the same number said it’s more important that a business’s support for a cause be “authentic” than how much money or other support it provides to that cause. Also noteworthy: The authenticity of a company’s support for a cause diminishes in the eyes of Canadians when the CEO stays silent on that issue.

A quick history lesson

At first glance, one of the more eyebrow-raising survey findings is that Canadians view businesses and charities as equally responsible for helping others.

But maybe this shouldn’t be so surprising, says Jacob Brower, Distinguished Faculty Fellow of Marketing at Smith School of Business. “Corporations are the most powerful entities on earth, and therefore people are expecting more from businesses because they see businesses as having the agility and speed to actually do something, and potentially that they hold some responsibility for some of the social ills that they see.”

Brower has been looking at corporate social responsibility (CSR) since his PhD days and says there have been three historical phases to corporate do-good efforts. For most of the 20th century, CSR comprised donations to charities, hospitals and other causes that executives deemed worthy. By the early 1990s, however, CSR started to institutionalize across firms as a way to mitigate harm. Ben & Jerry’s stance against artificial growth hormones is one example. This was CSR 2.0.

Now, as social movements around gender, race and environmentalism go mainstream, CSR has shifted into a new phase, says Brower. “CSR 3.0 goes beyond a company having its house in order to focus on the broader societal impact the company has on the issues that people care about.”

The more things stay the same

We may see signs of the shift from CSR 2.0 to 3.0 in some of the Smith survey results, says Brower. For example, one question asked respondents to identify which of the United Nations Sustainability Development Goals businesses should care about. Seventy per cent answered climate action, while only 53 per cent chose “responsible production and consumption.”

“It could be that people see responsible consumption and production almost as table stakes,” says Brower. In other words, firms should have already dealt with these CSR 2.0-type issues. “Climate action is still about doing less harm, but the expectation is increasingly about looking forward at the broader socio-environmental impact of business as a whole.”

So what should businesses do with results like these? Perhaps take them as a signal for how to proceed, says Brower. “One of the things I’ve been arguing in my recent work is that CSR 2.0 is a necessary condition for CSR 3.0. If your house is not in order and you attempt to engage in brand activism, you are probably going to get in trouble.”

Another lesson: Canadians think businesses should care about a lot of different social issues. But this shouldn’t be surprising either, says Brower. “It’s what we see in marketing generally—the market is fractured. And what that creates is an opportunity to niche specialize for different groups of people.”

In short, the survey is a reminder to think about the fundamentals of marketing, says Brower. “No corporation is going to be able to deal with all of these issues, nor should they most likely. It’s still really important to go back to the basics of understanding who your customers are, what issues matter to your constituency, and in what way they are likely to respond.”