You may encounter the term corporate social responsibility (CSR) and question whether it’s just another industry buzzword.
Is CSR nothing more than a PR gimmick designed to boost a company’s brand or public image? Or is it a realistic method for companies to integrate environmental and social issues into their business models? Let’s consider the statistics (source):
- More than half of millennials would defend a socially and ethically conscious company if people spoke badly about it.
- 71% of U.S. millennials hope companies will take the lead on social issues they find important.
- 40% of consumers seek purposeful brands and trust in brands to act in the best interest of society.
- 64% of respondents believe CEOs should take the lead on change rather than waiting for the government to impose it.
If you’re new to CSR, the concept may seem incredibly idealistic, and daunting to introduce into your business model. But, establishing a CSR policy is incredibly beneficial — not just to society, but also to your business and your employees.
What is corporate social responsibility?
The United Nations Industrial Development Organization (UNIDO) defines CSR as follows:
Corporate social responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.
The main tenets of a CSR program are social sustainability, environmental sustainability, and economic sustainability — or the “three P’s”: people, planet, and profit. In other words, companies with a CSR program take action that enacts positive change on society and the environment, while also growing their own bottom line.
Let’s take a look at the key elements of effective CSR programs:
1. Environmental concerns
A majority of businesses have large carbon footprints, so any efforts to reduce them are beneficial to the environment. These efforts include minimizing packaging to cut down on waste, prioritizing recycling, or using locally sourced products. Not only do these practices save money, but they also save the planet.
Effective resource management and energy efficiency are two major environmental CSR goals that companies are beginning to implement, especially as the effects of climate change accelerate. Furthermore, research shows consumers are more likely to support a company that takes steps towards decreasing their environmental impact (source).
2. Philanthropy
CSR and corporate philanthropy are often conflated, but there’s an important distinction between the two. Corporate philanthropy refers to the general practice of a business giving back to others, typically through charitable donations. CSR is a broader strategy in which philanthropic efforts align and are integrated with a company’s overall mission and business practices.
Here’s an example: an energy company making a large donation to a cancer foundation is a form of corporate philanthropy. Now, let’s say the same energy company partners with an environmental nonprofit to help support local environmental cleanup programs and fund clean energy initiatives. This partnership results in a boost in brand awareness for the energy company. That would fall under the umbrella of CSR, because the company is directly involving itself in charitable activities related to their own business practices.
3. Ethical labor practices
This one is pretty straightforward: CSR programs prioritize fair and ethical treatment of employees. Ethical treatment includes ensuring employee safety, promoting a healthy workplace, and other practices that contribute to employees’ wellbeing.
This consideration is especially important for companies with international locations, as they must comply with different regulations — without strategically taking advantage of another country’s labor laws. An example of unethical labor practices would be a company that conducts business in a certain country because doing so enables them to pay their workers less. Unfortunately, this example is all too common.
4. Economic responsibility
Economic responsibility is a term used to describe ethical financial practices in business. Of course, while all companies are legally required to pay taxes in some way or another, companies with an established CSR program pay especially close attention to how the money they pay in taxes is being used to benefit their surrounding communities.
It’s important to note that not all economic responsibility happens outside the walls of your company, on your dime. A critical aspect of economic responsibility involves paying employees a fair and competitive salary to ensure their wellbeing and their ability to provide for themselves and their families.
Now, if you’ve worked in business for any period of time, you’re likely familiar with corporate finance processes— many of which involve pinching pennies and cutting costs at every corner. But, paying employees more and purposely avoiding tax loopholes isn’t as insane as it may sound. So, hear us out.
Although CSR can increase costs upfront, the overall impact on your bottom line is often still an improvement. Here’s why: the money you spend on your employees and in the community around you, often comes back to your business in the form of high-performing employees, lifelong customers, and a decrease in resource and energy costs. Don’t let economic responsibility scare you. After all, you have to spend money to make money.
The Benefits of Implementing a Corporate Social Responsibility Program
We’ve explained that, on a broad scale, CSR benefits society, the environment, a company’s employees, and the company itself. Now, let’s get a bit more specific and look at some of the tangible benefits of a CSR program.
1. Increase employee satisfaction.
People like to work for companies that prioritize employee development, have strong core values, and facilitate positive change in the world around them. Enabling employees to make an impact on their environment creates a sense of unity, both within the company and within the local community.
Employees also become more engaged in their work when they feel valued by their employers. And, the more engaged employees are, the more productive they will be. In fact, companies with highly engaged employees achieve 21% higher profitability (source).
2. Boost customer loyalty.
In today’s hyper-competitive business environment, customer loyalty matters. And, modern customers have spoken— they want to buy from socially responsible brands. In fact, 56% of consumers said they are more likely to buy from a brand that is known for its social value, and 53% identify a brand’s commitment to community involvement as a leading purchase driver (source).
