Corporate Social Responsibility, or CSR, will improve your brand’s image and help you build a positive reputation while giving back to the community at the same time.
However, Corporate Social Responsibility isn’t something you should take lightly. Far too many companies look at it as a marketing gimmick and mess it up entirely.
Even the largest corporations in the world, such as Google, Uber, Volkswagen, and Pepsi, are guilty of this. Those companies should have known better, but they put profits before making an impact and got blinded by corporate greed, ruining their reputation in the long run.
Read on to learn more about corporate social responsibility, why it’s essential, and how to do it correctly. I will show you some examples of bad corporate social responsibility and why they were wrong.
Let’s get into it.
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Why Is Corporate Social Responsibility Important?
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When done right, Corporate Social Responsibility will lead to increased growth and expansion over the long run. Besides, it’s the right thing to do!
Here are some eye-opening statistics that will convince you of the need to take CSR seriously:
- Ninety percent of consumers are likely to switch to a brand supporting a good cause. More than half of all customers are even willing to pay extra for that.
- More than three out of four customers would not do business with a brand that holds views that contradict their own.
- Companies with a clear purpose are 50% more likely to expand into a new market.
- While only 44% of people said that price is the most crucial factor when choosing a business, 68-71% said giving back to the local community, CSR, or environmentally-friendly practices were the most important.
Generally, the younger your target audience, the more indispensable CSR becomes. While only a minority of baby boomers are likely to stop shopping at a company that supports an issue they disagree with, over half of all millennials and Generation Xers (under the age of 55) would.
Bad Corporate Social Responsibility Examples
1. Volkswagen
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The Volkswagen scandal is one of the most prominent examples of greenwashing.
On the surface, Volkswagen, the second-largest car manufacturer in the world, seemed to care about the environment. It claimed that it was manufacturing environmentally-friendly vehicles with low emissions.
However, according to the BBC, what Volkswagen was actually doing was installing “defeat devices” that would trick regulators conducting carbon emissions tests into thinking the vehicles were releasing fewer emissions than they actually were.
These defeat devices would detect when the vehicle was in a laboratory setting and switch to a low power mode. On the road, in actual driving conditions, the car would release a lot more carbon dioxide than it did during the tests.
These defeat devices were installed in 11 million vehicles worldwide, cheating emissions tests until the Environmental Protection Agency found out.
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2. BP Oil
In 2019, ClientEarth lodged a legal complaint against BP Oil, claiming that it was engaging in misleading ad campaigns in which it pretended to be an environmentally-friendly organization while spending 96% of its budget on oil and gas. Subsequently, BP Oil agreed to stop what it called “corporate reputation advertising.”
It’s another excellent example of greenwashing and a particularly audacious one, considering BP Oil is the company that owned the Deepwater Horizon oil rig and was responsible for the infamous Gulf of Mexico oil spill that killed an estimated 800,000 birds.
A report from Wikileaks found that a similar spill had already occurred two years prior in another rig, and governmental investigations established that BP Oil was responsible due to its negligence and had ignored issues that indicated problems during testing.
3. Wells Fargo
Wells Fargo is a splendid example of a total lack of Corporate Social Responsibility. Banks are supposed to protect their customers’ money and privacy, but Wells Fargo did the opposite.
The Wells Fargo scandal started with upper management, which created a lot of pressure on employees and sales associates to cross-sell as many accounts as possible. Employees would then take customers’ information and use that to open accounts on their behalf without their consent.
Customers would then receive debit or credit cards they didn’t order, and they would be charged fees according to the new savings or checking accounts they never wanted in the first place. Employees would even use their own contact details when filling out applications so customers wouldn’t find out about the scheme.
In the end, Wells Fargo agreed to pay $3 billion in penalties.
In another incident, Wells Fargo accidentally released 1.4 gigabytes of information on 50,000 high-profile clients, including social security numbers and other vital data.
Wells Fargo is a warning, not so much of a CSR gone wrong, but a complete lack of responsibility towards customers in the first place.
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4. Uber
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Corporate Social Responsibility isn’t just about caring for your own customers. It’s about caring for human beings, wherever they may be, and Uber did the opposite.
Back in 2014, a report revealed that more than 175 Uber employees allegedly booked and canceled thousands of rides with Lyft, Uber’s top competitor in the United States.
Uber’s employees would book those rides, sending Lyft drivers on pointless expeditions and trips. Drivers would get frustrated, lose income, and waste time and gas money.
Some of those drivers may have become dissatisfied with the frequent cancellations and switched to Uber. Similarly, a surge in requests would have led to surge pricing – higher prices for customers, forcing them to pay extra or switch to Uber instead.
5. Facebook
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Facebook claims to care about its users, but does it? The company has faced numerous lawsuits and criticisms over the years, from designing addictive features to tracking users.
However, one of the most significant lawsuits and scandals involving Facebook was the Cambridge Analytica scandal. The New York Times got hold of data from Cambridge Analytica that showed the political firm managed to obtain personal information from 87 million Facebook users and used that to create voter profiles for the 2018 US presidential election.
