The Most Important CSR Trend for the New Decade: Companies are Finding Middle Ground in the Era of Divisiveness

It seems unlikely that most of us could have predicted our present circumstances a decade ago. The state of both progress and peril in our country and around the world over the past 10 years has landed us in a fractured and unpredictable state, facing enormous societal challenges. Along with those challenges, there are countless opportunities – many of those thanks to corporations around the globe.

While issues are being debated (and not always civilly) both in the public and political arenas, something else is happening inside the walls and halls of U.S. businesses. Companies are pragmatically addressing many of today’s social and environmental issues that drive their markets, and in the process are engaging the more than 70% of Americans who work in the private sector.[1] While others are debating in polarizing absolutes, corporations are taking action with solutions of compromise. That’s the most important CSR trend of the coming decade, and one that will define corporate contributions to society for the foreseeable future.

While others are debating in polarizing absolutes, corporations are taking action with solutions of compromise.

Why are corporations navigating the current landscape so differently than other sectors? Survival. We may be divided as a nation, but market forces don’t take well to gridlock. Corporations’ bottom lines depend upon being able to work through divisive issues today to sustain themselves and grow in the future.

There are three trends impacting the bottom line that are compelling companies to solve for, rather than debate, today’s issues. 

  1. Diverse employees and consumers want to buy from and work for companies that contribute to society.80% of millennials and 94% of Gen Zs believe companies have a responsibility to address environmental and social issues beyond their business operations, and 76% of millennials would choose to work at a socially responsible company even if the salary would be less[2]. Business leaders are feeling the impact: more than 90% of business leaders say that consumers will likely hold them accountable for their environmental impact[3]. Companies have no choice but to respond to this powerful market force.
  2. Social/Environmental responsibility is driving capital investments. Institutional and individual investors now consider these issues to be mainstream expectations for companies in their portfolios. Public companies can hardly afford not to conform when $1 out of every $4 of total US assets under professional management is in sustainable, responsible, and/or impact investments. That’s an increase of almost 40% over the past two years[4], a trend that will surely drive corporate environmental and social impact going forward.
  3. Being green saves money and reduces risk. Environmentally conscious energy, manufacturing, packaging, and shipping cost much less in raw materials, power, and labor than traditional processes of a decade ago. Climate change also creates very tangible business risks that companies must address. Issues including disruption of operations, market devaluation, worker safety, and supply chain risk[5] all demand that companies create new efficiencies, systems, and technologies that significantly ramp up sustainability.

 

Businesses are on the front-line of the high-stakes outcomes of the next decade. They have no choice but to find middle ground. Here’s how – and why - companies are leading with decisive action on issues that politicians and the public are still debating.

Businesses are on the front-line of the high-stakes outcomes of the next decade. They have no choice but to find middle ground.

Diversity and inclusion. While communities are too often demographically separated, employees and executives are bridging demographic and social differences in the workplace on a daily basis. Attracting and retaining great talent and producing differentiating work depends on effectively engaging diverse talent in the mission. For example, companies are beginning to broaden their range of benefits because they know talent is gender neutral. Only ~10% of today’s companies provide transgender-inclusive health benefits, and while that number is still small, it has doubled in the last five years. Mass Mutual is one such company that provides gender transition support as part of their benefits package and publicly advocates for transgender rights at the state and national level. Now more than 80 percent of Fortune 500 companies have clear gender identity protections in place[6], and ACCP member companies including Coca-Cola, Bank of America, Ecolab, Johnson & Johnson, VISA, and many others have signed onto the Business Statement for Transgender Equality[7].

Employee Resource Groups are another practical example of how companies are engaging in cultural change to advance their work. Originally created to provide a coveted sense of “belonging[8]” and to serve as a channel for employee voice, ERG’s have now taken on new relevance and influence in divided times. Rajini Nagendran, Inclusion Officer at BMO Financial Group, echoed this sentiment, “We need to find productive ways to bridge gaps through bold conversations and actions. ERGs can be at the forefront of that change.”

