Maintaining CSR, Even During Crisis

Maintaining CSR, Even During Crisis

| By Joel Hare |

Now is not the time to neglect CSR initiatives.

The COVID-19 pandemic made 2020 a tremulous year for organizations. As we transition into 2021, the uncertainty of employment, an unending pile of bills accumulating, and the threat of virus incapacitation means people are looking for security in any form. Organizations that engage in Corporate Social Responsibility (CSR) are no different. They too must acclimate to the new business environments (e.g. allowing work from home, offering leave for childcare, or reducing hours to save money while still trying to meet the same work requirements). Stressors like these can lead to a tense atmosphere that creates an opportunity to act unethically.

Questionable Ethics, Past and Present

Even without the threat of a pandemic, the opportunity for mismanagement has always been present and can drain goodwill for an organization. Consider Nike, which has faced multiple reports over the years of sweatshops, underpaid workers, and use of child labor in developing countries. Nike was able to solve some of its sweatshop problems during the 1990s, but activists continue protesting maltreatment of workers in developing countries. Demonstrations in cities like Boston, Washington D.C., Bangalore, and San Pedro Sula in Honduras represented an escalation of allegations against Nike that have been slowly resurfacing. Among them are claims that workers at a Nike contract factory in Vietnam, for example, suffered verbal abuse and wage theft, laboring for hours in temperatures exceeding legal limits.

Despite these missteps, Nike has received recognition for its CSR programs. And it has done good, like spending $81.9 million on community development programs. But continued practices to cut costs by producing in developing countries with questionable safety protocols demonstrates the temptation to act irresponsibly in the pursuit of profits. Additionally, Nike announced in November 2020 that it would lay off 700 employees at its corporate headquarters in Oregon. Although the company said the layoffs were in the works before the pandemic, Nike has been harshly criticized for the move during a time of such hardship for so many. Critics have pointed to their stock prices, which were up 22% from one year prior to when the layoffs were announced.

CSR is very lucrative for organizations that implement it effectively. Even so, incorporating lax rules and regulations have negative effects on the global aspect in terms of business reliability and efficacy. The Hongkong and Shanghai Banking Corporation (HSBC) is a prime example of a company that had good intentions, but ultimately valued profit over security and compliance. In 2012, a Senate report disclosed that due to HSBC’s permissive anti-money policies, they “unintentionally” aided the flow of billions in US currency into the hands of Mexican drug cartels, rogue regimes linked to Iran, terrorist organizations in Saudi Arabia, and to the benefit of unlikely Russian car businesses.

Even though there are many more examples of their lax auditing and financial misjudgments, HSBC’s CSR outlook still looked good on paper. They invested over $96 million in supporting communities, had a 29% reduction in waste, educated over 500,000 children through their Future First program, and employees volunteered over 63,000 days. Their good intentions, however, failed to overcome the resolute wall of legal fees, sanctions, and fines that were imposed against the firm – as well as the bad press that followed.

Mismanagement of funds is nothing new. It is an unfortunate reality in the private, nonprofit, and public sectors. A classic example would be the former chief of the General Services Administration, who spent over $800,000 of taxpayer dollars on a conference in Las Vegas back in 2010. Certainly, there were more people involved but the blame usually resides at the top. In this case, they held a conference to congratulate each other on various projects and to hold team building events, such as building bicycles to donate to the Boys & Girls Club. Enron was another company that exuded CSR in their portfolio. Yet, even though multiple levels of management checks and catchalls were present, there were still openings for unethical decision making.

Making CSR the Priority

Organizations can use CSR as part of their branding strategy, and it has proven to be a profitable choice. Most of the organizations mentioned earlier have redesigned their CSR programs to be more effective at achieving their presented goals. In today’s age, especially the COVID-19 era when many leaders are counting on every cent to make it through hard times, it will be even more tempting to cut corners in CSR. But now is not the time to neglect CSR initiatives. Stakeholders are watching and are ready to hold organizations accountable.

Joel Hare, MBA, is a decorated military Veteran and self-published author currently working on completing his second book in the Pendants of Fate series. He lives in Minnesota with his wife Sarah, son, and two puppies.

3P INSIGHTS is a consulting firm that offers training, speaking and support services to help organizations attract and retain diverse talent, create inclusive workplaces, become better environmental stewards, and improve their overall social, environmental, and economic impact.

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