From reducing carbon emissions and mitigating the environmental impact of textile production to strengthening fair labor practices and addressing workers’ rights, corporate social responsibility has a broad mission.
But many consumers are demanding brands, products and companies to have better CSR practices. And from an investor’s perspective, it is a key business strategy. According to the Forum for Sustainable and Responsible Investment, the assets of companies engaged in various CSR activities have grown from about $1 trillion in 1997 to nearly $7 trillion today, which represents about 20 percent of total global business assets.
The FSRI notes that these business are engaged in “sustainable, responsible and impact investing practices.” And that includes the fashion apparel and retail industry. Gayathri Banavara, a faculty member at LIM College who teaches in the marketing, management and finance department, has a research focus in CSR practices and ethics. Here, Banavara discusses with WWD some of the trends occurring with corporate social responsibility.
WWD: Companies in the fashion apparel and retail segment have made significant strides on the corporate social responsibility front. But some critics say more can be done. Do you agree? Why or why not?
Gayathri Banavara: Stakeholders, particularly consumers, have played a major role in encouraging CSR activities in fashion companies. Research has shown that positive social activities by companies are a direct result of the demands of consumers and employees.
Most company Web sites have a tab dedicated to CSR which includes information on the company’s current CSR activities as well as their future plans. And almost all companies at least require their vendors to be audited and have the records to prove it.
But more can be done. Many companies are using CSR only as a marketing tool, resulting in only partial implementation. This strategy has improved the industry’s image of being more socially responsible, but there is a danger that this approach could turn into “greenwash” — used only to gain a competitive advantage. The issue with this approach is that CSR’s main purpose — being responsible — will be overshadowed by the profitability of the program.
Social media, NGOs [nongovernmental organizations] and various nonprofit organizations have played a major role in motivating fashion companies, and they will continue to do so. Yet to ensure the true purpose of CSR is achieved, companies must weave it into their operations and organizational decision making. One example of how this can be done is to include CSR goals in employees’ job descriptions and annual performance reviews.
WWD: Last year’s historic decision on gay marriage addressed a critical social justice issue, and the decision garnered a lot of support from the fashion industry. From a CSR reporting perspective of social justice issues, what are some of the goals companies are currently setting? What trends are you seeing?
G.B.: Issues of social justice do play a role in CSR, but to a limited extent. CSR has a broad agenda and, as its name indicates, it is responsible for the company, its stakeholders and the environment.
Taking a cue from the concept of CSR, companies in the fashion industry have started to look to the supply chain and the divide between the buyer and vendor. It has been argued that outsourcing has done more harm than good for manufacturing countries, creating more poverty. Companies are now moving toward addressing these issues, adopting multiple strategies to implement corrective measures, while at the same time building their brand image.
Using cause marketing and social media to garner support, companies are bringing aspects of social issues they can address to the forefront. Some of these are: worker abuse, worker underpayment, child labor, and women’s health and empowerment in developing countries.
WWD: How well would you rate fashion apparel and retail companies with regard to the work they’re doing on the environment, as well as addressing climate change?
G.B.: The fashion industry (particularly retailers) are aware of the serious issue of climate change and are shifting some of their business strategies to combat it. The shift toward sustainability in clothing and the use of natural and environmentally friendly dyes in textiles are some key strategies companies are adopting.
WWD: Overall, what are some of the trends you’re seeing in regard to CSR reporting?
G.B.: A key trend prevalent in CSR reporting in the fashion industry, and in its infancy in most other industries, is self-reporting. Stakeholders are influencing companies to be more transparent about their operations. NGOs, nonprofit organizations and social media are encouraging this. Large companies, who usually have a harder time adapting and changing, are collaborating to improve their brand image and become more socially responsible. The traditional form of reporting — audits — is only the first step. The trend is to do more, which will give companies a competitive advantage.