indicatorSales and Marketing

Corporate Social Responsibility: Harness the power of people, planet and profit

By ATB Financial 19 August 2020 6 min read

The secret to success for Calgary-based Local Laundry is giving the community the shirt off their back. While they sell cool casual clothes, they also support local manufacturing and minimize their carbon footprint by producing only Canadian-made garments.

In fact, 10 per cent of their profits are donated to local charities, and they build community by promoting and collaborating with local like-minded businesses. Oh — and their revenue is expected to increase by 100 per cent this year.

Dustin Paisley, the company’s co-founder and chief laundry operator, believes “100 per cent” that Local Laundry has a competitive advantage because it’s purpose-driven. A focus on corporate social responsibility (CSR) — managing the business to account for the effects on people and the planet in addition to profit — has driven higher demand for its products and greater business growth.

“Positive things happened to us along the way because of the company we are and because of the community we build,” says Paisley. For example, they’re seeing more B2B and custom orders from customers looking to work with purpose-driven businesses. That includes recently winning a contract to create gifts for 10,000 employees at a major national corporation.

To build brand loyalty through being a community leader, “start to say yes when you’re asked to do things for the community,” says Paisley. Of course, you still need to run a viable business, but avoid the mentality of “what’s in it for me” or “what’s my profit on this?”

 

Integrate corporate responsibility into your operations

Canadian companies surveyed by Strandberg Consulting last year said CSR is now “essential” for business success. This isn’t driven only by consumers; financial markets are also demanding CSR from companies. Socially responsible investing is on the rise, with global environmental, social and governance (ESG) assets hitting US $1.06 trillion in June, according to Morningstar, up 23 per cent from the previous quarter.

Typically with traditional CSR a separate arm of a company would give back through donations and sponsorships. But over the past decade, there’s been growing demand to integrate purpose into operations and encourage social entrepreneurship.

A newer company can seek out socially and economically responsible suppliers and business partners, but this is harder for a more mature business with a mature supply chain. Paisley suggests slowly starting to choose new sources or put pressure on existing suppliers to be more environmentally or socially conscious.

Existing companies can start integrating greater corporate responsibility into their operations by making small changes: Can you improve your business ethics or corporate governance? Can you contribute to sustainability by using recyclable packaging? Can you create better conditions for employees with better maternity/paternity leave or a better vacation policy?

Local Laundry, for example, decided to move its manufacturing operations to Canada, which would not only reduce its environmental footprint but adhere to stricter labour laws.

This doesn’t have to add to a company’s costs — increasing energy efficiency or reducing waste might even decrease costs. For example, when McDonald’s was under pressure to get rid of polystyrene packaging in the ’80s, by reducing waste and increasing recycling in U.S. stores the company saved an estimated US $6 million per year.

 

Authenticity is key

When you integrate CSR, “you can’t just appear authentic, you have to be authentic,” says Paisley. “If you’re donating to charities and giving back to the community, but your core business model takes away from the community, people see through that,” says Paisley.

Local Laundry doesn’t build community through collaboration just to look good. They “promote the heck” out of other small businesses, and “it comes from a place of genuinely wanting to grow the community and support the community.”

They’ve also passed on partnership opportunities because those potential partners only wanted to work with them for the brand image — they weren’t actually “walking the walk.”

 

Attracting good workers

Local Laundry can’t always provide employees with the same pay or benefits offered by some other employers in Calgary, but Paisley believes they can still attract good employees because they offer a deeper sense of purpose at work.

“A lot of people are starting to make employment decisions based on how they feel going to work,” he says. “And they feel more purposeful working for a company that’s making a difference.”

Research backs him up. A National Bureau of Economic Research study showed that CSR increases the number of applicants by 25 per cent, “an impact comparable to the effect of a 36 per cent increase in wages.” It also attracts more productive employees who produce higher quality work.

Here, too, authenticity is key. Research published in the Harvard Business Review shows that “workers care about the genuine use of prosocial incentives and may react negatively to firms using social initiatives to increase productivity or profits.”

Engaging employees in your CSR efforts takes a visible commitment from the company’s leaders. Clearly define and communicate your goals and involve employees, such as allowing them to direct charitable donations and giving them ownership of certain initiatives.

 

Accounting for the triple bottom line

Accounting, budgeting and cash flow forecasting can be more complex when managing the triple bottom line of people, profits and planet. For example, Local Laundry has a program called “Giving Garments.” For every toque, blanket, towel or sock sold, they donate one of the same to a shelter. This means keeping track of sales figures for those products and building donations into the margins of those products.

Transparency is essential, Paisley notes. If you’re giving a portion of your profits to charity or claiming that you adhere to certain environmental standards, then you need accurate records to prove this.

 

CSR and brand storytelling

It can be hard to tell your CSR story without sounding like you’re bragging or greenwashing. At the same time, it’s important for stakeholders to know what you’re doing. Social-impact consultant Mark R. Kramer writes that, as with all brand storytelling, it’s key to tailor your story to your audience.

Corporate watchdogs, activists and regulators need detailed stories — and you need to engage and partner with them. Employees need a message that builds pride in their company and meaning in their daily work, while investors need to know how the company’s actions help performance. Your messaging to customers will be most effective when you take leadership on an issue.

Paisley wants Local Laundry’s story to inspire others, and to set an example for others that they too can build a successful company driven by purpose. “If you’re not telling your story, nobody really will,” says Paisley. “It’s important to be driving that message out and sharing that story. If you’re just doing it for the news story, though, you’re doing it the wrong way.”

If you’re looking for a deep dive into everything you need to know around how to grow your business and make it more resilient, our ATB X Accelerator program might be just the place for you. Alternatively, feel free to reach out to one of our entrepreneur strategists to explore where you are with your business, where you want to be, and how to get there!

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