Corporate Social Responsibility: Good for Business, Good for Us
Corporate social responsibility has gone mainstream. From goliaths Apple (AAPL), Walmart (WMT), and Procter & Gamble (PG) on down the line, you'd be hard-pressed to find a big company these days that doesn't have a program in place to address environmental issues and other socially minded matters.
You'd be equally hard-pressed to find a major corporation that doesn't go out of its way to tout these programs to you. But today, corporate social responsibility is about more than just good PR -- it's also about good business and taking care of customers.
Virtuous Cycles
You've heard of vicious cycles, in which one negative action or event leads to another, and another, all of which feeds back into the first problem to make it more severe, pushing the cycle forward along a progressively worse course. What's happening with corporate social responsibility is just the opposite.
In this virtuous cycle, as consumers are becoming more environmentally and socially conscious they expect the goods and services they use to measure up, and therefore seek out the products and services that deliver. As consumer demand for these products and services increases, more and more companies are obliged to provide them to stay competitive. As more and more companies provide these products and services, consumers come more and more to expect them and consequently demand them more and more -- and so on and so forth.
Different companies approach their parts in the virtuous cycle from different angles. Costco (COST) is known for taking care of its employees. It pays them well, better than industry peers. As such, Costco employees have a reputation for being friendly, motivated, and knowledgeable -- thus making your shopping experience better and compelling you to return there the next time you need to go shopping.
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Whole Foods (WFM) is another socially conscious enterprise success story: It's built around the idea of providing nothing but organically sourced foods and environmentally friendly products in a hip atmosphere that begs you to linger. Sure, you always pay more for any organic or environmentally friendly product, and you're definitely paying for the Whole Foods' luxury shopping experience, but you know in the end you're getting the cleanest, safest, healthiest foods and products money can buy.
Amazon.com (AMZN) takes the idea of making your customer experience better to a whole new level. Have you ever bought something -- a toy, for example -- and wrestled the item half to death trying to free it from its packaging? Amazon has adopted the practice of shipping such items in what it calls "frustration-free packaging." You get the same product, but freed from the screws, zip ties, and clamshell packaging that would come along if you bought it in a brick-and-mortar retail shop.
Making Money, Making Your Life Better, and Making a Difference
People are becoming more and more socially conscious, and we want the goods and services we use to measure up. In truth, it doesn't take much. A simple action that costs a company little or nothing can make a real difference in the experience of its customers.
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Often, the added expenses a company incurs from paying workers a little more, monitoring resource sourcing, or going the extra ethical mile are small downsides when compared to the huge potential upside.
Now, if you want to play the cynic and believe that companies don't really care about the positive effects these programs have on consumers, the community, or the planet, that's OK. It doesn't really matter why companies pursue them, as long as they do pursue them. Corporate social responsibility is a trend we can all get behind.
Motley Fool contributor John Grgurich owns no shares of any of the companies mentioned in this column. The Motley Fool owns shares of Whole Foods, Amazon.com, Apple, and Costco. Motley Fool newsletter services have recommended buying shares of Amazon.com, Whole Foods, Apple, Costco, and Procter & Gamble, as well as creating a bull call spread position in Apple and a diagonal call position in Walmart.
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