Importance of CSR and ethics for the big brands

The importance of ethics for businesses has been a topic of debate for long. At the turn of the 21st century the Enron scandal added fresh heat to the debate. Enron went bankrupt and left behind a lesson for other businesses. Moving away from ethics can cost businesses everything from your business image to your profits. Enron became a case study cited in the business and academic circles whenever there was a mention of corruption and lack of ethics in the corporate world. The focus of governments and businesses both has increased on ethical practices.

While the introduction of SOX was mainly meant to regulate the financial businesses, other companies too have focused on ethics in the following years. Prima facie, it appears that businesses are now more concerned about their image and maintaining their ethical standards. However, the real answer lies deeper. It is not just your image but your business performance and profitability also depend on ethics. Businesses are not doing it out of pressure but there is also a motivation behind it.

Several of the big brands have shown that being concerned for your ethics can improve your brand’s image and sales. The root of ethical practices lies in the organizational culture. If you want to adopt ethical practices in your business then you must first focus on the creation of an organizational culture that is rooted in ethics. Starbucks is a well-known name in the world of business. However, it is not just its premium coffee and the style of customer service that has made it famous. More than that, it is known as an ethical company that maintains ethical practices internally as well as externally down its supply chain. Ethics and compliance are made a part of the organizational strategy and the employees are trained at Starbucks to behave ethically and remain compliant.

The brand has created awareness material for the purpose of training its employees. As a part of its awareness program, it regularly investigates and resolves any type of ethical issue arising inside the organization. It has set standards of business conduct that guide everyday behavior inside the organization’s offices and stores. Regarding legal compliance also Starbucks is very clear in its rules and strategy. All the relevant laws are to be adhered to and it is set out clearly in its standard of business conduct. However, it is the inside story. Down its supply chain also Starbucks has ensured that it sources all of its cocoa ethically. It has already achieved the 99% milestone in the ethical sourcing of raw materials.

Apart from ethics, CSR is another major concern for businesses and particularly the big brands. Starbucks is also focused on community involvement and investing in projects that help the community and the resourceless. Several of the big companies including Pepsi are investing in the environment and community. It does not have a huge environmental impact like the several other brands and still if Pepsi is focused on environmental leadership and water stewardship then it is because the brand is focused on environmental protection. Investing in CSR has its own benefits for the brands. It is not just for generating publicity. Research has found that it leads to better brand image and an increase in customer loyalty. Pepsi spells out these key focus areas in its mission and vision statements too. It calls it performance with purpose. “ At PepsiCo, we aim to deliver top-tier financial performance over the long term by integrating sustainability into our business strategy, leaving a positive imprint on society and the environment. We call this Performance with Purpose”.

Brands need to care for the world they live in. Business is not just about making profits. It is because both the community and environment are key stakeholders and unless you can handle their concerns too and invest in CSR, you cannot expect a great brand image and loyalty from your customers. Even the customers are watching which brands are investing in the environment. It leads to a positive outlook on the brand. So, the brands must not lose the focus of either in the 21st century — ethics and CSR. Apart from that, customer orientation is important.

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