Interviews for the position of Marketing Manager were on in a multinational electronics company. Lot of prospective candidates were bidding their chances of selection. Interviewers were delighted but at the same time confused – whom to hire. The last candidate for that day, Jay appeared before the panel of interviewers. As they say, the fate of the interview is generally decided in the first 3 and a half minute. Same happened with Jay. His confidence was apparent and he was there in the race of getting selected over other two shortlisted guys. The tie-breaker question was thrown to him: “Why should we care about environmental sustainability?” Jay knew that there is money to be made in environmental sustainability. He just had to convince the bigshots across the table.
“Well,” Jay responded by pulling a sample set from a nearby shelf in that room. He pointed out at its over-packaging and told the interviewers, “You are probably wasting paper and plastic—and money. A smaller packaging of this item would not only reduce waste, but also the size of the unit. That means more products per consignment. And that further means, lower transportation costs.” Jay got the job to manage Marketing. Four years later, Jay was head of corporate strategy and business sustainability in that company. For him, “Sustainability is strategy which should be weaved into the business mandate.”
Jay’s idea to cut down the packaging led to a 15 per cent cost reduction in the transportation of that item. Later, he also strategized that changing the positioning of ceiling lights could reduce energy use by up to 25 per cent. And the addition of a white roof that reflected light by retaining less heat than dark ones in the outlets and showrooms, led to savings on air conditioning costs in the summer. The result was there for all to see – company’s environmental record improved, and it improved the opportunities of money to be made. A clear win-win situation.
This is just one example of companies both large and small that have rallied under the banner of corporate social responsibility (CSR)—the notion that business should have a moral conscience on social issues, and a concern for the needs of future generations when it comes to the environment. Sometimes it’s about winning over customers, especially in an era when word of corporate misconduct can spread like an epidemic, and increasingly savvy consumers are willing to switch from brands that don’t reflect their values. But like this company did, other can also find opportunities to improve the bottom line.
Then there is a motor company, famous for its heavy-duty, diesel-guzzling, pickup vehicles, has inclined their focus on to more fuel-efficient engines, or even the all-electric version of the vehicles about a decade ago. Because, consumers wanted them, and the company smelled money. This company expects that as much as one-quarter of its global fleet of vehicles will be at least partially electric by 2020. The success mantra is that the company lets the consumer dictate which vehicle they are going to produce.
CSR is significant to a company’s long-term survival and it is hard to believe there is one big company that hasn’t thought about CSR. NGOs and other stakeholders that are on the ground are scrutinizing companies in a major way. Consumers have also become more sophisticated in their purchasing choices, demanding safer, healthier and sustainable products. Yet the deciding factor can be the social and environmental issues handled by companies.
Consider what happened to the GAP. In 2004, the San Francisco-based clothing company found itself facing widespread consumer backlash after revelations came to light that its supplier factories in the developing world—India, primarily—were using child labour. Children as young as 10 were making Gap garments in Delhi’s back streets. Consumer anger grew to a boil, spurring boycotts, as the Gap scrambled to cut ties with suppliers and clean up its battered image. To combat the problem, the Gap began issuing annual reports on the safety standards and working conditions of its suppliers.
When consumers feel they’ve been duped, the damage can run deep. That is where companies are most concerned, especially with today’s social media, because it can get beyond their ability to control the damage. People can perceive them as not doing the right thing, which is very costly.
The bottom line is that well-communicated and considered CSR initiatives are more than social responsibility. They are the deciding factors for a successful company.