Immigration and Guns. When it comes to our country’s most polarizing social issues like immigration and guns, companies are increasingly finding it necessary to identify and implement workable, although not perfect, solutions. Sometimes the course of action is in direct response to very public stakeholder pressure. Other times, issues are addressed more quietly as they arise for employees. For example, corporate leaders know that anti-immigrant sentiment can chill innovation and entrepreneurship, hardly a circumstance they welcome. Therefore, many companies are supporting their employees’ citizenship journeys, and for those employees with friends and families entangled in immigration challenges, employers are often providing support for the process or are helping their affected associates cope.

Even as companies move to take a public stand on controversial issues, they find some middle ground in order to protect the bottom line, while also appeasing consumers and stakeholders. Take Walmart’s response to firearms. In 2015, Walmart stopped selling military-style rifles in their stores. After the mass shooting in El Paso, Walmart also stopped selling ammunition for these weapons and banned customers from openly carrying firearms in stores. Even if a company doesn’t take a hardline position that answers all the activist demands (e.g. stop selling all guns), they are figuring out how to drive change while addressing lost revenue and other risks. There was a flurry of initial protest from gun rights activists for Walmart, but that has publicly quieted down in the four months since the policy was enacted.

Even if a company doesn’t take a hardline position that is 100% true to activist demands, they are figuring out how to drive change while addressing lost revenue and other risks. 

Climate Change. The climate crisis is burning Australia and the Amazon, droughts are threatening food sources and wildlife, and rising sea levels are wreaking havoc on communities. The phenomenon is indeed an existential threat, but it is also a direct threat to business. Supply chain is one key area with increased risk due to unpredictable climate related disruption, water shortages, and new environmental regulations and enforcement efforts[9] around the world. There is market pressure for companies to counter risk, and in response, many are at the forefront of developing innovative solutions. For example, Coca-Cola Company uses 305 billion liters of water every year and needs clean water as the foundational ingredient of its products. As of this month, Coca-Cola has also hit their ambitious goal to replenish the equivalent amount of water back to nature and communities, drop for drop[10]. The company knows that no one strategy alone can support this goal and they’re utilizing many, including less water in manufacturing, treating and returning wastewater, protecting freshwater resources, and engaging in thousands of community water programs around the world.

Climate change has become a powerful incentive for companies to cut millions in expenses from the bottom line through innovation.

Climate change has also become a powerful incentive for companies to cut millions in expenses from the bottom line through innovation. United Airlines has significantly reduced its carbon emissions by making its planes, and everything inside of them, lighter - including the paper on which the in-flight magazine is printed. They’ve saved more than $2 billion in fuel in the process. Nestle has shaved expenses with its ultra-thin plastic water bottles that reduce chemicals and emissions used in manufacturing. Not only do they save 72 cents per pound of plastic resin, but the lighter weight also saves on transportation expenses. Tech giants Google, Facebook, and Amazon have committed to sourcing 100% of the power for their data centers from renewables such as wind and solar. Green energy is saving them ~10% on their enormous utility bills.[11]

Our society is indeed fractured as we enter the new decade. We may not agree on how to solve our problems as a nation, but in the meantime, corporations are chipping away at practical and innovative responses rooted in compromise. We know the bottom line is a powerful driver. I would argue however,  that so are economic justice, human kindness, safety, and a healthy planet. And corporations are recognizing this. While there are no perfect answers, I predict we’ll be looking closely at the work of corporations over the next decade to develop a wide variety of workable solutions that help get us all closer to our accomplishing our goals and aspirations. 


[1] Pew Research Center, 2019

[2] Cone Communications, 2017

[3] Business and the Fourth Wave of Environmentalism, EDF, 2019

[4] US Forum for Sustainable and Responsible Investment, 2018

[5] IFC, FIRST for Sustainability, 2019

[6] Footwear News, 2018

[7] Business for Transgender Equality, 2019

[8] Washington Post, Business, 12/30/19

[9] Supply Chain Quarterly, Jan. 2020

[10] Coca-Cola Company, 2020

[11] Bloomberg, Climate Changed, September 2019