Corporate Social Responsibility is at the Foundation of Today’s Startups

These days, the idea of corporate responsibility is likely to be part of the founding structure of a startup. Socially aware companies are no longer content to wait for several years of business success and then start philanthropic foundations.

They want to help out now. And it’s not just the newcomers: Startups and corporate veterans alike are developing socially responsible products, highlighting and giving away products for social uses, providing pro-bono assistance to the needy, and creating supply chain and purchasing policies that care for people and the environment.

Here’s a quick overview of the trend toward corporate responsibility and sustainable business:

Part of a long tradition

The idea of corporate responsibility is not new. As David Packard, co-founder of computer maker Hewlett-Packard, put it in 1947, “The betterment of society is not a job to be left to a few. It is a responsibility to be shared by all.”

The push for corporate responsibility has grown in recent years amid rising concerns over environmental sustainability and large-scale social challenges that often fall outside of the interests of individual companies interested in turning a profit and making products.

“When you think about charity and volunteerism and philanthropy” as opposed to overall corporate social responsibility, said Tonie Hansen, director of corporate citizenship at Nvidia, a Santa Clara, California, company that makes graphics microprocessors used in games, computers and smartphones, “those things don’t have a return beyond employee engagement.”

Nevertheless, “corporations almost always have a business interest in being good corporate citizens,” said Ronald Brown, a consultant with a Silicon Valley startup working on software to facilitate linking corporate partners with nonprofits for long-term relationships.

Part of starting up

Today, corporate citizenship is often considered part of the cost of doing business when a company opens a new facility.

For example, compliance with environmental rules is fundamental today, Nvidia’s Hansen said. “At the bottom or foundation is compliance. These are things you’re technically required to do. For example, ‘You can’t do business in our country unless you take these chemicals out of your electronics.’ They’re woven into a company’s license to operate in many ways.”

Companies moving into new global markets also want to reassure local populations.  “When (corporations are) entering a new country, it helps them in terms of their ability to reach out to key stakeholders,” said Maeve Miccio, vice president for corporate responsibility at the Silicon Valley Community Foundation. “It sends the message that they’re there to stay, and they’re also part of the community.”

Hewlett-Packard said in its “Living Progress Report” that the company worked with the Chinese government to create a new manufacturing center in Chongqing, nearer the workers’ homes.  The project was socially responsible, helping to reduce worker stress, keeping people closer to their families and maintaining regional culture. It also helped the company improve its operating margin.

Merging social service to corporate mission

In some cases, social or environmental impact is at the core of the company’s mission — or even specific products. For example, Silver Spring Networks of Redwood City, California, creates “smart grid” electrical system technology. It also partners with a San Francisco graduate school program to train students in smart energy technology.

Hansen said Nvidia’s chips can make their consumer electronics customers’ products smaller and more efficient, which not only saves power, but also reduces product size and charging time.

“The way we look at things is performance per watt, how much value you can get for every watt of energy. What that means for a company that might purchase our products is that overall, they use less energy,” Hansen said. “If you’re a consumer, and you have a device that uses our product, you’re going to be able to run your product longer without having to recharge it.”

Similarly, computer maker Hewlett-Packard introduced a line of servers that requires less energy than competing products. That helps the environment by reducing the carbon footprint, but it also gives HP a competitive sales advantage to customers who want to lower their electric bills.

Millennials — those born from the early 1980s to late 1990s — in particular are keen to work at socially responsible companies. In Deloitte’s 2013 worldwide survey of millennials’ attitudes toward business, 36 percent of respondents in Southeast Asia, Brazil, the Netherlands, the United States, India, Canada, France and Germany said that businesses’ primary purpose is to improve society. This was the largest choice among nine others that included to “generate profit,” “drive innovation,” and “produce goods and services.” Specifically, they want to feel that the companies they’re working for are creating innovative products and services that will change the world.

“Millennials have an expectation that the companies they’re working for give back,” said Miccio of the Silicon Valley Community Foundation.

Putting workers to work – outside the office

Corporate volunteering for charities often receives a lot of attention and positive news media coverage, but companies are moving away from that and into using employees’ skills in pro-bono work.

Doing pro bono work “creates a virtuous circle where you give skills and you get skills,” said Caroline Barlerin, senior director of community engagement at Hewlett-Packard. (Barlerin is now head of community outreach and corporate philanthropy at Twitter.)

HP partners with the Taproot Foundation to connect with nonprofits that may need its employees’ services. Microsoft is involved with the We Teach Science program, which enables engineers to tutor middle school and high school students from their desk using Microsoft’s Skype videoconferencing software.

Volunteering in company groups can have a larger impact than employees attempting to do so on their own.

“There’s no doubt that getting a group of people together can have an amplified impact on the community,”  NVidia’s Hanson said.

HP’s base of more than 300,000 employees in 170 countries presents a formidable force, Barlerin said. “You have essentially a workforce that is larger than the Peace Corps doing good in the world.”

Corporations are consumers, too

Finally, corporations can behave responsibly in their day-to-day purchasing decisions.

“We purchase everything from pens to office chairs,” Nvidia’s Hansen said. “We’re thinking about how we can run our company greener, things like making sure you’re using as little paper as possible, and if you’re using paper, that it’s recyclable. We look at logistics, getting (our product) to its destination in the most energy-efficient way as possible.”

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