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The rise of corporate social responsibility in food and beverage companies

December 11, 2019 Article 3 min read
Ryan Behringer Bob Denninger
The concept of corporate social responsibility has gained traction in recent years — and its asking business leaders to confront who they’re most beholden to: the shareholder or the conscious consumer as stakeholder. Find out why you should embrace social responsibility.
Chef preparing to cook applesTraditionally, the sole responsibility of a business was to increase its shareholder value. However, those days may be numbered. The preferences of millennials and Gen Z, along with their substantial buying power, have substantially altered the landscape within the food and beverage industry. Not only have these consumers driven the growing health movements for organic, on the go, and better for your foods, they have also looked to become stakeholders in the brands they support. These generations are also using their influence to drive businesses — both large and small — to focus on Corporate Social Responsibility (CSR). While the notion of multiple stakeholders isn’t new, the surge in corporate social responsibility has pushed the multiple stakeholder idea to the forefront.

Rather than putting their trust in government to drive social responsibility, millennials and Gen Z report a higher level of confidence in corporations — specifically those that have managed to marry purpose with profit to take on global issues.

What do we mean by CSR? It’s the idea that organizations self-regulate their business model to be socially accountable via philanthropy, activism, charity, and operating with a public code of ethics. Rather than putting their trust in government to drive social responsibility, millennials and Gen Z report a higher level of confidence in corporations — specifically those that have managed to marry purpose with profit to take on global issues. For example, consider a company that plants 10 trees for every product they sell or a buy-one-give-one model like TOMS shoes.

Embracing CSR is an opportunity for businesses to catapult themselves into the spotlight. By using the power of their scale and resources, they can help solve the problems that their customers are concerned about. And this goes for all companies. (You don’t have to be Mars or McDonald’s to make a difference.) Let’s explore why companies — of all sizes — are embracing social good.

  • Increased loyalty. According to a Futerra study published in Forbes, 88% of consumers believe brands should partner with consumers in their desire to do good for the planet and its inhabitants. It’s no surprise that when brands invest in CSR, they tend to improve their overall performance. If you’re not connecting with what most buyers are asking for, you’re losing a large share of potential consumers. Businesses that align with a greater purpose and then tune in to connect with their customer base on an authentic level drive high levels of engagement and, therefore, loyalty.
  • Increased ability to attract and retain top talent. In the interview process, candidates are often asking how companies approach CSR. They may want to see a company’s sustainability report to know how the organization is helping the greater good, becoming more environmentally friendly, impacting the local community, and making the world a better place. The businesses that are rethinking their social responsibilities and adapting accordingly are those who are winning the war on top talent.
  • Increased efficiencies. When people hear the term “social responsibility,” they tend to think of it only as a cost center. However, investing in CSR initiatives can lead to operational enhancements that improve the bottom line. In the food and beverage industry, having the ability to accurately measure the amount of waste in your production process is a key operational metric. Therefore, creating a CSR initiative to reduce that waste cannot only increase your yield, but also lead to positive impacts on the internal and external environment.
  • Focus on the future. The pivot to focus on enhancing corporate social responsibility versus solely earning a profit for the shareholder is becoming more real every day. While only 6% of those age 65 and above are investing sustainably, according to the latest UBS Investor Watch, 72% of those ages 18-34 are on board with CSR. As that demographic gains in buying power, we’re going to see a seismic shift in how organizations respond to the customers’ growing demands for companies to make ethical business choices.

Interested in learning more about CSR? Not sure where to begin? Our team of management consultants have engaged on various operational projects with food and beverage manufacturers. We can assist in evaluating operational improvements and efficiencies, reducing risk, and delivering insights into consumer preferences. Whether the goal is remaining competitive or increasing output, strategies aimed at sustainability and ethics can have multiple payoffs.

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