CSR Notes

Corporate Social Responsibility in Operations

Key Concepts

  • Corporate Social Responsibility (CSR): A business considering its activities' social, environmental, and economic impacts, taking responsibility for their impact on all stakeholders.

  • CSR is what a business does above and beyond what is legally required.

  • Triple Bottom Line: A business's performance is assessed in three aspects:

    • Social impact

    • Economic impact

    • Environmental impact

  • Sustainable Business Practices: Practices that use fewer resources, have lower emissions and less waste, and reduce costs.

  • Environmental Sustainability: Ensuring that natural resources are not permanently depleted or damaged.

Advantages and Disadvantages of CSR

  • Disadvantages:

    • Time-consuming

    • Costly (training staff, sourcing from ethical suppliers, cost of new technology)

  • Advantages:

    • Improve reputation

    • Reduce costs and improve efficiency in the long-term leading to higher sales and profits

    • Improve staff retention

Applying CSR to Operations

  • Businesses can be socially responsible by considering:

    • Environmental sustainability of inputs

    • Amount of waste generated from processes

    • Production of outputs

1. Environmental Sustainability of Inputs

  • Actions:

    • Sustainable and socially responsible procurement/sourcing of inputs (choosing a sustainable supplier - e.g., a supplier that uses renewable energy and minimizes waste)

    • Use of renewable/green energy (e.g., solar power) rather than coal-fired electricity to reduce carbon emissions

    • Use of technologies that are low emissions (e.g., Electric cars)

    • Using recyclable materials

    • Sourcing materials locally to reduce transport emissions

  • Benefits:

    • Reduce utility costs (solar power is cheaper than coal-fired electricity)

    • Improved business reputation

    • Less waste and reduced impact on the environment

Real-World Example: Qantas - CSR in Inputs

  • Qantas used biofuel flights with a partnership with domestic farmers to produce biofuel from mustard seeds.

  • Lower carbon emissions on its flights by up to 80%.

  • Replacing Boeing 747 aeroplanes with new Boeing 787-9s that have greater fuel efficiency.

2. Amount of Waste Generated from Processes

  • Actions:

    • Using processes that use fewer resources (e.g., processes that reduce water usage or make use of lean management)

    • Using processes that reuse or recycle resources (such as recycling defective products or recycling waste materials)

    • Improving quality to reduce the number of defects in the production process

  • Benefits:

    • Improve reputation

    • Reduce costs and increase productivity

    • Reduce negative impact on the environment

Real-World Example: Qantas - CSR in Processes

  • Qantas introduced environmentally friendly flight practices.

  • Qantas uses 4D flight planning to minimise their fuel usage by finding the optimal flight path.

  • Pilots take advantage of weather and winds to reduce fuel usage where possible.

  • Pilots use reverse thrust techniques and reduced flap landing to minimise engine power and fuel usage during landing.

3. Production of Outputs

  • Actions:

    • The output should minimize social harm (e.g., alcoholic drinks and fast food can have negative social impacts in terms of alcohol-related violence and obesity)

    • Product packaging should have minimal environmental impact

  • Benefits:

    • Improve reputation

    • Reduce negative impacts on the community and the environment

Real-World Example: Qantas - CSR in Outputs

  • Qantas combines its sustainable inputs and processes together to produce an output of zero-waste flights for customers.

  • Passengers used electronic boarding passes and compostable cutlery for its inflight meals.

  • Unused food is either donated or composted.

  • Qantas also offers customers the option to carbon offset their flight when booking.

  • Funding goes toward programs that offset the carbon emissions produced by flights.

Output packaging Push to do better

  • Mars and Snickers chocolate bars have moved to recyclable paper wrapping as a part of a move towards sustainability.

  • The changes to the popular chocolate bars come into effect in Australia today and will help remove over 360 tonnes of plastic from ending up in landfill, where the old plastic wrappers were sent after they were thrown out.

Darrell Lea - CSR Implementation

  • Inputs:

    • Using solar panels on their buildings to generate clean energy solutions to reduce carbon emissions

    • 100% sustainably sourced cocoa in all our chocolate

    • 100% Palm oil free products

  • Processes:

    • Technology with AI to reduce defects & discarded products

    • Use JIT for the liquid chocolate to arrive when needed

    • Lean management strategies like takt & zero defects to reduce wastage

    • Using quality strategies with quality control points (checking temp, foreign objects, weight) to reduce wastage and defective products

    • Sell rejected product in outlet at discounted price

  • Output:

    • Recyclable Packaging (Soon)