Unpacking the concept of CSR and the benefits of demonstrating a responsible stance for businesses in an era of social and environmental consciousness.
Today, enterprises are keenly expected to have Corporate Social Responsibility (CSR) commitments firmly embedded into their corporate mandates.
Although there is no official US law requiring organizations to allocate a portion of their income to CSR, a plethora of regulations exist that are designed to compel the implementation of such practices; whether that’s adopting a proactive role in social welfare or taking a stance on environmental sustainability.
The most pressing CSR issues that organizations and companies are expected to respond to include relations amongst employees and local communities, environmental management, responsible sourcing, labor standards and gender balance, to anti-corruption and human rights to name just a few.
In the modern world of business, value-driven consumers are calling for full transparency, particularly from corporate giants. In 2011, a report published by the Harvard Business School found that less than 20 percent of S&P 500 companies reported on efforts relating to CSR and sustainability. In 2019, that figure jumped to 90 percent.
Consequently, those corporate giants and iconic names in industry entail some truly laudable commitments. Google is one of the biggest names in terms of environmental CSR achievements, as last year the tech and software icon successfully neutralized its entire legacy carbon footprint since the company was founded in 1998. This officially made Google the first major organization to achieve carbon neutrality for its whole operational history.
On the social side of the CSR coin – although in today’s world the wellbeing of our planet can only be seen as intrinsically linked to the ongoing welfare of its people – Microsoft frequently reports and attains notable achievements in charitable donations and furthering its technological reach for social development. In the fiscal year 2020, the company provided $1.9 billion in donated or discounted products to aid over 240,000 non-profits to better service their communities, most notably over the course of the pandemic.
In this environment, a direct correlation between the level of social engagement that a company upholds, and revenue is becoming increasingly apparent. Indeed, in the landscape where we expect a display of social and environmental consciousness, the degree to which a company demonstrates this carries the power to influence purchasing behavior.
An Ipsos poll conducted in 2021 entitled ‘Understanding Society’, found that two in five Americans either choose to regularly support a business on whose social stance they agree with – particularly in response to political and environmental matters, or do not support a business that they disagree with on a regular basis.
Consequently, what originated as a matter of moral obligation is quickly becoming a case of profit versus loss. Alongside products and services, businesses are cottoning on to the marketability of selling values and virtues in terms of identifying the profitability in ethics.
A study conducted by researchers at the Indiana University Georgia Institute of Technology identified five different modes of CSR practices adopted by companies to minimize a negative impact on society and the environment with a specific link to brand sales data analyzing the success of the varying approaches. The ‘five C’s’ range from correcting business operations by making changes, to cultivating goodwill through philanthropic acts not necessarily related to the business’ operations. Both corrective and compensatory acts were found to be the most effective, while participating brands demonstrated a drop in sales based on a cultivating style of CSR practice.
This growing awareness has also given way to a burgeoning cynicism amongst consumers, critiquing the validity of organizations partaking in commitments or causes that don’t specifically negate or reduce the societal harm caused by the company itself. Subsequently, businesses face navigating the balance between public need, and private profit.
Increasingly, the consumer and stakeholders expect businesses to align on broader social values, with jobseekers more receptive to finding work in companies that advocate ethical leadership. In a country that hosts the third largest population in the world, it is the points of interpersonal engagement that define the successes, and indeed the reasoning behind CSR. This applies to the entire consumer base, and the company’s employees, with CSR playing an integral role in attracting and retaining stakeholders.
Within the fabric of a company itself, a study conducted by Project ROI found that a CSR program had the potential to increase employee engagement by 7.5 percent, boosting productivity by a further 13 percent, and reducing staff turnover by 50 percent.
In implementing these initiatives, organizations are increasingly leveraging technology such as Integrated Workplace Management Systems (IWMS) in order to further CSR goals; utilizing functions such as improving facilities to reduce carbon footprints, efficient energy and waste management, and achieving compliance to maintain safe work environments.
Whether it pertains to a focus on compliance, or prioritizing sustainability, the businesses of today are encouraged to exceed beyond the remit of the services or products they provide, and observe a cognizance and acknowledgement of environmental and social stewardship in recognition of their wide-reaching impact.
By so doing, a company can only increase in relevance, competitiveness, and profitability.