Why do businesses exist? For many years people believed that the existence of a corporation was unique to have profit. These days are long gone. In today’s world, companies need a purpose. But both of these things can, for sure, be achieved together. To be able to sell and make a profit, companies need to care enough about their clients to have an excellent product to offer. They also need to treat people well; otherwise, clients will not come back. And now, companies also have to care about the things their clients care the most about. In this scenario, the term Corporate Social Responsibility (CSR) was born.
Milton Friedman, a renowned American economist, was quoted by the New York Times Magazine when he said:
“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
Many people use this quote as proof that corporations are only after profit and nothing else. Truth is that profit is not the end goal. The real goal of corporations is to enchant clients, to make products that transform their lives for the better, and to serve a bigger purpose.
Of course, corporations know that holding themselves accountable to their social and environmental impact will lead to a closer relationship with their clients, employees, shareholders, and communities. It is undeniable that nowadays, businesses need to gain profit in a way that meets the needs of its stakeholders. This is the only way to keep the business viable in the long run.
CSR in practice
Costco’s former CFO Richard Galante once mentioned how a corporation can benefit from being socially responsible. According to him, from the day one, the company runs the business with the philosophy that: if they pay better than average; have a positive work environment and good benefits; they would be able to hire better people. These employees will also stay longer and be more efficient. In the end, the mindset of providing a pleasant work environment and quality of life to its employees brings benefits to both the community and the corporation itself.
And that is the great learning we should take from CSR. It is a win-win movement, after all, being good is a driver of business. Corporations can and should help communities while achieving continuous growth. Many companies, such as Michelin, Johnson & Johnson, and L’Oreal, have been proving that in order to consolidate with high profitability does not have to come at the expense of society.