Speaker 1: Hello, everyone. Welcome to Business School 101. In 2019, the U.S. Business Roundtable redefined the purpose of corporations away from maximizing shareholder value to promoting an economy that serves all stakeholders, which include customers, employees, suppliers, communities, and shareholders. This change signalized corporate social responsibility and sustainability are no longer just progressive perspectives on how to run a business, but are central and powerful business tenets. So what exactly are the corporate social responsibility and sustainability? Why are more and more firms, including both big and small ones, starting to practice social responsibility and sustainability? In this video, I will discuss these questions with you. Corporate social responsibility, or CSR, is a self-regulating business model that helps the company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, companies can be conscious of the kind of impact they are having on all aspects of society. Generally, there are four major benefits from firms to practice corporate social responsibility. 1. Increased Employee Satisfaction The way a company treats its community says a lot about how a company treats its employees. People that feel respected and supported in their jobs are often more productive and satisfied at work. Giving your employees opportunities to volunteer, especially during working hours, creates a sense of community within your organization, as well as a connection to the surrounding community. Employees will gain motivation and pride in their work through these personal development opportunities. 2. Improved Public Image In today's digital era, companies that demonstrate corporate social responsibility are gaining exposure from their involvements. Firms' brand reputation can benefit from good deeds in their community. 3. Increased Customer Loyalty A recent business study showed that more than 50% of consumers said a brand being known for its social value was one of their top purchasing drivers. Customers are more likely to be loyal to brands if corporate values align with their personal ones. What's more, millennials are driving the market these days. According to Forbes News, millennials prefer to do businesses with corporations and brands with pro-social messages, sustainable manufacturing methods, and ethical business standards. 4. Increased Creativity CSR initiatives encourage employees to think outside the box, try new things, and increase innovation. Through this social involvement, employees will feel empowered to start contributing to the bigger picture. They might come up with new ideas about products or internal processes, or innovate new problem-solving solutions. Besides CSR, the concept of sustainability also gets increasingly popular in the global business world. It is widely considered as one of the most important components of firms' social responsibilities. By definition, sustainability refers to meeting the needs of the present without compromising the ability of future generations to meet their needs. It is composed of three major pillars, economic sustainability, environmental sustainability, and social sustainability. First, Economic Sustainability. Economic sustainability requires that a business or country uses its resources efficiently and responsibly so that it can operate in a sustainable manner to consistently produce an operational profit. Without an operational profit, a business cannot sustain its activities. Without acting responsibly and using its resources efficiently, a company will not be able to sustain its activities in the long term. Second, Environmental Sustainability. Environmental sustainability means that we are living within the means of our natural resources. To live in true environmental sustainability, we need to ensure that we are consuming our natural resources, such as materials, energy, fuels, land, and water at a sustainable rate. Some resources are more abundant than others and therefore we need to consider material scarcity, the damage to environment from extraction of those materials, and if the resource can be kept within circular economy principles. Third, Social Sustainability. Social sustainability is the ability of society to persistently achieve a good social well-being. Achieving social sustainability ensures that the social well-being of a country, an organization, or a community can be maintained in the long term. Besides improving brand image, increasing customer loyalty, employee satisfaction, and innovation, firms that practice sustainability have at least two additional benefits. Number one, increase in productivity and reducing costs. This is likely the simplest and most obvious way to engage in sustainable practices. Through development of more sustainable business practices, efficiency in operations will increase. With better use and conservation of resources, operations will be streamlined and the costs will decrease. Number two, increase business ability to comply with regulation. With all the discussion regarding climate change, dwindling energy sources, and environmental impact, it's no surprise that state and federal government agencies are enacting regulations to protect the environment. Integrating sustainability into your business will position it to meet changing regulations in a timely manner. Increasingly, more and more companies are making public commitments to sustainability through actions like reducing waste, investing in renewable energy, and supporting organizations that work toward the more sustainable future. Here are a few examples. Example one, LEGO. LEGO has invested millions of dollars into addressing climate change and reducing waste. LEGO's environmentally conscious efforts include reduced packaging, using sustainable materials, and investing in alternative energy. Example two, Johnson & Johnson. Johnson & Johnson focuses on reducing its environmental impact by investing in various alternative energy sources. Globally, Johnson & Johnson also works to provide clean, safe water to communities. Example three, Starbucks. Starbucks has implemented a socially responsible hiring practice to diversify their workforce. Their efforts are focused on hiring more veterans, young people looking to start their careers, and refugees. Example four, Google. Google has demonstrated its commitment to the environment by investing in renewable energy sources and sustainable offices. Google's CEO is also known to take stands on certain social issues. Example five, Pfizer. Pfizer's focus on corporate citizenship is reflected in its healthcare initiatives. Some of Pfizer's initiatives include spreading awareness about non-infectious diseases and providing accessible healthcare services to women and children in need. Now, let's do a brief summary. In this video, we introduce the definition of corporate social responsibility and sustainability. We also explain the major benefits for firms to practice CSR and sustainability. Please keep in mind that in today's business world, a commitment to corporate social responsibility and sustainability is no longer optional. Companies need to understand that CSR and sustainability will affect their internal and external growth. By creating and participating in CSR and sustainability initiatives, companies have the opportunity to showcase their core values and create trust among their investors, employees, and customers. So, what do you think of CSR? Can you provide an example of firm CSR or sustainability efforts? Please leave your thoughts in a comment below. Thanks for watching, and I will see you next time.