Corporate social responsibility has become a growing trend among the top organizations in the United States and around the world. Organizations want to be able to continue to make profits while at the same time doing something that helps the community, environment, or some other cause that may be a focal point for the organization. Incorporating social responsibility into risk management makes logical sense because being socially irresponsible can cause harm to the organization. By being socially responsible many times an organization can recoup some of the costs associated with being socially responsible by either making repeat customers or creating new ones based on their outreach.
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CSR defined and why it should be incorporated into the Business Strategy
Corporate social responsibility (CSR), also known as corporate citizenship, is a self-regulating business model that helps a company be socially accountable — to itself, its stakeholders, and the public in all aspects of society including economic, social, and environmental (Investopedia, 2019). From an organizational standpoint, social risk is like any other risk that may arise due to the behaviors and actions within the organization that can create vulnerabilities (Kytle & Ruggie, 2005). CSR is not new as a concept, it’s just that there are more organizations that are adopting this into their business strategy, and why wouldn’t they? CSR can attract better employees, new customers, and the end results makes something, usually in their own community better. There is a large consumer base that cares about a myriad of social issues and they are willing to pay a little more or drive a little further for products that they know are made responsibly. Wal-Mart may offer almost everything, but for some people they would rather shop at a local business that they know helps to make their community better by treating their employees with respect and not compromising their morality just to increase the bottom line.
Benefits of using CSR at the Business and Community Level
The benefits of employing CSR by conducting business in a way that enhances society and the environment, instead of negatively contributing to them, is that both the organization and the community wins (Investopedia, 2019). It may seem like an obvious choice to make the community in which you create your business better instead of turning a blind eye to the problems of the community or the world. There is a benefit to the organization in terms of visibility and reputation, but also some that have an anticipatory value (Gazzola, 2012). When you think about the visibility and reputation aspect, it makes sense and you could draw a line from a gain of consumers due to a company announcing that it supports a global cause, such as clean water or water conservation. The anticipatory value is added in when the company happens to be Zephyrhills Water. By being proactive in how they source and bottle their water, they will be ahead of the curve if legislation is introduced to change how water is sourced and bottled in the United States. They would likely have less to change to meet the requirements and they would not incur as large a cost since minimal changes would need to be made. The benefit to the community is knowing that the organization is focused on helping the environment and would not put the neighboring communities at risk by sourcing water in a harmful or negligent way.
How Zappos uses CSR in the Community
When you think of Zappos, you may only think of shoes or know them as the company Amazon acquired in 2009. However, even though they are owned by Amazon their CEO, Tony Hsieh, maintains control over how Zappos is operated. When Hsieh became the CEO of Zappos he revamped the company, moved their offices to downtown Las Vegas, and changed the culture. Part of this included asking employees what they desired from the company to make their lives better. From there, Tony was inspired to find ways to make the surrounding community better. The vision at Zappos was always centered on the 3 C’s: Clothing, Customer Service, and Culture. Then the fourth C was added with Community. In 2017 Zappos introduced Zappos for Good, known as their charitable arm of the organization. The department is led by Steve Bautista who says the way they do charity is focused on the community and making sure that employees are engaged in the process (Bell, 2019). The ideas initiate from the employees and they are responsible for their success. An example of one of their recent acts of good is donating to Kyler’s Kicks that was founded by a Las Vegas boy who was bullied and stabbed over his shoes. Kyler’s Kicks donates shoes to the homeless and to kids in need in the Las Vegas area. There are so many other examples of Zappos reaching out to their community and have even more plans for the future that revolve around goods that are made of recycled products, helping the environment and the community at the same time.
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How CSR and Risk Management are related
CSR is something that has to be integrated into Risk Management as they are very intertwined in many aspects. In the day and age of social media and the rate at which something can go viral is mind-blowing. As an organization, the last you want to go viral for is not being socially responsible. The risk to the organizations reputation can be harmed significantly if information of an indiscretion gets out to the public. When social responsibility is incorporated into risk management it lowers the opportunity to have an issue arise because of the behaviors or actions within the organization.
- Bell, J. (2019, May 7). From Prom to Fresh Produce: All the Ways Zappos Gives Back to Its Community. Retrieved from Footwear News: https://footwearnews.com/2019/business/retail/zappos-for-good-charity-projects-las-vegas-1202778095/
- Gazzola, P. (2012). Social Performance Enhances Financial Performance. Benefits from CSR. Retrieved from linccweb.org: http://eds.b.ebscohost.com.db24.linccweb.org/eds/pdfviewer/pdfviewer?vid=2&sid=97222dc9-11ab-4a6e-84bf-01439715cbe3%40pdc-v-sessmgr02
- Investopedia. (2019, February 11). Corporate Social Responsibilty (CSR). Retrieved from Investopedia.com: https://www.investopedia.com/terms/c/corp-social-responsibility.asp
- Kytle, B., & Ruggie, J. (2005). Corporate Social Responsibility as Risk Management: A Model for Multinationals. Corporate Social Responsibility Initiative Working Paper No. 10. Cambridge, MA: John F Kennedy School of Government, Harvard University.
- Narvaez, J. F. (2015). Implementing enterprise risk management: case studies and best practices. Hoboken: Wiley.
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