The parent company of Subaru, Japan’s Fuji Heavy Industries Ltd., posted a 70% jump in first-quarter operating profit on Friday. This was driven in large part by rising car sales in its largest market, the U.S. (which saw 28% sales growth to 140,400 vehicles in the quarter), helped by a weak yen. Subaru’s sales have doubled in the U.S. since 2011, and to accommodate its growing staff Subaru of America is moving its headquarters to a site in Camden, New Jersey that is twice the previous size.
Subaru is thriving, and much of its success rests on its reputation. In large part, this is dependent on tangible results — its cars are popularly viewed as reliable and long-lasting. A secondary but key component in the firm’s reputation is its voluntary corporate social responsibility (CSR): a prime example of how a firm can achieve progress for admirable causes while also boosting its marketing and consumers’ brand loyalty.
Subaru’s most prominent CSR initiative currently is its “Who We Are Is What We Leave Behind” campaign. On June 8, the firm announced it will share its knowledge of zero landfill practices with the U.S. National Park Service to reduce landfill waste from the parks. In partnership with the non-profit National Parks Conservation Association (NPCA), Subaru will test zero landfill practices in three iconic national parks – Yosemite, Grand Teton, and Denali – with an end goal of significantly reducing waste going into landfills from all national parks.
The firm has the credentials to pull this off. Its Indiana automotive assembly plant was the first in the U.S. to be designated as zero landfill, meaning all of its waste is recycled or turned into electricity. And since 2004, all of the firm’s manufacturing plants have reached that goal.
Meanwhile, the National Park Service had to handle more than 100 million pounds of waste nationwide in 2013, mostly generated in the parks by their 273.6 million visitors. (This total does not account for the waste managed by park concessioners, which is considerably higher.) Of the 16.6 million pounds of visitor waste in 2013 from the three pilot parks, 9.7 million pounds were sent to landfills — meaning there is much room for improvement in the new initiative.
In a press release, Subaru stated:
To start this major effort, National Park Service, National Parks Conservation Association, National Park Foundation, and concessioner representatives from each pilot park visited Subaru of Indiana Automotive, Inc. (SIA). They observed Subaru’s environmental stewardship in action, discussed best practices and identified opportunities and challenges at each park. Following that visit, Subaru sustainability experts visited each pilot park to assess their current practices and discuss initiatives needed to reach the eventual goal of zero landfill.
NPCA, who is helping Subaru implement the pilot project, is conducting a baseline waste audit, as well as reviewing recycling, organic material composting, hazardous waste management, and visitor waste behaviors. Together, Subaru and NPCA will document the effort and create scalable zero landfill implementation plans that other national parks can adopt.
And Subaru is by no means the only company engaging in CSR. In just the last few years, CSR projects have grown from relatively rare undertakings to now almost essential business functions. A study (commissioned by Verizon but which analyzed “over 300 studies primarily from rigorous, peer reviewed research”) published on July 9 found that CSR programs can increase a firm’s revenue by as much as 20%, command price premiums up to 20%, and increase customer commitment by as much as 60%. Companies with effective CSR programs have on average increased shareholder value by $1.28 billion over a 15 year period, seen increases in employees’ productivity by as much as 13%, and experienced reductions in employee turnover by as much as 50%.
So it is no surprise that many companies have jumped on-board the CSR bandwagon. In 2011, just under 20% of S&P 500 companies published a sustainability or corporate responsibility report. But by last year, 75% did so. In absolute numbers, companies around the world published 7,838 CSR reports in 2014, 30% more than in 2010. And numerous high-profile international conferences are devoted to promoting CSR. (In fact, two are coming up this fall in Asia alone: the 14th Asian Forum on Corporate Social Responsibility will take place in Bangkok in September, and the CSR Asia Summit will be held in Kuala Lumpur in October.)
Given the benefits to worthy causes and to companies’ performances, CSR projects like the Subaru-National Parks partnership should be encouraged further. However, legally requiring them may not be the best approach. For example, India’s Companies Act of 2013 requires 2% of large firms’ net profit to be spent on CSR, but it is so full of loopholes and additional amendments that only 30-40% of the envisioned spending is currently being done. If companies are forced to do CSR but lack enthusiasm, such programs risk being perceived as more bureaucratic red tape.
Voluntary CSR, highly publicized for maximum P.R. benefits and encouraged by corporate tax breaks, is the best way to go. Though, regardless of the motives for CSR, real results on the ground are indisputable, and certainly for the better.