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January may be hot or cold, rainy or snowy—it just depends on where you live. But whether you sport a windbreaker or a parka when you head back to work after the holiday season, January is the same everywhere when it comes to making resolutions. It marks a new year and a clean slate—which got us thinking. Why shouldn’t companies take part in this fine goal-setting tradition—especially if the goals can have a positive impact on the world AND mitigate reputational, regulatory, financial and strategic risk at the same time? That’s where programs aligned to Corporate Social Responsibility (CSR) or Environmental, Social and Governance (ESG) standards come in.
The rise of CSR
Corporate social responsibility isn’t new. Well-known for its grassroots initiatives, iconic ice cream label Ben & Jerry’s commits nearly $2 million a year to fund initiatives designed to uplift communities, push social change or support environmental sustainability. Google met its 100 percent renewable energy target in 2017 and continues to provide grants for social impact initiatives. Unilever, which counts Dove and Lipton among its many brands, has consistently achieved a high ranking on the Dow Jones Sustainability Index since it was launched in 1999.
What’s different now? Sustainable Brands highlights the CSR opportunity that Unilever seized, and other companies are beginning to recognize, noting “Brands could become, in fact, an aspirational force for social good and address some of the world’s most pressing economic, social and environmental problems.” And evidence suggests that such CSR and ESG commitments can attract prospective employees, consumers and investors. “The bottom line for businesses large and small is that you get a competitive advantage regarding sales and talent recruitment by not only claiming that you support positive social outcomes but also by walking the walk and demonstrating it,” writes Wayne Elsey in Forbes
“More than 90 million Americans own our public companies through their investments in mutual funds, and millions more do so through their participation in corporate, public and union pension plans. These owners include veterans, retirees, teachers, nurses, firemen, and city, state and federal workers. We owe it to all of them – and to all our shareholders and investors who have entrusted us with their savings – to get this right.”
How resolutions can make a difference
When you stick with them, New Year’s Resolutions can have a profound impact. By committing to CSR and/or ESG, companies can realize risk management advantages too. Globalization has made it possible for procurement professionals to build a cost-effective supply chain but has decreased visibility into the many links across that chain. The result is increased risk exposure. By auditing supply chains based on CSR or ESG standards, companies can improve visibility into emerging risks and proactively manage those risks.
Along with the regulatory, financial and strategic risks associated with poor performance when it comes to the environment or social justice, the reputational damage that arises from media scandals can exact a heavy toll on companies. Plus, investors and consumers can weigh in with class-action lawsuits that seek to recoup losses when a company gets caught up in an FCPA investigation or forced labor is uncovered in the supply chain.
What three resolutions should you start with?