Social responsibility is the concept that business is part of the larger society in which it exists and must therefore act in a way that not only advances the firm, but also serves the society. More than ever firms are being challenged to integrate social responsibilities in to their operations. Many firms now believe that social responsibility to be a lot more than granting money to community groups or volunteering their time to organizations – although these are both important ways that firms support the community. Today, business leaders recognize that a commitment to corporate social responsibility can provide distinct advantage in attracting and retaining employees, dealing with suppliers and regulators, strengthening customer relationships and providing positive returns for investors.
Let us take a look at some of the social responsibility issues and analyze how businesses are showing their social responsibility.
Around the world there are lots of environmental concerns that challenge companies to be better global citizens. Leading companies know that taking a strong role in protecting the environment improves the efficiency of operations and saves money, making a positive impact on business partners, customers and investors. Let us see how socially responsible companies are responding to the environmental concerns.
Delphi Automotive Systems is dedicated to protecting human health, natural resources and the global environment. For Delphi, a commitment to environmental management is a critical business strategy. Delphi has certified 15 of its global manufacturing sites under ISO 14001, a global standard that recognizes facilities that have systems in place to proactively manage and reduce their environmental impact. The company is working toward earning this certification for all 168 of its manufacturing facilities around the world over the next three years.
John Jaffurs, director, Delphi environmental services, states, “We want to formally integrate our environmental management into the goals of the business. Delphi is using ISO 14001 and other tools as a means of creating a total environmental management system. This will allow us to integrate operational environmental issues directly into future planning.”
Delphi’s involvement in reducing the automobile’s environmental impact began more than 30 years ago with the introduction of the first catalytic converters. Delphi works to reduce emissions, increase fuel economy, decrease vehicle mass and enhance the recyclability of its products. Delphi also believes that the reduction or elimination of materials can go far in helping the environment.
Delphi’s E-STEER Electric Power Steering reduces the number of seals and totally eliminates the power steering fluid, hoses and pump from the power steering system. In 1995, 75 percent of all cars sold (approximately 27 million) were equipped with traditional power steering and carried an estimated 40 million liters of hydraulic fluid. This new technology can result in a significant reduction in raw materials, which means less material to recycle or dispose after the life of the product. E-STEER also reduces energy demand by up to 80 percent, resulting in improved fuel economy and reduced vehicle emissions.
E-STEER received the 1999 PACE (Premier Automotive Suppliers’ Contribution of Excellence) award from Automotive News and Ernst & Young LLP, which recognizes automobile suppliers who have excelled in adapting and reinventing their companies and their products to meet the growing demands of their customers — the world’s major automotive manufacturers. E-STEER is just one example of the many innovative product technologies Delphi can offer to provide environmental solutions to its customers.
According to the American Lung Association, motor vehicle emissions account for approximately 77
percent of the carbon monoxide (CO), more than 35.6 percent of the volatile organic compounds (including hydrocarbons) and around 45 percent of the nitrogen oxides (NOx) in our nation’s air.
With this in mind, car manufacturers like GM, Ford and Honda are now producing and marketing cleaner-burning cars powered by electricity, alternate fuels or a combination of the two. Environmentalists like to refer to these as “green cars” because they represent an environmentally responsible way to travel in style. Politicians, on the other hand, have begun to see the potential for addressing larger issues. Earlier this year, Representative Robert T. Matsui (D-CA) introduced legislation that would give up to $5,000 per year in consumer tax credits to people with green cars. With this in mind, GM came up with its environment friendly “EV1”, Ford with its “Ranger” and Honda with its “Insight”.
The Tennessee Valley Authority (TVA), the nation’s largest electricity producer, has announced that it will begin test-marketing alternative energy sources as early as next year. As phase one of the TVA’s Green Power Program, the test will utilize wind, solar and landfill gas energy sources to generate roughly three to six megawatts of power. Eight distributors, representing all seven of the Tennessee Valley Public Power Association’s districts, have agreed to participate in the test. If the test is successful, TVA customers could see full-scale implementation by the end of 2003. The Green Power Program is the first of its kind in the Southeast.
In related news, the TVA received word June 18 that the Department of Energy (DOE) has approved a proposal from the Virginia Alliance for Solar Electricity (VASE) to provide matching funding for the Green Power Program. The TVA’s marketing plan for Green Power represents the fruits of an alternate energy initiative that began in January 1998. At that time, the TVA solicited and received 22 proposals for adding renewable electricity generators to its energy production facilities. Initial research also revealed that 84 percent of TVA customers favored a green power option.
