The importance of Corporate Social Responsibility in the time of Covid-19

Inside the enterprise, Corporate Social Responsibility is an established strategic approach to business, although its meaning is still debated. In this post, we’ll take a look at how CSR responds to change in times of crisis.

A company is not an island. On the contrary, it is part of the larger economy and the community where it operates, and from which it receives stimuli and influences. This is a two-way street. Just as the community impacts the company, the company is also able to influence the economy and society where it operates. This means that it’s impossible to completely separate a company from the outside world. In fact, its business choices have a great impact on different areas of society, from its employees to the environment.

In light of this, customers, employees, and the general public expect companies to implement initiatives that are in line with the corporate values and skills from which the whole community can benefit. This underscores the importance of what we call corporate social responsibility.

 

The concept of Corporate Social Responsibility

The concept of social responsibility dates back as far as 1953, in a book by Howard Bowen, “Social Responsibilities of the Businessman.” In this book, the author poses an important question: what responsibility does a company and its leaders have toward society? (researchgate.net).

This topic has long been debated, even in the face of some particularly strong positions, such as that of the economist Milton Friedman, who argued that the only social responsibility of a company is to use its resources for profit, i.e. to stay in business. In a now-famous New York Times article, Friedman wrote: “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Profit remains the goal that drives the activities of most companies, but it is only the basis on which other responsibilities are supported by different subjects: government/regulators, customers, suppliers and, finally, the community as a whole.

A European interpretation

The European Union has also intervened on this point, both to provide a community definition of Corporate Social Responsibility (CSR) and to regulate its various economic and fiscal effects.

Originally, the concept was outlined in the European Commission’s 2001 Green Paper, which defined corporate social responsibility as “a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment.”

Ten years later, the European legislator returned to the subject again with the issue of communication, number 681 of 2011, “A renewed EU strategy 2011-14 for Corporate Social Responsibility,” which put forward a new definition of CSR as “the responsibility of enterprises for their impacts on society.” This new definition rejected the voluntary nature of the previous legislation and firmly places a company’s social responsibility in a much wider area: “To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders…”

It is no coincidence that in recent years, the concept of Shared Value is spreading, in which economic aspects, social benefits, and marketing strategies can coexist.

The idea behind this theory is that the competitiveness of each company and the welfare of the community in which it is located are somehow mutually dependent. Recognizing and enhancing this type of link between the economic and social spheres would give greater impetus to a new wave of sustainable economic development and at the same time, correcting some of the harms typical of capitalism.

 

The contribution of companies in normal times

It is precisely in the light of this approach that one can understand why companies are called to play their part within the community to which they belong. Among other things, improving one’s social responsibility does not necessarily mean taking action outside the company; on the contrary, CSR can also take the form of internal policies that affect employees and the workplace.

For example, Google has long since started a series of useful projects to establish itself as a socially aware brand. One such project is Google Green, a CSR initiative that focuses on environmental sustainability. Since it embarked on this path, the company has reduced energy costs by up to 50% in its data centers alone, thanks, among other things, to an extensive program that promotes recycling among its employees and the investment of $1 billion for the development and implementation of renewable energy projects.

Another particularly relevant example is that of Starbucks, which addressed two particularly sensitive issues: the exploitation of workers and the environmental impact of the coffee supply chain.

Over the years, the company has committed to a series of activities linked to making their business sustainable. For example, it launched a program aimed at farmers to guarantee the supply of 100% “ethical” coffee, identifying a series of fundamental requirements (the Coffee and Farmer Equity Practices, C.A.F.E.) that all its coffee suppliers must respect. Other commitments concern the reduction of disposable plastic packaging or water waste.

 

Covid-19: Corporate Social Responsibility in times of crisis

If you expect this kind of concrete action from companies during normal periods, what happens in times of crisis? 

Companies all over the world have mobilized to help their communities in the wake of Covid-19. Some companies have made financial donations toward health facilities or to local governments, some have purchased products and machinery to fight the virus, others have even converted their production chain to produce tools that are useful for doctors and nurses, such as gowns, masks, and hand sanitizer.

In addition to these community initiatives, many companies have also taken actions aimed at their employees, providing support for smart working, offering training activities accessible from home, or providing financial support in some cases.  

 

Make sure your CSR is relevant

A good Corporate Social Responsibility strategy should focus on issues and actions that are relevant (environmental protection, sustainability of work, waste reduction), especially in times of crisis when your employees and the larger community are most in need. 

It is therefore fundamental, even in crisis situations, to identify what the company’s “priorities” are and to act accordingly so that any interventions made are both consistent and effective.

 

CSR should be concrete and consistent 

Consistency is another aspect that should not be underestimated when planning Corporate Social Responsibility interventions. Whatever action you decide to take, it is important that it is closely linked to your company’s core business. If each company is expected to do its part, the best place to start is with the areas and activities you know best. 

After all, in emergencies, it is not only economic resources that are needed, but also the skills and technical knowledge to be put in place. It is precisely this, then, that companies must share with the rest of the community, for at least two reasons.

For one, it’s about effectiveness: Based on production, materials, skills, and sector knowledge, a company can probably make the most impact, quickly, and with positive results in their own sector or even a neighbouring sector. 

Ferrari, for example, decided to use its production line to manufacture valves for respirators. Armani decided to convert all of its Italian plants to the production of disposable gowns to be used as personal protective equipment (PPE) for healthcare workers working on the frontline of the coronavirus. In both cases, the expertise recognized by these brands has added value to the operation and to the quality and reliability of the products distributed.

Such activities also enrich the company’s mission, which can be expanded to include providing an effective response to the wider community in a time of crisis. Secondly, by staying close to core business activities, companies can avoid superficial or hasty CSR that may come off as “greenwashing” or hypocritical. The consequence of such an attitude is doubly negative.

In light of this, a company should make wise choices and recognize that if there are no tangible initiatives that can be undertaken without the risk of falling into simple “marketing operations,” then it may be better to limit itself to a donation commensurate with its possibilities.

It is precisely in times of crisis where a sense of unity and belonging are important for any community. For this reason it is essential that a company also manifests this sense of belonging and shows that it is an active part of the community.

Communication must also follow this line, where the initiatives pursued can be seen in the light of supporting the common good, where actions are not merely about fulfilling a duty, but about supporting the larger community because it’s the right thing to do. 

Moreover, the first rule to follow when building a CSR strategy is to make sure that the company does not in any way impoverish the environment or the community in which it is located.

 

Communicating Corporate Social Responsibility in an emergency 

At this point, let us move on to a thorny question: should we communicate the CSR initiatives that take place during periods of emergency? Obviously, the question is based on a well-founded fear: anything that is communicated in times of crisis requires a great deal of attention.

The answer is yes, as long as it is done in a conscientious and measured manner. There are many approaches to communicate a company CSR operation in ordinary situations; in critical moments sobriety must prevail. This is why it is good to standardize your internal and external communication by choosing an institutional and resolute tone with which to explain what you have done and what you want to do.

But even before deciding whether to communicate, one must ask if there is anything to communicate. The relevance of the action itself should justify its communication and at the same time, convey the company’s values.

Only if you are certain that you have acted in a truly relevant way then you can emphasize what you have done, remembering that in these situations, actions are more important than words.