CORPORATE SOCIAL RESPONSIBILITY

Traditionally, the top priorities of corporations have been shareholder¹ value and profitability². They placed little value on their company's environmental and social impact. However, this is changing. Thanks in part to commentary by consumers and activists, corporations around the world now realize that they can no longer turn a blind eye to the impact that their activities have on the world and its people. A Nielsen poll found that over eighty percent of people under the age of twenty-five said that it's "extremely" or "very" important for companies to have programs to improve the environment. Knowing that profitability is linked to public opinion, many companies have adopted some form of corporate social responsibility (CSR) into their business model.

To understand what CSR is trying to achieve, we must understand what the term means. It can be defined as a company's engagement with environmental, social, and corporate governance³ issues. Examples of environmental concerns include climate change, hazardous⁴ waste, nuclear energy, and ecological impact. As for social concerns, they include social diversity⁵, human rights, and consumer protection. Lastly, governance issues involve management structure, employee relationships, and anti-corruption measures.

Companies that adopt CSR programs do many things to address their environmental and social impact. Some programs consist of charitable fundraising⁶ and volunteerism⁷. Others involve improving workplace conditions and social benefits like healthcare. At an operational⁸ level, CSR-focused companies can have programs to reduce waste and emissions and invest in environmentally friendly modifications to their production process. To illustrate, the Danish toy company Lego set out to power its production facilities with one-hundred percent renewable energy. To achieve this goal, the company developed wind farms.

Keep in mind, however, that CSR programs are not entirely altruistic⁹. Most companies are not looking to support good causes out of pure generosity. Rather, CSR programs are seen as a type of investment. One clear benefit of adopting CSR programs is that they generate positive public relations. In essence, they're another way to advertise, build brand trust, and gain media attention. But CSR programs aren't just profitable because they provide a company with advertising. Consumer spending and employee motivations are also changing, which has affected companies' bottom lines. A market research company, Toluna, reported that thirty-seven percent of consumers are willing to pay up to five percent more for environmentally friendly products and are actively changing their purchasing activities to do so. Employees are also positively affected by CSR programs. Studies have found that companies with CSR projects have better employee satisfaction and loyalty.

Certainly, CSR programs aren't without their drawbacks or criticisms. Proper social responsibility can be difficult to achieve and often costs lots of money. Such programs are also criticized for being poorly controlled and monitored. Take, for example, the German carmaker Volkswagen. Before 2015, the company portrayed itself as an environmentally conscious company that made clean diesel cars. However, in 2015, the United States Environmental Protection Agency found that their vehicles came with software that reduced emissions only while testing and not while being driven on roads. Volkswagen used this software for nearly six years before being caught. During that time, they sold over eleven million vehicles with this software worldwide. Although Volkswagen apologized and even recalled the affected vehicles, the damage had already been done. Shareholder value and car resale values fell. As a result, the company has promised to fix its ways.

With a growing percentage of the population determined to make companies behave responsibly, we can be sure that corporate headquarters around the world will continue to come up with CSR plans and policies. However, whether or not these efforts are genuine or simply inauthentic attempts to fit the paradigm is yet to be seen. What we do know is that public pressure does have power, and with enough effort, change can be made to stick.

• ecological impact
• consumer trust
• fundraising and encouraging
• important to remember
• customers and activists
• mean that consumers

• headquarters
• essence
• paradigm
• commentary
• modification
• positively

Responsible Fashion

Corporations create useful and desirable products as well as jobs, wealth, and opportunities. However, in the pursuit of profits, corporations can sometimes behave poorly. Take, for example, the fashion industry. Fast-fashion companies like H&M and Zara provide high-fashion designs at affordable prices. However, in order to do this, they often move their production to developing countries, where wages can be shockingly low. For example, in 1992, Jeff Ballinger published a report that detailed the awful working conditions at a factory making Nike products. In his report, he detailed how employees worked for as little as fourteen cents an hour, which was less than the country's minimum wage.

The scandal created widespread demand for better corporate social responsibility. Following Ballinger's report, Nike's then-CEO Phil Knight responded. He recognized that "the Nike product [had] become synonymous with slave wages, forced overtime, and arbitrary abuse." He then promised that Nike would change. He raised the wages of his workers, increased monitoring of his overseas factories, and required factories to meet clean-air standards. By 2005, Nike further followed through on its promises of change. The company became the first in the industry to publish a list of all the factories it used overseas, along with a detailed report of factory conditions.

Although the changes Nike implemented helped to repair its broken reputation, many consumers feel the company still has room for improvement. In order to keep up with growing customer awareness, companies in all industries will continue to find themselves under pressure to prove they are cleaning up their manufacturing processes and protecting the health and well-being of their workers.