In the fall of 1998, the TVA held seven public forums that further confirmed the need for a Green Power. Participants included several members of the environmental community, utility executives, energy experts, healthcare organizations and representatives from citizens’ groups. After the forums, the TVA formed the “multi-interest team” that was eventually responsible for the 2000 test-marketing plan.
As the association of U.S. shareholder-owned electric utilities, Edison Electric Institute (EEI) works with key stakeholder groups, including regulators, legislators and member companies, to achieve environmental excellence.
EEI’s Climate Challenge program is a voluntary effort created in partnership with the Department of Energy in response to concerns about global climate change, says spokesman Jim Owen. To date, more than 600 electric utilities participate in the program, which means they have pledged to sequester or avoid 170 million metric tons of carbon dioxide and other greenhouse gases in the year 2000. This is more than four times the original goal established by the government in 1993.
While some Climate Challenge efforts are undertaken by individual utilities, there are five industry-wide initiatives in place as well. These include Envirotech Investment Funds, which provide venture capital for emerging renewable technologies; the Utility Forest Carbon Management program, which funds tree planting and forest management projects; the National Earth Comfort Program, which promotes geothermal heat pumps; EV America, which introduces electric vehicles into the marketplace; and International Utility Efficiency Partner-ships, which support joint projects with foreign utilities and governments to provide efficiency of new or existing power systems.
According to the Department of Energy’s Energy Information Administration, electric utilities represent almost 85 percent of the voluntary actions to reduce, avoid or sequester greenhouse gases. In addition, electric utilities have made significant progress in restoring aquatic habitats, protecting endangered species and generating renewable energy, says Owen
Bridging the gap between school and work is another critical link that companies are focusing on. The national organization Jobs for the Future (JFF) was founded in 1983 to help prepare tomorrow’s workforce and smooth the transition from school to work.
Ford’s Contribution in developing tomorrow’s workforce
Ford Foundation, is an initiative that seeks to create a measurable increase in jobs, wealth, services and other community infrastructure through increased corporate involvement in community economic development. JFF works with the initiative’s many partners, whose collective experience and expertise cover community and economic development, national and international business and education to achieve these goals. One of JFF’s major corporate partners is the Ford Motor Company. The two organizations have developed a relationship in which they exchange expertise and experience that allow both to enhance their individual programs.
“In today’s rapidly changing economy, schools alone cannot effectively prepare young people for a successful future,” explains Hilary Pennington, president of Jobs for the Future. “Academic standards are only part of the equation. Young people need the chance to apply what they’ve learned to new situations, and what happens in the real world is hard to simulate in school. We try to build partnerships between companies and schools to give kids opportunities to expand their learning experience. The Ford program is a splendid example of this type of partnership.”
Ford has created several innovative education initiatives that “are helping us create a pipeline — for employees and suppliers, as well as a consumer base for our products,” says Renee Lerche, director, workforce development, Ford Motor Company. For example, the Ford Academy of Manufacturing Sciences (FAMS) is an academic- and work-based program in public high schools. The program’s goals are to provide students the opportunity to learn science, math, technology and communications skills in real-life settings and encourage them to pursue secondary education. Ford trains high school teachers, who teach the manufacturing-oriented courses to 11th or 12th grade students (participants take two courses through Ford each year). An internship during the summer between 11th and 12th grade provides work experience as well.
The program serves as a way not only to attract future employees to Ford, says Lerche, but also as a way to draw customers for its cars and trucks. “We don’t have concrete evidence that if you do these things, people buy your products. However, these activities do influence perception of our commitment to the communities in which we do business,” says Lerche.
Issues such as environmental protection, education and community support are critical to companies that want to gain the trust and loyalty of their constituents. The companies profiled here understand that corporate social responsibility offers clear business benefits for all stakeholders.
AT&T awards grants to private colleges
In Jan. 1999, “AT&T Learning Network Teaching and Technology Grants” awarded totaling more than $244,000 to private colleges. The grants will support collaborative projects designed to encourage the use of interactive, cost-efficient technology to enhance teaching and learning at 31 FIHE (The Foundation for Independent Higher Education) -affiliated colleges and universities and one member independent state college fund. These awards mark the AT&T Foundation’s second consecutive year of support through this program, with a total of $494,000 in contributions now reaching 48 colleges in 11 states.
