A company aware of its social responsibility strengthens its foundation internally and externally. Learn how important it is for your business, employees, and customers here.
In this article:
- What Is Corporate Social Responsibility?
- Corporate Social Responsibility in Practice
- Why Do We Need Corporate Social Responsibility?
- The Business Case for Corporate Social Responsibility
- Where to Start as a Business
- This Is Just the Beginning
Understanding a Company’s Social Responsibility
What Is Corporate Social Responsibility?
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 But, in a world of massive consumer option and growing collective social awareness, this model has become outdated.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 like environmental issues and societal issues, and the idea is catching on.
Ninety-three percent 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 its executives and the company as a whole, corporations monitor their impact on a “triple bottom line” — planet, people, profits.
These CSR reports detail how a company can implement socially responsible programs that will have an environmental and social impact. It’s also about letting the world know that a company is taking a proactive stance in environmental protection, sustainability, and doing social good.
The implementation of CSR strategies has 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.
Rajendra Sisodia 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. He goes into more detail about this in his book Firms of Endearment.
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 are a wide variety of ways CSR initiatives 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 businesses 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.
Ninety-one percent 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. Forty-three percent say they’re actually willing to spend more on these brands.
Society just needs corporations to establish their own CSR programs and stick to their 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, millennials in particular, place a high priority on working for a business whose ethics are aligned with their own. They 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 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 so everyone will know what needs changing in your business practices. Employers and investors must have a voice to talk about the real meaning of CSR for each of them.
From there, consider the below as potential next steps. Focus on one at a time as 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 supply chains: 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 what areas in their lives they could use help in and assess what 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 the aspects of your 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 social responsibility programs.
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.