Facebook failed to protect its users’ data, and it’s not the only time. For example, in 2020, it paid $550 million as part of a settlement for a lawsuit claiming it had violated a law requiring companies to obtain consent from users before storing their biometric data.
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6. Shell
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A study found that while Shell and other oil and gas companies, such as Exxon and Chevron, pledged to help the environment, they only made empty promises in a classic example of greenwashing.
For instance, even while promising to decrease fossil fuel extraction projects, the companies actually increased their oil and gas exploration.
Claims of being more environmentally friendly and switching to clean energy were worthless, as the companies’ actions directly contradicted those claims.
7. Ryanair
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Ryanair is another case of a company committing greenwashing. It claimed in one advert that it was the “lowest emissions airline” in Europe.
However, the UK Advertising Standards Authority, the UK’s ad regulator, banned the ad because it was misleading. Here’s why:
- Ryanair used data from 2011, despite it being almost ten years later.
- It failed to include other significant airlines in its charts, thus making its claims of being the lowest emissions airline good-for-nothing.
- It failed to account for seating density.
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8. BMW
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That brings us to BMW, which also committed greenwashing by running a misleading ad that was also banned by the UK Advertising Standards Authority.
In the ad, it claimed that its i3 electric car model was a zero-emissions car, which is blatantly false as it comes with the option of a small petrol engine.
9. Walmart & Kohl’s
The FTC fined Walmart $3 million and Kohl’s $2.5 million for making deceptive environmental claims. The companies claimed that dozens of their products were made of bamboo, thus free of harmful chemicals and environmentally friendly.
In fact, those products were made of rayon, a fiber made from bamboo. The process of turning bamboo into rayon, though, requires toxic chemicals that release dangerous pollutants.
10. Pepsi
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During the height of the BLM protests, Pepsi released an ad attempting to drive a message of peace and unity.
However, it was forced to pull the ad a short while later, after activists accused the company of using imagery of protests to promote its product while also trivializing the protestors’ concerns about the police and police brutality.
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That is clearly a case of CSR gone wrong. While trying to jump on and hijack a current social justice trend, Pepsi shot itself in the foot and sent the wrong message.
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11. Google
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Google prides itself on building a sense of belonging, including creating a more inclusive workplace. It promises to work on racial equity, gender equity, and inclusiveness of the LGBTQ community, people with disabilities, and veterans.
However, does it follow through? According to its 2021 diversity report, it is seriously lacking.
Its workforce is 68% male and 50% white. African-American workers are the most underrepresented in the workforce, making up just 4.4% of all employees.
12. 3M
3M, a global corporation that sells consumer goods, medical equipment, and more, has been accused of pinkwashing – pretending to support breast cancer while contributing to it.
It has sold pink Post-its and even pink stethoscopes to “raise awareness” about breast cancer. At the same time, it continued to use PFAS chemicals, including harmful and possibly carcinogenic chemicals linked to an increased risk of breast cancer.
Examples of Good Social Corporate Responsibility
All of the above examples show bad CSR. Let’s take a look at some examples of good Corporate Social Responsibility:
- Investing in your local community: Do something that will actually impact your community. For example, team up with a church to provide food for the poor.
- Offering training and employment opportunities to the disenfranchised: One way to give back to the community is by providing people from marginalized communities and groups training opportunities for free or at a low cost. If you can offer employment opportunities, that’s even better.
- Investing in your own employees: Start by making the workplace a better place for your employees. Give them better training options and foster a helpful and encouraging atmosphere.
- Addressing real environmental issues: If you have business practices hurting the environment, stop. It takes courage to do so, but you need to be genuine.
- Measuring your impact and being transparent: Measure the impact of your CSR campaigns to see if they had the desired effects. Be transparent about your faults and show how you will fix them.
The Challenges of Corporate Social Responsibility
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One of the reasons CSR can go horribly wrong so quickly is that businesses almost often have selfish interests in their CSR campaigns. Corporations do things because they calculate that it will bring them profits.
Consequently, when corporations use CSR campaigns as a way to increase brand awareness and attract more customers from a specific target audience, things are bound to go amiss. Activists won’t usually be too pleased.
Furthermore, there is a fine line between government compliance and CSR. What some businesses might present as CSR might actually be something required by the law.
To overcome those challenges, corporations may instead look at CSR as a form of self-regulation that goes beyond compliance. The ultimate form of CSR is one that sacrifices profits instead of increasing them.
CSR that focuses on increasing profits often seems insincere. When businesses go beyond profits and do things that make the world a better place – even if those things may cause them to lose short-term or even long-term revenue – that’s impressive.
Getting CSR right requires you to integrate social ethics and morals into your operations and business model.
Simply running performative campaigns without allowing the ethics and morals you claim to care about to change how you do business shows that you aren’t being truthful in your intentions.
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What Are Some Types of Bad CSR?
1. Using Charitable Initiatives to Cover Up Bad Press
CRS does not refer to starting charitable initiatives to cover up bad press. If you’re receiving negative attention and create a CSR campaign to shift the narrative, that’s being disingenuous.
