In a hyperconnected world, neither individuals nor corporations can afford to remain unbothered by social issues ranging from gender equality to climate justice. Corporate social responsibility is one of the best ways by which businesses respond to the needs of the times.
Defining Corporate Social Responsibility
Ethics and social accountability are at the heart of corporate social responsibility (CSR). This management concept ensures that the company’s operations help and do not harm society and the environment. Also called corporate citizenship, CSR takes various forms depending on the company and industry it belongs to. CSR does not only benefit society but also the business by improving brand reputation and sales. Additionally, implementing CR enhances relations between companies and employees as well as between employees and the greater community.
CSR can be done through standalone programs or integrated in a larger campaign. Some CSR initiatives include donating to nonprofit organizations, ensuring workforce diversity, and pledging to reduce the firm’s carbon footprint.
Categories of Corporate Social Responsibility
Generally, CSR activities fall under these three categories:
1. Environment
Using natural resources sustainably as well as cutting down pollution and greenhouse gas emissions are CSR activities in the environmental responsibility category. A company that embodies environmental responsibility is Starbucks. Specifically, the world-renowned coffeehouse uses recycled paper in its cups, uses paper straws, and donates coffee grounds for composting.
2. Human rights
Fair labor practices, including equal pay for equal work, fair trade practices, and ethical sourcing are only some of the ways that CSR initiatives can uphold human rights. Clothing retailer H&M is known for its commitment to supply chain transparency and ethical sourcing. In fact, the fashion store lists almost 99% of its suppliers’ names and addresses on its website so that it can be held accountable for the suppliers’ conduct.
3. Philanthropy
Philanthropic responsibility involves acts that serve humanity. These include supporting health, education, and other meaningful causes from local to international levels. Support may come in the form of money, time, or other resources. A perfect example is Walmart lending its refrigerated food trucks to Feeding America, a charity that distributes fresh food to people in need.
Though companies are free to choose which CSR program to implement, more and more of them are engaging in environmentally responsible activities. Global news of forest fires, heat waves, and unprecedented flooding has pushed companies to invest in sustainable operations and carbon footprint reduction. In recent years, achieving net-zero emissions has become a popular environmental CSR initiative.
Understanding net-zero emissions
In late 2018, the Intergovernmental Panel on Climate Change (IPCC) published a monumental report. It stated that countries should aim to limit global temperature rise to 1.5 ° C instead of 2°C in order to reduce the negative impacts of climate change on ecosystems and human health. Around the same time, student Greta Thunberg inspired climate change strikes across the world. As a result, countries began committing to net zero emissions. Companies followed soon after.
Targeting net zero emissions, shortened as “net-zero”, simply means not contributing to global warming. This goal suggests that a country or organization should not produce any more greenhouse gases (GHG) than it takes out from the atmosphere. To achieve this, two actions must be taken: 1) reducing GHG emissions and 2) taking GHG out of the atmosphere.
How companies can achieve net-zero
Before tackling emission reduction, companies should be familiar with the different types of emissions. The internationally recognized Greenhouse Gas Protocol divides emissions into three classifications. Scope 1 involves direct emissions (e.g., fleet vehicles) while Scope 2 involves indirect emissions through purchased energy (e.g., electricity). Lastly, Scope 3 refers to other indirect emissions related to upstream and downstream business activities. A comprehensive plan for net-zero should address all these emission types.
Generally speaking, companies need a total business model transformation in order to reach net-zero. Specifically, a company should align its corporate strategy with net zero, adjust its operations and supply chain, fund changes and innovations, and uphold transparency.
Phase 1: Eliminating emissions
Relying on renewable energy sources to generate electricity for office buildings is a good way to cut down GHG emissions. New inventions such as electricity-powered vehicles can also be used in place of fossil fuel-reliant cars. A combination of different strategies and technologies, big or small, will help bring down total emissions.
Phase 2: Neutralizing emissions
Carbon capture and storage is an innovative way of looking at carbon as a valuable product instead of a waste material. Through carbon capture technology, companies can capture carbon dioxide from the air and then store their carbon emissions permanently underground or use them for production. Though carbon dioxide removal entails extra costs, it is a competitive way to reach net-zero. However, natural methods like reforestation can also sequester significant amounts of carbon.
Phase 3: Investing in emission reduction
Companies can contribute further to reducing carbon emissions by trading carbon credits on the Voluntary Carbon Market. Buying one carbon credit allows a company to emit one tonne of carbon or an equivalent greenhouse gas. Countries and companies are assigned a certain amount of credits and are fined if they exceed the cap. However, they can take advantage of the cap-and-trade scheme by selling credits they won’t use. The ultimate objective is to incentivize companies to avoid greenhouse gas emissions. Nonetheless, there is no single regulatory body for overseeing carbon credits, so participating companies must embody transparency and integrity.
Commitment to the core values of corporate social responsibility means that companies should be willing to step up in the face of climate change. To achieve net zero emissions, organizations need to eliminate and neutralize their own emissions as well as invest in initiatives that reduce total GHG emissions.
