A company aware of its social responsibility strengthens its foundation internally and externally.
Understanding a Company’s Social Responsibility
What is Corporate Social Responsibilities?
Historically, corporations have been thought of as being responsible to shareholders first and foremost. But, in a world of massive consumer option and growing collective social awareness, this model has become outdated. Collectively, corporations hold an immense amount of power.
Power that can be utilized in solving many of the world’s problems. And the idea is catching on.
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93% of the of the world’s largest 250 companies are publishing annual Corporate Social Responsibility (CSR) reports.
CSR is a self-regulatory mechanism in which a business ensures active compliance with ethical standards. By taking responsibility for the actions of it’s executives and the company as a whole, corporations monitor their impact on a “triple bottom line” – planet, people, profits.
CSR strategies are implemented to have a positive impact on all stakeholders, including employees, partners, customers, shareholders, and local and global communities.
The strategy, also known as conscious capitalism, is often more profitable, as well. A recent study found that businesses seen as conscious have investment returns of 1025% over a 10 year period, compared to only 122% for the S&P 500.
Conscious Capitalism Definition: This business philosophy advocates ethical business practices to serve its stakeholders and create a positive impact on society. It also keeps tabs on the company’s environmental impact.
Corporate Social Responsibility In Practice
CSR is not mandated or even regulated, so there is a wide variety of ways it can be implemented. For example:
- Environmental – reducing or offsetting carbon footprint, waste reduction, efforts around clean air and water, adopting green building standards.
- Philanthropy – monetary donations, donated products or services.
- Labor practices – non-discrimination efforts, corporate wellness programs, value-centered leadership models.
- Community involvement – company-sponsored participation in community events, donating employee time to causes important to them, sponsorships and fundraisers.
- Ethical marketing – marketing in a way that shows respect for the consumer, avoiding manipulative practices.
Why Do We Need Corporate Social Responsibility?
Many of the problems we’re experiencing today can be attributed in large part to decades of corporate irresponsibility.
While one might argue that consumer demand is just as at fault as the business themselves, these businesses have no doubt profited from the situation. And being faced with issues like air pollution, deforestation, and climate change, the demand is changing.
91% of consumers are now saying they would switch brands to one that supports a cause if it were similar in price and quality to their usual brand. 43% say they’re actually willing to spend more on these brands.
Society just needs corporations to establish their own CSR programs and stick to that commitment to encourage others in their individual social responsibility.
The Business Case for Corporate Social Responsibility
Besides the feeling of doing good in the world, serving ideals beyond profits, and the above-mentioned consumer demand, there are a number of arguments for a company to establish CSR practices.
- Worker Recruitment and Retention. Today’s workers, Millenials in particular, place high priority on working for a business whose ethics are aligned with their own.
They further are more likely to feel dedication for an employer they can feel good about. And who provides opportunities for them to feel good about themselves, such as through volunteer and giving programs.
- Investor Attraction and Retention. CSRs show investors that corporate mission statements aren’t just greenwashing. Showing interest in the local and global community, employees, and customers attracts the kind of investor that’s in it for the long haul.
- Corporate Reputation. Reputations can take years to build and moments to ruin. CSR limits the risk of ruin by scandal and environmental accident.
- Brand Differentiation. Businesses that have a strong CSR model tend to get consumer attention. They are acknowledged by non-profits, admired and recommended by suppliers, and regarded on social media.
Not only are they more respected, but they can often charge a higher price point to support their mission.
Where to Start as a Business
The idea of implementing CSR might seem overwhelming to business owners, but it doesn’t have to be. Start by pinpointing what is important to the business. Make sure to include everyone in the conversation.
Employers and investors must have a voice in order for you plan to have real meaning. From there, consider the below as potential next steps. Focus on one at a time in order to not overwhelm you or your staff.
- Donations: You might start by donating a certain percentage of your profits to causes that are collectively important to stakeholders, or implementing an annual or quarterly volunteer day
- Consider your supply chain: Where can you reduce waste? Where can you purchase more sustainable materials? Who do you want to support with your business?
- Worker wellness: Check with employees to see where are areas in their lives that they could use help, and assess whether you might be able to do about it. Maybe they need help obtaining child care, guidance on weight management, or smoking cessation.
You can learn more about this topic through our Corporate Wellness Academy.
This is Just the Beginning
The above steps are good starting places, but the real magic happens when you incorporate CSR in all that you do as a business. Check out our film Prosperity to learn more about the significant power you hold as a business owner and as a consumer.
Some people think the social responsibility of business is to increase its profits. On the other hand, establishing a positive company image through CSR also draws in investors and potential clients. It can also help retain employees by giving them a sense of belonging and importance through the CSR program.
How does your business address social responsibility? Share some examples of corporate social responsibility programs you have participated in or worked on in the comments section below.
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Editor’s Notes: This post was originally published on February 9, 2018, and has been updated for quality and relevancy.