Soup-to-Nuts Podcast: The increasing demand and complexity of corporate social responsibility plans

30-Mar-2018 - Last updated on 30-Mar-2018 at 16:00 GMT

In the push to win consumers, woo top talent and, believe it or not, balance budgets, corporate social responsibility programs could be one of the most powerful tools in companies’ arsenals – but determining what to include and how to structure them can be complicated.

When CSR first emerged, it mainly focused on environmental issues, but as the political environment has become more tumultuous and the government has backed off many social services, consumers and employees are demanding more of corporations to fill the gaps, according to Susan McPherson, who specializes in social good and corporate responsibility consulting as the CEO of McPherson Strategies.

She explains, for example, political calls to restrict immigration and an increasing frequency of “crazy people having crazy guns and doing crazy shootings,” has pushed people to look to corporations for leadership where they once sought it from government and faith-based organizations.

This is supported by Cone Communications’ 2017 CSR study which found two-thirds of Americans believe progress on key issues will be slowed by an absence of government regulation and 70% who say companies have an obligation to improve issues that may not be relevant to their everyday business.

For their part, 87% of consumers say they are willing to support companies that advocated for issues they care about through purchases, and 76% said they will boycott brands that support issues contrary to their beliefs, according to the survey.

So, what do consumes want companies’ CSR programs to tackle? According to Cone Communications, 94% say domestic job growth, 87% list racial equality, 84% note women’s rights, 81% say the cost of higher education and 78% say immigration. Other top issues include climate change, gun control and LGBTQ rights.

Getting started

With so many expectations layered on one concept, some companies understandably may feel intimidated by the prospect of creating a CSR program. But, according to McPherson, they don’t need to be. She recommends companies start the development process by first asking employees what they value and then expanding the conversation to include other stakeholders.

“I am a big believer of literally asking your employees. You have to live with them every day, and you know they are in some ways your most important audience,” she explained.

“Then I would take it a step further,” she added, and ask the companies’ biggest customers and use social media to reach out to the general public .

According to Caroline Krajewski, who is the head of global CSR at Kraft Heinz, this is exactly how Kraft Heinz approached creating its CSR program. It refined the list of goals by cross-referencing them on a matrix with the company’s values and available resources.

Organizing for action

From there, Kraft Heinz organized its CSR focus areas into four pillars with measurable goals and clear action plans.

“We took all these issues and we said we are going to develop these four pillars … environment, supply chain, nutrition and well being and communities, and then we kind of have an overlay of two others that I would call sub-pillars, if you will, one of which is what I would call supporting best practices, and that is really things like transparency or aligning to certain reporting standards. … And the other overlay is workplace, and that is for things like our employee code of conduct and diversity and inclusion,” Krajewski said.

One of the areas on which Kraft Heinz ultimately decided it could have the most impact was on ending world hunger.

“We are working towards eradicating global hunger by the year 2030,” in part by donating 1 billion meals to people in need by 2021 with help from partner organizations Rise Against Hunger and Feeding America, Krajewski said.

The company also created a micronutrient powder that is stirred into meals and delivers 23 essential vitamins and minerals to combat malnutrition, she added.

“As of the end of 2017, we have delivered 267 million meals to folks in need, so we are excited for that and we are excited for what the next four years will bring,” she said.

Another area on which Kraft Heinz is focused under its supply chain pillar is one with which many other corporations also struggle, and that sourcing sustainable palm oil. This includes a commitment to only purchase palm oil that is 100% certified by the Round Table on Sustainable Palm Oil, as well as better understanding where palm oil is sourced, Krajewski said. On this last point she added the company has traceability to the mill on over 90% of its supply.

One more example from Kraft Heinz’ CSR report that also is popular with other food and beverage companies is improving animal welfare. This includes sourcing cage free eggs, transitioning away from traditional gestation crates for pregnant sows and raising the standards of welfare for boiler chickens by 2023.

Other companies also are stepping up to address different consumer and employee concerns, such as immigration and employment. On this last point, McPherson calls out Starbucks and Chobani as leaders.

“Starbucks has been a leader stepping into social impact with regards to its 100,000 jobs initiative,” and another commitment to hire 10,000 refugees, she explained.

Given that some of these are hot button issues, McPherson notes that companies should brace for some push-back, but that for the most part these are “safe bets” at this point.

Balancing the budget

As admirable as CSR programs may be, they also can be resource intensive, which on the surface appears to run afoul of another emerging trend in business: zero-balance budgeting. But as Krajewski explains, zero-balance budgeting is actually one way that Kraft Heinz has funded its CSR activities.

“Zero based budgeting means focusing on eliminating costs that don’t benefit our consumers or our stakeholders or our companies, and in the process of that exercise and removing those costs that are not necessary for our success, that is what actually enables us to make significant investments, like we have made, in CSR and other critical growth areas,” she explained.

Specifically, she said, Kraft Heinz was able to invest $200 million in its CSR activities, which Krajewski emphasized are considered critical growth areas.

Maintaining momentum

While Kraft Heinz and others are making strides to meet their CSR goals, they also must remain engaged with their stakeholders and be flexible around where they invest their resources year over year to maintain momentum.

Krajewski says Kraft Heinz keeps its CSR program “fresh” by continually talking to stakeholders to understand their evolving needs and expectations. She added that the company also holds itself accountable by committing to regularly reporting its progress on its CSR goals.

McPherson also suggests that companies ensure their CSR programs maintain momentum by constantly re-evaluating their long- and short-term goals, and ensuring they have champions to see projects through.

She explains: “Really think about long-term and short-term, so what does success look like over the next year, what does success look like for the next five years, and do you have people on the team who are going to see it through?”