When Unethical Behavior Undermines CSR — Madeleine Barker

When you think of “Corporate Social Responsibility”, what do you think about?

-“going green”?

-volunteer incentives for employees?

-philanthropic giving?

All of the above are important pieces of CSR, however there is one fundamental piece missing. According to The World Bank, Corporate Social Responsibility is defined as “the commitment of businesses to behave ethically and to contribute to sustainable economic development by working with all relevant stakeholders to improve their lives in ways that are good for business, the sustainable development agenda, and society at large”.

Did you hear that? Ethically.

Since the 1950’s, people have come to ask more from the corporations in their lives whether it’s having three different types of recycling bins available in the office kitchenette or having solar panels that power the lightbulbs in Building B. But many companies that tout robust, forward-thinking CSR initiatives fail to succeed at a fundamental pillar of corporate social responsibility — acting ethically. A poor code of ethics is more often than not handed down to the organization from the top and can cause far more damage to society than the positive effects that come from any of their CSR initiatives.

A few examples of corporate ethical downfalls and the cost to the company and society:

Company:Google

CSR initiative:Global Fishing Watch promotes ocean sustainability through transparency of global commercial fishing activities.

Scandal:Violation of the Children’s Online Privacy Protection Act.

Cost to the company:$170 million

Cost to society:Personal data was illegally harvested from children without their parents’ consent via YouTube.

Company:Fox News

CSR initiative:“He Named Me Malala” global campaign. Included premiere for 7,000 girls in L.A. and $125k donation to educate Syrian refugee children.

Scandal:Multiple sexual harassment lawsuits against the Chairman and popular show host.

Cost to the company:$90 million

Cost to society:Widespread culture of sexual harassment in the media and broadcasting industry creates an imbalance of power and can stifle the progress towards equality in the workplace.

Company:Mitsubishi Motors

CSR initiative: Donations to the MICHINOKU Future Fund so that children who were orphaned by disasters can receive higher education.

Scandal: Cover up of product data falsification.

Cost to the company: Stock dropped 40% shortly after the news surfaced.

Cost to society: End users’ physical safety is put at risk in over 160 countries.

The effects of unethical behavior on business and society include:

· The company’s inability to build or regain the trust of their customers — Equifax

· The company becomes vulnerable to expensive litigations — Alphabet

· The company becomes more susceptible to further accusations — Facebook

· Customers shun the company, starting a campaign against them — Uber

· Loss of trust can mean a decline in sales and the company’s share prices which can drive away investors — Theranos

· Distrust within the company resulting in a poor work environment — Kraft Heinz

Ethics are an integral part of a company’s CSR strategy, along with the other dimensions of philanthropy, environment, and economy. It is important for companies to take a holistic approach for sustained success and societal wellbeing