Challenges remain for brands transitioning from CSR to purpose-led

In Canada, the trend remains predominant among startups and smaller businesses.

TenTree

“The boundaries between work and higher purpose are merging into one,” writes Virgin Mobile founder Richard Branson in his book, Screw Business as Usual. A new study backs up that contention, highlighting a pivot in corporate social responsibility over the last five years.

Once thought of as transactional, donations-focused and ad hoc, CSR has evolved into a more holistic, transformational and social purpose-driven endeavour, according to a new report called Corporate Social Responsibility in Canada: Trends, Barriers and Opportunities.

Authored by B.C.-based Strandberg Consulting, whose focus is environmental and sustainability initiatives, the report highlights how CSR is increasingly seen as an essential business practice – so much so that several company respondents reported believing the term itself is outdated and too compartmentalized, and that they didn’t need a standalone CSR strategy.

The qualitative study surveyed 32 companies (roughly split between private and publicly traded) about their CSR initiatives, including Aimia, HP Canada, HSBC Canada, Loblaws, Maple Leaf Foods, Telus and Sun Life Financial. It was funded by the federal government with the goal of helping it better understand trends and best practices in CSR and “the roles it can play to accelerate and advance CSR in Canada.”

The report situates businesses along a spectrum of CSR evolution: from “community investment,” as a starting point, in which employees volunteer for a charity or the company sponsors an event; through to “CSR strategy” and “CSR integration,” in which sustainability and other efforts begin to be incorporated into all business decisions (and other business functions, such HR and finance); to a final stage of “social purpose,” in which CSR defines the company’s reason for existing.

Nearly half (14) of the companies surveyed indicated that they had, or were developing, a social purpose. And these companies reported expecting to be involved in more long-term proactive, strategic partnerships in the future, allowing them to address systemic issues by working with non-profits and other organizations.

While a transition towards social purpose appears to be underway in Canada, Phillip Haid, CEO and co-founder of Public Inc, notes that the trend is predominant among startups and smaller businesses – such as Regina-based Ten Tree International, a lifestyle clothing brand that plants ten trees for every item purchased, and Good Food For Good, whose products made with sustainable and organic ingredients help feed those in need.

But at the exception of co-ops and credit unions like Vancouver credit union VanCity, Ontario’s Meridian and outdoor retailer Mountain Equipment Coop, which tend to come the closest, Haid says there “aren’t a lot of examples of Canadian companies that lead with social purpose at scale,” when compared to those in other countries.

Some companies, such as Unilever (whose Dove Men+Care brand recently launched a “paternity leave movement”), Patagonia (with its commitment to reusing clothing through its “Worn Wear” pop-up and online store) and IKEA (with its goals to create a more circular economy) are making a move towards social purpose, with those global efforts felt in Canada.

But overall, Haid says larger local brands have been slower to make the transition, likely because it remains a relatively new approach, and because Canadian companies tend to be more risk-averse than their American counterparts. It could also be because the country lacks the culture and regulatory environment to support that transition.

In Canada, companies are limited to for-profit, non-profit, registered charity and co-operative business models. Meanwhile, the U.K. has had a legal framework in place since 2005 that enables the creation of “community interest companies,” limited-liability businesses that can more easily structure their commercial activities around supporting social goals, blending profit and purpose.

“Governments are only starting to wrap their head around it and are way back compared to say the U.K.,” Haid says. “This combo makes purpose-led companies are still a novelty and ‘nice to do’ versus a ‘need to do.’ But the good news is it is changing.”

Coro Strandberg, founder of Strandberg Consulting, explains that what’s driving this push towards social purpose is that it represents a competitive advantage for businesses large and small. Employees who work with companies with a strong social component are more engaged, according to a November UBC study of 673 global workers, including 181 Canadians. And a 2018 Upside Foundation and Interac survey of 1,000 Canadians finds 70% are more likely to purchase from companies that support charities.

“In the past,” says Strandberg, “grants or sponsorships might have been leveraged to create high-profile signature events and flagship projects to draw attention to a brand, but that’s changing – that’s not seen to be very value-added anymore.”