Corporate Social Responsibility is an important strategy for increasing a company’s “triple bottom line.” Kellie McElhaney, UC Berkeley-Haas professor, discusses the power millennials have in driving CSR to the top of the leadership agenda.
Corporate social responsibility has evolved from what was once small division within a company to an integrated business model strategy. Where CSR was once motivated by external pressures such as corporate scandals, and written off as PR ploys, the business case for CSR has changed. Kellie McElhaney is an adjunct professor in the institute for business and social innovation at the Haas School of Business, and founded the Haas Center for Responsible Business. She explains why it is a critical strategy for expanding markets and improving talent pipelines, and how leaders can begin to implement their CSR strategy more effectively.
The ethical millennial
CSR is a smart business strategy for multiple reasons, but McElhaney emphasizes a particularly influential one: millennials. Many studies show that millennials are less engaged at work and less likely to stay in their jobs longer than a few years, than other generations. However, one thing is clear about the millennial generation, and that is they care about contributing positively in the world. A recent report showed that 60 percent of millennials seek a “sense of purpose” and socially responsible companies when selecting their employer. McElhaney says leaders must internalize this and begin to leverage it to attract and retain talent. “You can actually see in some companies if you compare employees who are highly engaged in the company’s sustainability strategy, their engagement level with the company goes up, their level of satisfaction with the company goes up.”
Millennials also wield enormous influence on the consumer side. They are more likely than any other demographic to spend their money on a product with a social cause. Forbes recently suggested 2016 is the “Year of the Millennial Customer,” due to their growing purchasing power ($200 billion annually by 2017) and enormous influence in the buying decisions of other demographics. “Consumer products is the highest area in which millennials have shown to care with their purchase decisions,” says McElhaney. “This is because a consumer product is very much a social badge, if I’m wearing a pair of Toms Shoes -- the 1-for-1 business model -- I’m socially badged in society as someone who cares about contributing positively to the world in a way that is highly visible.”
The pressures exerted by the millennial workforce and consumer base has been influential in pushing many brands, like Coca-Cola, Nike, Starbucks, and many others, to improve their social and environmental sustainability. “It’s getting companies to say ‘we have to care about this,” says McElhaney. “It’s become a need-to-have strategy.”
A high-impact CSR strategy
What makes an effective CSR strategy? Companies that design strategies that intersect their core competencies and social and environmental impact have the most impact. McElhaney cites examples of data centers, who have employed strategies to offset their environmental impact by capturing energy and heat losses, and redistributing that surplus back into the grid. McElhany also points to Coca-Cola. “Water is a top-of-mind issue for everyone, particularly in California with the drought. If Coca-Cola can’t help solve our water issues, they will be out of a product.” The company has invested heavily in research for purification and filtration systems so they can improve water standards in communities around the world. This strategy makes sense to preserve the longevity of their product, but it also creates a positive impact for other areas of the world. “There is a business reason and there’s an environmental and social reason, and that’s the perfect mix.”
On the other hand, she says, companies can fall short of effective CSR strategy when they do not integrate their cause with their core competencies. “If a tech company decides to run a ‘Toys for Tots’ program over the holiday season, it’s a nice gesture but is a one-off, and not a deeply embedded, sustainable strategy.”
Kellie McElhaney authored the book: Just Good Business: The Strategic Guide to Aligning Corporate Responsibility and Brand. Learn more about the ROI of CSR, and how to implement effective CSR strategies in her InFocus interview