Council Post: Redefining CSR: What It Means To Be Socially Responsible During A Pandemic

Payson Johnston is the CEO and Co-Founder of invoice auction marketplace Crowdz, helping SMEs get paid faster and access invoice finance.

The Covid-19 pandemic caught the world by surprise, spreading like wildfire and causing fatal illness and economic hardship for individuals and organizations alike. The implications of the pandemic’s spread have resulted in widespread socioeconomic disruption, halting supply chains, global trade, the ways businesses and organizations access finances and other associated “normal” business activities. As such, the ability for the public and businesses to cope has rested primarily on government initiatives, such as the PPP program, which don’t always work as intended. Thanks to this, we are now seeing an upswing in the number of large businesses and enterprises pulling together and offering support to their smaller counterparts as part of their corporate social responsibility (CSR) initiatives. This movement will be vital in our work to reclaim the future and kickstart local economies.   

CSR is nothing new and is usually used in softer contexts than a global pandemic, like companies that announce they are “going green” by paying to offset their carbon emissions or donate a percentage of sales to an on-brand charity. In short, CSR is about the obligation of companies to do “good” and convey to the wider public that they are a “good” company with “good” values. The payoff is backed up by studies, too, with a report from Nielsen stating that CSR is no longer a niche play; a business’ bottom line and brand growth depend on it.

With the definition of CSR locked down, it’s pretty clear why we’re seeing an upswing in enterprise-led initiatives during the pandemic. Not only are there plenty of struggling small businesses needing help, but it’s also the perfect opportunity for larger organizations that have fared well throughout — or even as a result of — the pandemic (like Amazon, Microsoft and Tesla) to flex their charitable muscle and show the world that they want to help those struggling. The targets for these initiatives? Mom-and-pop stores, along with other small-scale, high-street businesses. 

While important to the economy, the real reason why many CSR initiatives are focusing on mom-and-pop stores and high-street businesses is that the pandemic has highlighted the role these businesses play as an integral part of the community. Think about it: these establishments are often community hubs where the focus is on building genuine relationships with members instead of cheap gimmicks and vapid advertising slogans. Without businesses like these, the character, charm and local culture of many communities would likely disappear. In short, helping these businesses is more about ensuring local culture and charm can be perpetuated than it is about helping the merchants sell more products.

So what are larger organizations doing to help these smaller businesses? Well, the proliferation of CSR, combined with the unique challenges brought about by Covid-19, has resulted in the birth of a new type of CSR. Known as supply chain finance as a service, or SCFaaS, this function offers corporations and other large enterprises the opportunity to assist smaller businesses via invoice financing. While the financing does have to be paid back, when conducted through the right platforms, interest rates tend to be lower than banks, without the delays and bureaucratic barriers and without the predatory lending practices that are considered standard for many traditional finance institutions.

We’re already seeing evidence of this, with a number of smaller businesses switching to alternative lenders over the course of the pandemic. Ratio Coffee attempted to use a big bank to facilitate its PPP loan in the first round of funding. After being turned away, it switched gears and instead opted to work with a small local bank, which facilitated, secured and delivered the loan. Additionally, Ratio Coffee opted to source alternative financing through my company to fund purchase orders from large wholesale accounts. It was able to free up cash otherwise tied up in purchase orders with 60- or 90-day terms from those with extra cash to bigger enterprises funding businesses supply chain finance.

Companies like Facebook have also recognized this challenge and have implemented a number of initiatives that use their supplier diversity program to invest in the community. Aside from helping reduce barriers to entry and building a community, especially with minority-founded businesses, the company has introduced a Receivables Financing Program. This initiative allows small businesses to have their unpaid invoices financed immediately so they can unblock cashflow bottlenecks, especially those supplying larger companies that often have payment terms of 60 or 120 days.

On the opposite side of the coin, CSR is also being reimagined when it comes to charitable donations. In the midst of a pandemic-induced economic downturn, donations to charities have become less frequent, despite more people requiring support than ever. For companies that thrived in 2020, revisiting their ESG program can be a new focus in 2021. Enterprises can use their bottom line for good.

Most recently, Glow’s giving circle has provided Liberian elementary students with healthy meals through an initiative called Mary’s Meals. This project, which supports a region battling a hunger crisis, is one of many that will receive direct support from ethically-minded businesses. Rather than participating in greenwashing or viewing CSR as a box to tick, new-age giving platforms allow enterprises to make tangible change in communities  

In 2021, I believe big businesses will turn their lens away from vanity CSR projects and onto initiatives with actual impact, whether that be niche communities or developing nations. Through the help of larger companies, smaller local main street businesses and mom-and pop-stores are able to secure the financing they need to survive through to the end of the pandemic. 

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