According to the BSR Education Fund’s Global Business Responsibility Resource Center, research shows that a company’s role in its community is a factor in increasing profitability, promoting company image, reducing costs and elevating employee morale and customer loyalty. For example, a 1997 Walker Information survey found that employees involved in community activities were 30 percent more likely to want to continue working for a company and to help it succeed.
UPS: Delivering Support to Communities
For United Parcel Service (UPS), community involvement has been a natural part of the company culture since its earliest days and is institutionalized as part of the company’s charter. UPS’s Community Internship Program (CIP) was created to support the belief that good corporate leaders are born out of good community leaders. Initiated in 1968, CIP has had participation from more than 1,100 senior UPS managers. The four-week program takes managers out of their normal routine and exposes them to situations they would rarely encounter in their everyday lives or learn about in a classroom, says Fred Fernandez, corporate director, community relations.
Managers are sent to one of four U.S. locations run by either a nonprofit agency or a church. Typical activities include serving meals to the homeless, aiding migrant farm workers in building temporary houses and schools and helping teachers manage a classroom of children in a Head Start program.
Says Lea Soupata, senior vice president, human resources, “Many companies promote community in-volvement and give paid time off to employees who wish to volunteer during business hours, but the UPS Community Internship Program stands alone in its depth and breadth. CIP simply creates a better person and a better manager.”
Volunteerism is a critical element of UPS’s culture, with more than 35,000 U.S. employees and their families volunteering annually at local nonprofit agencies. Because UPS serves every community in the country, no matter how small, volunteer efforts are administered through coordinators in each geographic district through the UPS Neighbor to Neighbor program. All efforts are entered into a nationwide database that soon will be available for employees to search and replicate.
“UPS is in a unique position because of our broad reach into communities around the country,” explains Soupata. “We see what makes communities work, up close and personal. We are those communities.”
For this reason, The UPS Foundation makes it a priority to take many of its funding recommendations directly from employees. For example, this year The Foundation began awarding Community Investment grants to local employee-identified organizations. Through this program, collectively, employees must show evidence of a minimum of 120 hours of volunteering to each organization that receives funding. “We want to match our financial resources with our human resources,” says Soupata.
In 1995, Microsoft partnered with the College Fund (formerly known as the UNCF) to devise a way to provide computer and Internet access to a diverse population. The Equal Access Program was established by 1997, and within the past two years, the program has collected over a quarter million dollars in donations. Microsoft is currently working with Compaq and Dell Computer in reaching its overall goal.
The money raised through this program helps increase diversity among the IT workforce, and also helps skilled workers meet the growing demands of the competitive industry. In addition, these funds provide for computer labs, training, software, and hardware for such nonprofit organizations as the College Fund (UNCF) and the Big Brothers and Big Sisters of America. Through this initiative, Microsoft hopes to level the playing field and provide opportunities to implement technology in everyone’s professional, educational, and personal lives.
Campbell soup foundation awards $300,000 for Camden youth
On June 16, 1999, the Campbell Soup Foundation awarded a grant of $300,000 to 22 non-profit organizations that offer summer activities in the arts, education, employment and recreation for approximately 10,000 Camden youth.
The check was presented at the Rutgers-Camden Center for the Arts, one of the beneficiaries of the grant, where the Foundation held a festive carnival for 100 kids and celebrated the 25th year of its Summer Program.
“This donation brings the total funding for the Summer Program to more than $3.8 million. The programs that benefit from Foundation grants are diverse – from the artistic to the entrepreneurial,” said Jerry Buckley, Chairman of the Campbell Soup Foundation, “but they all have one thing in common: they all benefit Camden’s children, teaching them more about themselves and the world around them. The Campbell Soup Foundation is proud to play a role in making this summer brighter for these kids.”
The Campbell Soup Foundation is the philanthropic arm of the Campbell Soup Company. The Foundation supports non-profit organizations that make a difference in the lives of people in the company’s hometown of Camden, NJ and in communities where the company has operations. Last year the Foundation donated approximately $1.4 million to non-profit organizations in the city of Camden.
