1. Customers respond positively to companies powering their CSR? What you should know

Customers respond positively to companies powering their CSR? What you should know

Customers respond positively to environment sustainability practices adopted by businesses

Published: September 25, 2017 5:44 AM
GlaxoSmithKline, Andrew Witty, Zika virus, HIV treatment programme, CSR, Nike, KPMG, JISL, Flyknit shoe line,  Mark Parker  GSK conducted three decades of painstaking research for developing a vaccine for malaria, which has distressed major parts of sub-Saharan Africa—it is the hardest-hit area by malaria.

Vidya Hattangadi

GlaxoSmithKline (GSK), established in 1715 and which has entered its fourth century in business, bases its drug pricing on the gross national income per capita in all 150 countries where it does business—in dozens of underdeveloped nations, it reinvests 20% of its profits in local healthcare infrastructure and worker training. The company believes in serving the patients in poor countries alongside the wealthier nations of the West. Ex-CEO Andrew Witty addressed them “the other 6 billion” people in the world.

GSK conducted three decades of painstaking research for developing a vaccine for malaria, which has distressed major parts of sub-Saharan Africa—it is the hardest-hit area by malaria. GSK has partnered with the government of Botswana on an ambitious HIV treatment programme. It is also working continuously on a vaccine for the Zika virus. GSK ranked at the number one position in the Fortune Change the World list of 2016. Nike’s CEO Mark Parker likes to ask his team a single question: “Can we double our business, while halving our environmental impact?” The world’s major athletic gear company was the first to kick off a recycled shoe programme back in 1990. It’s worth noting that 71% of its footwear and apparel uses “Nike Grind,” which is made of recycled polyester and other materials. Grind can be found in yarn and basketball shoes. Grind is also incorporated in more than 1 billion square feet of sports surfaces—including running tracks, playgrounds and football fields, replacing surface materials like virgin rubber.

Nike’s popular Flyknit shoe line, debuted in 2012, is both innovative and ecofriendly. Their team of engineers has reduced waste by about 60% on average for every Flyknit shoe compared to what’s used for traditional shoes, saving nearly 2 million pounds of fabric-scrap waste since 2012. Its 2020 targets include sourcing 100% of cotton more sustainably and reducing landfill waste. For Nike, there’s no finish line to becoming a more sustainable company. The sportswear maker is certainly gung-ho in the race of impacting positive practices to save Mother Nature. Nike ranked at number sixth in the Fortune Change the World list of 2016.

The Fortune Change the World highlights leading companies that are innovating to solve the world’s biggest challenges through core profit-making strategy and operations. Building on the concept of shared value, the list identifies companies not for their philanthropy, corporate social responsibility (CSR), or other business approaches, but for innovative activities that create material business value while contributing to community impact. Customers respond more positively to environment sustainability practices adopted by businesses. Today’s educated customers appreciate business organisations adopting pro-environment practices, and when they see it, and businesses adopt them legitimately, it only helps organisations gain tangible benefits. Smart organisations have also understood that adopting sustainable business practices can improve business processes and help in cost-cutting.

India is the first country in the world to make the corporates shell out from their annual revenue to charity from April 2014 onwards. There are quite a few areas in which organisations can invest. The major problems are hunger, poverty, healthcare and education. A survey by KPMG found that 52 of the country’s largest 100 companies failed to spend the required 2% in previous two years. Only a minor proportion of companies has contributed sincerely to CSR—corporate are allegedly deceiving the system by giving donations to charitable foundations which later return the amount minus a commission.

Prof Michael Porter, who is the doyen of strategic management, feels why should companies turn to NGOs and governments to solve society’s major problems? It is the need of the hour for business organisations to address societal needs and challenges while doing business. When businesses solve an external problem, they grow bigger and stronger in proportion with the rise of community standards. The shared value concept enhances corporate policies and practices, which add to the competitiveness of a company. By working on societal issues, companies automatically start innovating, including their business plan and strategies, and the innovations impact the living standards of consumers.

Jain Irrigation Systems Ltd (JISL) is the only Indian company to make it to the Fortune Change the World list (in 2015)—JISL ranked seventh on the list. Its drip irrigation, micro irrigation and tissue culture is a boon to farmers—high yields can be obtained with minimum usage of water. JISL has also entered the business of automation and solar pumps. It is leading in the setting up of greenhouses as well. The 2016 list saw two Indian companies on it—Cipla and Godrej Group. According to Prof Porter, India is a land of opportunities and sky is the limit for Indian organisations to start profitable ventures related to societal problems such as climate change, water management, education, healthcare, rural upliftment, etc.
Business managers need an approach of engaging with the external environment with an eye over expanding business through finding solutions to some pressing problems. Organisations need to look at how good they are at external engagement; they must be prepared to innovate to do better externally. Business organisations are not monolithic entities; they don’t exist in vacuum. Organisations are governed and led by individuals and are anchored in the societies in which they conduct their businesses. CSR schemes reflect the human side of organisations.

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