Remember, when you give back to your employees, your community, and your environment, your customers will give back to you.
3. Improve your public image.
Of course, public perception shouldn’t be the driving motivation behind your CSR program. But, it would be disingenuous to ignore the benefits CSR can have on your company’s image, and subsequently, your profits.
Socially responsible companies generate positive buzz by word-of-mouth marketing and earn the authentic trust and respect of their audience. On the other hand, companies with unethical business practices that harm their employees, the environment, or their community are often scrutinized in the public eye via social media where users are quick to jump on the bandwagon known as cancel culture.
Of course— these benefits are secondary to more important social and environmental benefits, which of course depend upon the specifics of your CSR program.
5 Steps to Kickstart a Successful Corporate Social Responsibility Program
Now that we’ve thoroughly defined and explored the benefits of CSR, let’s look at the first steps you can take to jumpstart your company’s CSR program.
1. Establish a clear definition of CSR for your organization.
Before you can pursue specific CSR goals, you must first clearly define what CSR means for your organization. Outline your company’s short- and long-term plan for implementing CSR. Determine how supporting social and environmental causes will benefit your company’s bottom line — is your plan to reduce costs? Drive brand awareness? Not only are these questions necessary to develop your strategy, but they’re also critical towards getting key stakeholders on board with the program.
While you might establish a dedicated CSR team, understand that CSR isn’t an isolated project for a small group of employees to worry about. Rather, it’s a core principle that must become embedded in the fabric of your business. Be sure to communicate your CSR blueprint to everyone at your company, and provide frequent updates as you put your strategy in motion.
2. Re-assess your company’s core values.
As we’ve hopefully made clear by now, CSR is a much more strategic process than simply selecting random social and economic causes to support. Yes, your company should continue to donate and support the charities you love — but a truly sustainable CSR program requires a clear understanding of your company’s values and business model.
To start, identify social and economic initiatives that align with your companies core values. For example, let’s say your company ships high quantities of commercial goods all around the world. A natural CSR initiative would be to minimize the environmental impact of your shipments by reducing package size, using eco-friendly packing materials, and working with shippers that use low-emission transportation methods.
3. Consult your customers.
64% of people cite shared values as the main reason they have a relationship with a brand (source). Naturally, it’s in your best interest to develop CSR initiatives that align with your customers’ values.
We recommend you facilitate candid conversations with some of your best customers and get their insight into your CSR program. Use social media and other outward-facing marketing channels to solicit ideas from your audience and keep them informed on how they can be a part of your CSR initiatives.
Remember, your customers can provide a different — but no less valuable — perspective of your brand and its message than your stakeholders can.
4. Gather input from your employees.
If you think your employees are apathetic towards corporate social responsibility, think again. 64% of millennials consider a company’s social and environmental commitments when deciding where to work (source). While stakeholders and upper-level executives may seem like the shot-callers, it’s important to remember that your staff is what holds your company together. Your employees deserve to have a say in the direction of your CSR program.
Create open lines of communication with your employees and provide an outlet through which they can voice their thoughts and opinions about the causes they care about. What constitutes ‘ethical labor practices’ from their perspective? Which social causes are they passionate about? What do they believe your company can do to help the environment?
A company-wide survey is a good place to start — but your employees’ input shouldn’t stop there. Managers should meet with their respective teams in order to discuss CSR, answer any questions they might have, and open the floor for them to speak up about the direction your company will take.
5. Develop a reporting system to track and measure your CSR program.
One of the biggest critiques of CSR is that it’s a difficult initiative to measure. It’s true that you can’t quantify every environmental and social return, but you can establish clear metrics to tie your CSR program to your company’s performance.
Once you’ve fleshed out your overall strategy, determine which CSR efforts can be directly linked to tangible business results. For example, let’s say one of your goals is to reduce energy consumption by using renewable energy sources. To measure this, you can take a look at how much you’re spending each month as a company on energy costs. Then, with each change you enact to get you towards your goal, you look at how much you’ve reduced costs each month— proving that your environmental initiative had an impact on your company’s bank account and on the environment.
Be sure to explore other key metrics to discover new ways to tie them back to your CSR efforts— sales and marketing metrics like increased brand awareness, website traffic, customer acquisition, and average order size are a good place to start.
Final Thoughts on Corporate Social Responsibility
Above all else, CSR is a commitment to facilitating positive environmental and social change within your workplace and the community around you. Of course, the initial investment may seem daunting: implementing CSR costs money, resources, and most of all, time. But, an effective CSR strategy doesn’t help society and the environment at your company’s detriment. It bridges the gap between these sustainability practices and your business strategy. When CSR works, everyone wins — the community, the environment, and your business.
If you have the opportunity to make a positive impact on the world while also benefiting your business, why not take it?
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