Instead, you should avoid negative behaviors and focus on creating a positive impact from the get-go. People will be able to tell that you don’t have honest intentions with your new initiative unless you own up to your mistakes, apologize, and take the necessary steps to fix the damage and ensure it never happens again.
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2. Using Good Initiatives to Cover Up Bad Practices
Similarly, some businesses run large PR campaigns about their charitable initiatives while secretly conducting bad practices that hurt the environment.
This may work as a short-term strategy. Many people will pay attention to your messages on social media and other mediums, and they may believe you.
However, it’s a recipe for disaster in the long run. Over time, your bad practices will inevitably come to light – I will show you some examples in the next section.
When that happens, your supporters will turn against you, and you will lose any moral credibility you once had. It’s just not worth it.
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3. Moral Self-Licensing
Moral self-licensing is the reverse of what I just talked about.
Self-licensing is a phenomenon in social psychology in which performing a good act leads to permitting yourself to perform a lousy action later on, even if you only had good intentions from the beginning.
In dieting, for example, you might go to the gym and work out, only to allow yourself to partake in a slice of cake or a bag of chips right after that. You might eat a fruit and then think it’s not too bad if you have a cup of ice cream later.
Moral self-licensing is when you conduct good behaviors, causing you to feel good about yourself and worry less about the consequences of destructive behaviors later on.
The moral credential effect happens when you have already established in your mind that you are an excellent person, blinding you to the facts when you do something terrible later.
As a business, you have to watch out for moral self-licensing, even if you have pure intentions when starting your CSR campaign. You must constantly evaluate what you are doing and measure your impact.
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4. Jumping on Every New Social Justice Issue and Caring Only About Profits
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You need to stand for something, a cause that you support consistently.
News cycles often tend to highlight one social justice cause at a time. If people are protesting racial inequality, news outlets will focus on that; at other times, they may focus on the #MeToo movement, abortion rights, LGBTQ rights, or something else.
You’ll come across as disingenuous and solely interested in profits if you constantly jump from one issue to another just because it is trending on Twitter or picked up by CNN.
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People will see that what matters to you is making sure you look like you’re the “good guy.” While trying to appear as a company driven by unshakable morals, you’ll come across as having no morals at all.
That doesn’t mean you can’t support trending social justice causes. However, don’t let them distract you from your core values – the things you are actually making an impact about, not just posting about on social media.
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5. Misrepresenting Your Efforts
The number of corporations lying about their efforts to increase diversity, help the environment, support marginalized groups, and back other causes is just too high to count. I’ll discuss specific examples later in this article, but claiming to do something you’re not doing is wrong.
Let’s take a look at specific types of CSR misrepresentation:
- Greenwashing
- Pinkwashing
- Colorwashing
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Greenwashing
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Greenwashing is when a company purports to support the environment and pretends to make environmentally-friendly decisions when it, in fact, does not.
Companies like Volkswagen have been caught pretending to be concerned about the environment or climate change only to use business practices that actively hurt the environment.
A company may start an initiative like “Donate $1 to plant a Tree,” for example, hoping you’ll see it as conscious about climate change. In the meantime, though, it might be using dangerous chemicals in its factories that are hurting the environment.
Many companies deliberately misrepresent the “greenness” of their products, with 95% of products presented as green containing at least one false or questionable claim.
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Pinkwashing
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Pinkwashing is when a company pretends to support the LGBTQ community but only does so for social justice points.
Many companies change their logos to rainbow colors during Pride Month (June) without doing anything substantial to support the LGBTQ community. Consequently, memes about such corporations only giving lip service to this cause are also shared extensively every June.
Pinkwashing may also refer to companies using pink ribbon products to pretend to raise awareness about breast cancer, only to use chemicals in their products that contribute to breast cancer.
Colorwashing
Colorwashing refers to pretending to care about marginalized groups while doing nothing concrete to support them. A company may release a press release claiming to support diversity, but in actuality, its workforce may have serious diversity problems.
One such company is Google, as you will soon see.
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Frequently Asked Questions (FAQs)
What Is Corporate Social Responsibility?
There are a few different definitions of Corporate Social Responsibility.
However, at its core, CSR boils down to going beyond profits and focusing on making the world a better place. That could be by adopting certain ethics, values, and morals or by investing in the community, creating an environmental impact, fighting for social justice, etc.
The United Nations Industrial Development Organization states that CSR is “a management concept” in which business and corporations “integrate social and environmental concerns in their operations.”
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Wrapping It Up
Corporate Social Responsibility means adopting ethical practices and moral values that shape your business practices and operational methods. It requires courage, dedication, persistence, and a commitment to the greater good over corporate profits.
Remember, CSR is never required. It should be something you do because you care, not because you want to tick a box that the board has been pushing for.
Above all, listen to people! It’s okay to make mistakes along the way, as long as you own up to them and change.
If you are honest and transparent about your journey, people will be more understanding and supportive.
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