How important is corporate social responsibility (CSR)? What is the best ethical system one can graft onto a young for-profit enterprise?

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Businesses being launched today are in the unique position to fuse their identity with social responsibility. There is genuine fatigue with the bluechip approach to social responsibility - it does not seem honest and it too often appears token.

But this would be unfairly cynical - few major corporations were founded in an era of social and ecological awareness. Their businesses were forged in a zeitgeist where, most likely, tobacco smoking was considered good for one's constitution and the term 'global warming' was more likely to be seen on a military recruitment poster. They have adapted to the changes to the world ad hoc, some better than others.

Siasto built a product that promotes collaboration and teamwork - all socially valuable but not, per se, ethical. We went further and offered our software free of charge for non-profit teams and genuine educational groups (feel free to get in touch if you are either...).

Constrained by our size and the SaaS nature of our product, we have been delving deeper into what we can do to make sure we fuse social responsibility into our identity as we grow. We have ruminated broadly over the most effective approaches to SSR and identify three trends - we intend to constructively criticize our way to find Siasto's social responsibility:

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Blake Mycoskie - Founder and Chief Shoe Giver of TOMS

One-for-One

Take one, give one - this is a trend that has been embraced, most famously, by TOMS and, more recently, by Warby Parker. TOMS originally promised to donate a pair of shoes for every pair of their Argentinian apargatas you buy and have now even expanded into glasswear. Warby Parker, similarly, commits to donating a pair of spectacles for every pair you buy.

Fundamentally, the social aura of this approach is not the deciding factor of the purchase - the elegant product design and price are. Nonetheless, one is left with a warm and fuzzy feeling long after the purchase and this, at least, serves to ward off any urges of cynicism you might get from the ubiquitous success of the companies. While having glasses and shoes is better than not, this flies in the face of the old proverb of 'Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime'...and this sounds mighty like giving a man the proverbial fish...

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Foundations

Foundations were originally constructed from the largesse of the wealthy, often overwhelmed with their wealth and eager to put their money to work after an extended period of acquiring it. Today, eye-watering richness is not a prerequisite for philanthropy and one can start a foundation with just $1 - start small and you are already a step ahead of Messrs. Gates and Carnegie.

From its beginning, Salesforce strapped itself to its '1/1/1' integrated philanthropy philosophy. Founder Marc Benioff had a vision to donate 1% of Salesforce's equity, 1% of his employees' time, and 1% of his product to improving communities around the world. Furthermore, they invite you to 'take the pledge' with your own startup. Powerful words but how much of that feeds directly into the real economy?

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Ethical Supply Chains

Earlier this year, the harrowing scenes of lacerated limbs protruding from the dusty rubble of a Bangladeshi garment factory have reminded the world of the importance of the provenance of their products. A push has now been made, once again, for the introduction of a Fairtrade system for the clothing industry. Even Tyler Brule, the preening Nipponophile, was forced to complain about the outrageous petroleum stench wafting up from the freshly opened packaging enveloping his deep v-neck tee-shirt (as he was connecting from Helsinki to Narita Airport no doubt...).

Apple, infamously, has never mentioned social responsibility and seems to be perpetually in the sin-bin for their ethically dodgy Asian manufacturing. While Inditex and Walmart brief their lobbyists for another round of political armwrestling, smaller companies are emerging with combined for-profit and ethical offerings.

Veja - a new French footwear brand - has managed to build, through great design and price, a competitive product that people actually want. The warm feeling comes only after, when you realise that not only are your trendy sneakers well-made, fashionable and fairly priced, but they have come from a fully integrated ethical and ecological supply chain.

Brazil is the native home of the natural rubber plant (Hevea brasiliensis) and the Brazilian rubber boom ended only after the Victorians used bio-piracy to dramatically steal seeds from the Amazon and transport them to the British colonies in Asia.

Much later, the discovery of petroleum-derived rubber would prove the final nail for the home of wild rubber - today just 40% of global rubber production is natural and almost all of it from Asia. Veja directly employs dozens of traditional rubber-tapper families to source the raw material that goes into their soles and does the same for the Brazilian organic cotton producers for their canvas. The company pays a high premium for these raw materials but manages to make a respectable margin by not advertising and using the internet to its advantage.

Conclusions

The options for SSR are limited by the nature of each startup's product but it is clear that what serves society best is employment and the education to help give them those opportunities. More direct employment of people in ethical or ecological industries is needed so that market economics can take over - but, ultimately, the buck stops (or starts) at the consumer.

They must demand more of their products and the conduits for those products - companies. Startups can lead by example and we should be obliged to try and reach these social heights; humans prefer to realise their potential through their own labour.

As a software company we can help by improving information sharing and education and explore how best we can facilitate this in all communities.

But we would love to know what you are doing or would like to do for Startup Social Responsibility...? Comment, tweet and share your views with #SSR

2 comments

Another way to view / compartmentalise the "models of CSR/SSR" is:

* Accidental: Not deliberately for 'social good', but does it anyway. I.e. eBay is probably the biggest decentralised recycling / re-use system in the world.

* Tithing: Give a certain percentage of profit to a charity.

* In-kind Tithing: A business does what it does best for free, for a charity or NFP.

* 1 for 1: Tie individual purchases to CSR output (essentially 'sharing' the cost burden with customers)

* Embedded: the business' core offering works towards social good and just so happens to make money to support itself.

It seems the different approaches are most useful at different times ... i.e. 1 for 1 helps with bootstrapping a new product-based company, whilst a law firm can create massive social impact by restructuring a charity's contract system, or similar. :)

? Will

Thanks for the interesting breakdown - very insightful. Although it may be too ambitious, I do believe that startups should try create a social identity that is a reflection of what they do and what their company values are. Giving money away to charity, or tithing, would probably be at the bottom of my list of the options as I think one can do so much more and display honest passion if it is intertwined with your values. An 'Embedded' system is ideal, but it is not necessarily a bad thing if the company is, primarily, a for-profit entity (like Veja).

For consumer products, I believe that the majority of consumers fundamentally would like to be doing so but, in reality, tend not to hand over money to charities. To circumvent this more apathetic demographic, I think a fair and effective way is simply to make people's dollar go further, as opposed to asking them to give twice.

Edward Neale

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