For nearly 25 years, H.B. Fuller and its employees have been committed to responding to social needs in their communities, and to meeting them in new and innovative ways. The company sets aside 2 percent of global pretax earnings each year to invest in communities, which it does in creative ways that positively impact the communities in which the company does business.
H.B. Fuller follows two key principles in executing its community affairs initiatives. First, the company recognizes that community affairs is not a static program, but a dynamic process of constant change, adapting to both changing community and corporate needs. Second, the company strives to integrate employee volunteerism with corporate giving; employee guidance brings a high level of integrity to corporate philanthropy.
As corporations continue to globalize operations, the business value associated with being a good corporate citizen has increased. Mounting shareholder pressure has led companies to adopt business practices that promote socially responsible initiatives around the world. Corporate champions of these efforts realize enhanced brand image, which in turn can increase shareholder loyalty and improve the bottom line.
Recently, human rights abuses have emerged as an international concern, eliciting public demand for action. Corporations have responded by not only ensuring company compliance, but by participating in activities that promote human rights in developing countries.
One of the best known corporate supporters of international human rights is Starbucks Coffee Company. The Seattle-based organization is accustomed to conducting business internationally, operating more than 2,100 retail outlets in North America, the United Kingdom, the Pacific Rim and the Middle East. In addition, Starbucks’s major suppliers are located in the coffee-rich regions of Latin America, Africa, and Southeast Asia. In 1991, Starbucks made a long-term commitment to promoting human rights through its partnership with “CARE”, an international relief organization. Community development projects in Kenya, Indonesia, and Guatemala, countries from which Starbucks imports its coffee beans, are aimed at improving the lives of coffee workers and their families. Current projects include education and literacy programs, rural community development, and preservation of national parklands. Starbucks is the largest annual North American corporate contributor to CARE, donating and helping to raise over $1.2 million, benefiting an estimated 2.6 million people.
In 1996, Starbucks took its human rights efforts one step further, becoming the first US agricultural commodity company to adopt a human rights corporate statement. Known as the “Framework for a Code of Conduct,” this mission asserts Starbucks’s commitment to preventing forced labor and child labor, and supporting freedom of association.
Starbucks’s reputation as a human rights advocate is one of its most valuable assets, strengthening brand image, influencing consumer purchasing decisions, and impacting the bottom line. As the public continues to focus upon and expose human rights abuses, and as U.S. companies continue to expand their presence globally, it is expected that more corporations will become involved in initiatives to improve human rights. Promoting human rights is just one way that companies can effect change while building a reputable brand image that is valued by shareholders.
Natura Cosmeticos, Based in Brazil, is recognized as a leader in corporate social responsibility in Latin America for its commitment to the communities in which it operates, for creating an empowering workplace, and for its support of human rights issues locally. The company’s mission statement details its dedication to promoting “well being/being well” through its cosmetics business, and Natura has a separate department specifically charged with creating, identifying, and developing social responsibility programs. The company has a focus on creating partnerships with schools, government organizations, and non-profits to enhance the quality of children’s lives and the public education systems in the regions in which it operates. For example, the company has formed a partnership with the Abrinq Foundation for Child’s Rights that entails
(1) mobilizing its network of consultants and suppliers who spend volunteer time to design, produce and sell products the sale of which the partnership child labor program.
(2) including an anti-child labor clause in its supplier agreements.
(3) placing a child-friendly seal on its products.
(4) advocating with other companies around issues such as the Brazilian Child and Adolescent Bill of Rights.
Natura’s employees, suppliers, and consultants are provided with opportunities to perform volunteer community service, and the company makes its facilities, management expertise, and administrative capabilities available to numerous non-profit organizations. The company also demonstrates its commitment to environmental sustainability through its use of refillable packaging.
Today, it appears as if there are more problems on a macro scale than ever before. Therefore, social responsibility by organizational entities is more important than ever. Governments are relied upon to allocate tax money to the well being of society. For example, lifestyles of the mentally ill and homeless could be improved.
Perhaps there is absolutely no way the government can do enough. Hence, organizations need to contribute. However, in doing this, the very important issue of public relations is improved. In addition, the company gains enormous tax benefits.
I still believe that more incentives are needed for corporations to help improve the future holistic entity of the earth. The overall issues at stake are the environment and the human quality of life now, and in future generations. Perhaps the greatest incentive to participate in social good is social good itself.