put side content here if visible
The Business Case
While no one disputes that CSR has an effect on the bottom line, as yet there is no definitive best practice to maximise both profits and ethics. In today’s global investor driven market the pressure is on CSR to pay its own way. The business case as it currently stands gives a framework for companies seeking to integrate responsible practices into their overall strategy, and an indication of where CSR is going to generate revenue.
Cost and risk reduction is the area which a business entering the CSR fray for the first time would most likely find itself in. Put simply it is considering which CSR activities would reduce costs and risk to the business. It is a fairly defensive position, where stakeholders – that is people affected by the business but not directly involved in it – are a threat, and therefore protecting the company from that threat makes firm business sense. A big argument on the environmental side of CSR is that declining resources will affect everyone, whether they dutifully separate out their recycling every week or not, and therefore any business that wishes to survive will at the very least need to consider what effects this is going to have on them.
An example of risk reduction would be brands such as Páramo and Patagonia, who in the face of evidence that it is dangerous to human health, have decided not to work with perfluorochemical technology. An example of cost reduction is Alpkit’s decision not to use swing tickets or polybags on its products – while waste reduction is of course environmentally friendly, the primary business motivator here is cutting packaging costs.
Competitive advantage is the next stage on from cost and risk reduction. Here business starts to separate itself from its competitors on the basis of its CSR programme. Companies can start to build CSR around their core business aims, avoiding the danger that they will be seen as either add-ons or distractions. This brings benefits both internally, by enhancing employee motivation, and externally, by a stronger relationship with consumers who perceive added value in the firm’s products. Where stakeholder demands were before seen as threats, now they are opportunities to be exploited.
A firm and integrated commitment to CSR activities will then afford the company an improved reputation and increased legitimacy in society. This allows them better relationships with all stakeholders, from consumers to governments. Clear reporting will back up the company’s position. An example of a reputation enhancing activity is cause marketing. We’ve all seen products where a percentage of the profits are donated to a particular charity, and it is easy to dismiss this as a gimmick. However this is actually a good example of a brand being able to align ethical activities with profit maximising. The more the company makes, the more the charity does too. An example of this is the 1% for the Planet scheme started by Patagonia founder Yvon Chouinard . Members donate 1% of annual sales to their choice of approved environmental charities, and can use the 1% for the Planet logo on their products.
This sort of behaviour starts to lead towards an ideal situation where pursuing profit and acting responsibly are mutually reinforcing. This situation obviously requires total commitment from a firm, a top down approach where everyone from the CEO to the Saturday shop staff shares the same values. Most people when asked to name an outdoor brand at this level would say Patagonia, but there are several brands out there, particularly in Scandinavia, who working to build a sustainable business strategy.
It is important to remember that CSR is not a one off; it is a gradual process and like any other aspect of business, is always changing. There are plenty of outdoor brands who are at some stage along this journey. When the debate is so fresh, there are compelling reasons for outdoor clothing companies, generally small in comparison to the giants of the sportswear industry, to be setting their own agenda now before it is forced on them by others.