Corporate social responsibility (CSR) is a business’s effort to take responsibility for all its actions and to consider what impact its actions have on the environment and society. To put it simply, CSR is about compensating the impact a business has on the environment and community. CSR can take the form of different types of initiatives such as reducing the carbon footprint of a company with clean energy solutions, proactively addressing labour laws and benefits or donating to charities. CSR should also be seen as a form of self-regulation as it reflects a business’s accountability and commitment to the well-being of society. As the definitions show, CSR is a complex and multifaceted concept. This text aims to review it in the Q&A format.
Q: Why is CSR important?
A: Businesses of different sizes and locations have been adopting socially responsible policies. As consumers are increasingly socially conscious, their awareness affects their purchasing decisions. This means that if a company fails at implementing responsible business practices, customers will simply stop buying from it. This is reflected in data: according to GreenPint research, about 80% of consumers are more likely to buy environmentally friendly products; and 77% of consumers are concerned about the environmental impact of purchased goods.
Q: What are the benefits of CSR for companies?
A: CSR can be beneficial to companies in many different ways. First of all, it means a better public image and customer loyalty. Consumers want to buy from companies that care about different causes and have a sense of social responsibility. Companies that appreciate and show respect to customers are favoured, thus encouraging customer loyalty.
Another benefit of CSR is the possibility of identifying areas for improvement. CSR efforts often result in reviews and evaluations of processes in companies, which often leads to the discovery of things that could be improved.
Furthermore, CSR increases employee engagement and satisfaction. CSR schemes help create a sense of community and employee bonding, and encourage positive relations. It has also been observed that employees want to work for companies involved in positive initiatives and with a strong public image.
Finally, CSR helps attract talent and investors. Companies which implement CSR programmes aimed at improving communities are more likely to attract committed employees. Similarly, investors want to work with companies which have a sense of CSR, and can demonstrate that profit is not their only priority.
Q: Why do companies implement CSR practices?
A: There are many reasons why companies decide to implement CSR practices. One of the main reasons is the fact that it improves brand perception. To stand out from competitors, companies need to prove to the public that they are doing good. If a company advocates and raises awareness for socially important causes, its brand value increases.
Another reason is that CSR attracts and retains employees. According to Susan Cooney, Head of Global Diversity and Inclusion at Symantec, a software provider, sustainability is an important appeal factor for top talent. “The next generation of employees is seeking out employers that are focused on the triple bottom line: people, planet and revenue,” she says. What is more, if employees share the company’s values and can relate to its CSR initiatives, they are much more likely to stay.
Lastly, CSR increases the business appeal to investors. If a company can demonstrate a solid CSR programme and initiatives, it will be more appealing to investors. Taking CSR seriously is a clear indicator to both investors and partners that a company is interested in both long-term and short-term gain. CSR is closely related to environmental, social, and governance (ESG) metrics that help quantify the company’s social efforts, and becomes one of the key factors for investors’ consideration and interest.
Q: What are the types of CSR?
A: There are 4 main types of CSR. One of them is environmental responsibility. Corporations can significantly contribute to greenhouse gas emissions, pollution, waste and natural resource depletion. However, if they commit to environmental responsibility, they take ownership over their impact on the environment. Environmental responsibility can take different forms. It can mean using alternative energy sources and sustainable materials, implementing a company-wide recycling programme or donating to or volunteering for organizations focused on environment protection.
Another type of CSR is ethical responsibility. An ethically responsible business engages in fair business practices and treats all employees, stakeholders and customers ethically and respectfully. Ethical responsibility can take different forms. For example, it can include setting a higher minimum wage or ensuring that all materials are ethically sourced, and that all employees receive a competitive salary and all benefits, and are treated respectfully.
CSR also includes philanthropic responsibility. Businesses are expected to give back to their communities and donate to causes that reflect their mission. The donations can be as small as sponsoring the annual fundraiser of a local non-profit organization or as big as donating a percentage of earnings to some good cause.
The last type of CSR is economic responsibility. Acting economically responsibly means making financial decisions that prioritize doing good. This means that, for example, a company chooses a supplier that uses sustainable materials even at a higher cost or introduces a transparent salary system so that all employees would be compensated fairly.
Q: How to introduce a CSR strategy?
A: The following guidelines may help introduce a CSR strategy:
- Identify all stakeholders needed for conducting business ethically and sustainably.
- Clarify relevant corporate responsibility (CR) areas.
- Understand how your CR strategy is aligned to your business strategy and human resources (HR) practices.
- Get the approval of the top team, and know how to make a case for CR.
- Make sure that CR is well reflected in the employee induction and development process.
- Measure and evaluate CR performance so that the results can be clearly seen and improved.
- Publicize and promote success cases.