What is the first thing that comes to mind when you think ethics? Honesty? Morals? Values? Integrity? All of the above? For many businesses, it’s corporate social responsibility.
This weeks marketing assignment has us assessing the corporate social responsibility of a particular retailer. I chose REI, Recreational Equipment Inc. This is a company I frequently shop at and consider one of the leaders in ethical business practices.
First, let’s look at what exactly corporate social responsibility (CSR) is. It can be defined as “a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, as well as, the environment. Voluntarily taking further steps to improve the quality of life for employees and their families, as well as for the local community and society at large” (Olsen & Veerman, 2010, slide 4). Some examples of how a company can incorporate CSR is by participating in charitable events, philanthropy, fundraising, community development projects, green business practices, and accurate reporting of social and environmental impact (Olsen & Veerman, 2010).
Let’s assess how REI practices CSR. First, REI’s mantra throughout their business is their stewardship efforts. To the company, this represents their love for the environment and outdoors. The company takes great pride in preserving the outdoors, reducing their environmental footprint, and creating a positive workplace for their employees. The company produces annual stewardship reports highlighting their CSR efforts during the past year (Sustainable Brands, 2014).
REI’s 2016 Stewardship Report included many ways the company practiced CSR. First, the company invested in the outdoors. They accomplished this by granting $35 million to programs that help to preserve the environment. They donated $3 million to local non-profit organizations and donated $462,500 to groups connecting youth and diverse cultures with nature (Sustainable Brands, 2014).
Second, the report highlighted their responsible business practices. These practices include their commitment to using renewable resources, including the 26 solar powered systems they own and use. The company also purchases certified renewable energy certificates to help power their stores and distribution centers (Sustainable Brands, 2014).
Third, the company also focuses on product sustainability. The company evaluates their product’s lifecycle and works to increase it. Additionally, the company uses a “Bluesign” system that helps to eliminate harmful chemicals from the materials the company uses in manufacturing (Sustainable Brands, 2014).
Fourth, the company is committed to creating a positive work environment. This has landed them a spot on FORTUNE Magazine’s “100 Best Companies to Work For” for the last 17 years. They achieve this through competitive pay, a comprehensive benefits package, and employee engagement (Sustainable Brands, 2014).
Finally, the company is a co-op. Meaning they share their profits with their customers. The customers pay a one time $20 fee to become a member. After that, the company pays out annual dividends to its members. The company also takes pride in working with the community. They host events, adventure trips, and “Outdoor School” classes that all members of the community are welcome to join (Sustainable Brands, 2014).
REI has managed to do a great job maintaining their ethical and sustainable reputation and staying out of the legal spotlight. However, back in 2014, a class action lawsuit was filed against the company for not paying their employees overtime, forcing them to work off the clock, and failing to pay the minimum wage. This went against the company’s ethical claims. The lawsuit consisted of a class of more than 5,000 of the company’s current and past hourly employees. The lawsuit was settled in 2015 for $2.5 million (Lubin, DiTommaso & Austermuehle, 2015).
So, does REI practice CSR for the environment, or for a profit? Well, upon assessing the company, it seems they truly do place a high value on maintaining the environment and outdoors for future generations. However, as discussed in this TEDx video by Alex Edmans, it really is both. The company practices CSR, and the profits follow. Practicing CSR creates happy employees (most of the time), happy shareholders, happy customers and a happy community. All of which will lead to continued patronage and increased profits. Therefore, the concept of CSR is really a win-win situation for all (TEDx Talks, 2015).
Do you think that REI is “green” for profit, or for the environment? Or do you agree with Alex Edmans that it can be both?
Lubin, P., DiTommaso, V. & Austermuehle, P. (2015). REI Overtime Class Action Lawsuit Settles for $2.5 Million. Retrieved from https://www.chicagobusinesslitigationlawyerblog.com/2015/05/rei-overtime-class-action-lawsuit-settles-for-2-5-million.html
Olsen, K & Veerman, B. (2010). One Smooth Stone Corporate Social Responsibility. Retrieved from https://www.slideshare.net/gvlk/one-smooth-stone-corporate-social-responsibility-290779
Sustainable Brands. (2014). Stewardship at REI: Reflected in its Communities, Operations, Products, and Workplace. Retrieved from http://www.sustainablebrands.com/press/stewardship_rei_reflected_its_communities_operations_products_workplace
TEDx Talks. (2015). The Social Responsibility of Business – Alex Edmans – TEDxLondonBusinessSchool. Retrieved from https://www.youtube.com/watch?v=Z5KZhm19EO0
Image retrieved from http://www.rei.com