Gone are the days when the only focus for businesses was their profit margin. Now, a business’s social responsibility to their stakeholders holds as much weight as the profits they bringing in.
CSR is the social responsibility of an organisation to its stakeholders. It's defined as the duty to ethical and transparent behaviours and should account for the impacts of its decisions on society and the environment beyond immediate legal obligations.
The process should take into account a business' impact on the social, economic, and environmental issues in a community.
What do corporate responsibilities involve?
There's a wide range of activities covered under the process.
This can range from activities partnering with the local community to plant trees, right through to practicing social responsible investments.
This approach contributes to the sustainable development of a society by delivering social, economic, and environmental benefits to stakeholders.
So, with those points in mind, you can view corporate social responsibility (CSR) as the efforts of an organisation into improving the local (or more widespread) social environment.
Another way of considering the process is it aims to ensure corporations conduct business in an ethical way.
Is CSR mandatory?
An organisation's approach to CSR is in a corporate self-regulation capacity.
Businesses have seen a move from voluntary self-imposed decisions at the level of individual organisations to mandatory schemes. All CRS efforts can happen on a local, national, and international level.
But there is a possibility the British government may introduce laws that make CSR mandatory for businesses.
Some business insiders argue that voluntary social responsibilities allow companies to demonstrate best practices within their industry. It also allows them to determine, raise, or lower their criteria for the best practices.
Why should corporations be socially responsible?
Governments, employees, and customers recognise the importance of contributing to the social development of the communities they occupy.
For some employers, CSR is also an essential means of increasing competitive advantages. It's also considered an effective tool to raise brand awareness among customers and employees.
Having a CSR policy in place not only shows your customer base you care about their community, but you’re also taking steps to improve it.
And in the modern business world, all SMEs are facing increased demand to be more open about their business activities from customers. They’re also facing pressure to maintain acceptable business practices in order to build trust.
How does corporate social responsibility affect businesses?
You can feel the effects of your social responsibility efforts at various levels of your business.
Organisations that practice CSR can have happier and more satisfied employees. This is due to the fact employees have more of a sense of purpose when working for a company that's socially and environmentally conscious.
Your corporate social responsibility can also impact the ability to attract new talent. Millennials and Generation Z are now joining the workforce - they have a major focus on protecting the planet.
The rise in popularity of social media has also created an environment where feedback is key.
Employees and customers can give public feedback on their experience of dealing with your business. This in can negatively affect your public image, unless you put in the steps to ensure you make a positive contribution to the world around you.
Types of corporate social responsibilities
There are four main pillars that form the foundation of CSR.
Business owners can choose between the different pillars to create a programme that suits their brand. It's important to implement these procedures for the good of your company and the community.
The four types are:
- Philanthropic efforts: These initiatives include donating time, money, and other resources to the likes of charities. You can donate to various organisations and causes on a local, national, or international level. You can also select a worthy cause to give. Possibilities include human rights projects, natural disaster relief aid, and education programmes.
- Environmental protection and sustainability: Aligning yourself with efforts to reduce carbon footprint can have positive results for your public image. It requires you to take a social stance on disaster relief and environmental conversations. You can assist in your local communities by contributing resources to food drives etc.
- Company diversity: This encourages businesses to acknowledge and address the need for a diverse workforce that makes all members feel welcome. You should have policies in place that are in line with equality and diversity as well as a process to implement said policies.
- Volunteering commitments: This is probably the most popular type of CSR. Businesses recognise that to improve the profile of their brand they should work together with their local community. Providing employees with opportunities (time or resources) goes a long way to improving the public perception of your company.
What are the benefits of CSR?
The actions you put in can lead to many positive outcomes. These apply to businesses within any sector and of any size. You can expect:
- Improved brand recognition.
- Positive brand reputation.
- An increase in customer loyalty.
- Improved employee retention rates.
You can also save on costs by reducing the use of resources, managing waste and monitoring carbon footprint, and more.
Focusing on your corporate social responsibilities can also contribute to winning new business deals, enhancing relationships, and gaining access to new funding opportunities.
Want to put back more?
The experts at Croner can offer advice on creating and implementing your CSR policy.
We'll make sure that policies are in line with your brand message and company objectives. Contact us for more information on 01455 858 132.