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What Is Corporate Social Responsibility (CSR) And Why Does It Matter?

Delphia Debra
Jan 1, 2021 5:29:00 PM

Companies and organizations alike, in today's business world, are rapidly increasing their focus on Corporate Social Responsibility.

  • Protecting the environment
  • Championing women’s rights
  • Donating employees’ time to charities
  • Attempting to eradicate poverty at any level (local, national, or global).

From an optics perspective, any socially responsible company will project more attractive images to stakeholders, which serves to positively influence their bottom lines.

Corporate Social Responsibility example

So what is Corporate Social Responsibility?

It’s a long-term initiative where an organization addresses the needs of communities, customers, and employees.

Corporate Social Responsibility aims to direct businesses in an ethical, therefore, taking into consideration their economic, environmental, and social impact.

According to the World Business Council for Sustainable Development, CSR refers to

the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large.

Socially responsible companies

Socially responsible companies take steps to ensure that there are positive environmental and social effects associated with the way they operate.

Taking stock to incorporate addressing social and cultural issues, aimed at benefiting them in the process.

Corporate social responsibility models don’t just increase business bottom lines, they promote global change and progress, often involving helping individuals with fewer or no resources.

socially responsible companies

What is the purpose of corporate social responsibility?

Corporate Social Responsibility has become so popular, that over 80% of companies worldwide now participate in the United Nations Global Compact (the world’s largest corporate sustainability initiative) since its inauguration in 2000.

Companies are realizing that setting up a robust and solid CSR policy isn’t only beneficial to the society, but also to themselves.

  • managing risks in supply chains
  • staff recruitment and retention
  • driving innovation and productivity

Below are a few benefits of Corporate Social Responsibility:

  • Enhanced public image
  • Improved brand awareness
  • Positive impact in the community
  • Enhances relationships with customers

Customers (especially millennials) access public image when choosing brands to associate with.

Simple gestures like employees volunteering an hour every week at a charity demonstrate that you're a company committed to helping people. This means that you’ll appear more appealing to consumers.

Furthermore, when you’re committed to ethical practices, the news will spread. As a result, more people get to hear about your brand, thereby creating an improved awareness.

Improved and Enhanced Relationships with Clients

Businesses can build customer trust by acting in a socially responsible way. This trust factor often overtakes the price factor as many consumers are more likely to purchase (at a premium) from a brand that engages in and supports activities to improve society.

Consumers are becoming more expectant of CSR and are often less likely to associate with overly unethical companies.

Trust building with clients increases customer retention and business reputation. Happy customers who trust a brand engage more with such business and become a free marketing tool.

They are more willing to speak to family, friends, and post on social media about a brand they love and trust.

Becoming an Employer of Choice

An employer of choice is capable of attracting and retaining highly qualified and productive staff.

Companies with a strong CSR policy tend to attract staff who are enthusiastic about making a significant difference in the world - in addition to simply picking up a paycheck.

Large organizations have strength in number and the collective staff efforts can achieve significant results, increasing workplace morale, and boosting productivity.

Saving Money On Operating Costs

A company’s CSR policy can include making some simple changes in favor of sustainability by joining a green accreditation scheme.

This can be achieved by assessing the company and finding ways to cut down its carbon footprint. A lot of these processes include cost saving, either short-term or long-term.

Becoming more environmentally friendly and reducing carbon footprint ensures that a business uses less water, energy, etc. doesn’t just save money, it also improves the brand’s reputation while continuing to foster customers’ trust.

Corporate Social Responsibility (2)

Types of Corporate Social Responsibility

Corporate Social Responsibility exists in different forms, all of which address different issues.

However, they can all be covered under the four main CSR types, including environmental, ethical, philanthropic, and volunteering.

Environmental Corporate Social Responsibility

Many companies focus their Corporate Social Responsibility efforts towards reducing their environmental impact.

Harmful environmental effects were once deemed a necessary and unavoidable cost of daily business operations, pollution, and excessive consumption of resources now pose a global social and political concern.

Hence, Environmental Corporate Social Responsibility has kicked off, with numerous companies now paying attention to their business impact on the environment.

Environmental CSR is generally geared at businesses reducing their waste and greenhouse gas emissions.

This involves reassessing a company’s production processes, identifying wasteful acts, and eliminating them from the company’s business plan.

Ethical Corporate Social Responsibility

This strategy focuses on ensuring that every stakeholder (from employees to customers) in a business receives fair treatment.

Ethical responsibilities are self-enforced initiatives implemented by a company because they’re vested in doing the morally correct thing.

Businesses consider how their activities affect stakeholders and work towards making the most positive impact.

While a company’s primary concern is its economic and legal responsibilities, it can begin to focus on its ethical responsibilities once these fundamental requirements have been addressed.

Ethical CSR programs are intended to:

  • enforce a fairer treatment for every employee
  • maintaining decent standards in factories
  • paying higher wages
  • refusing to partner with unscrupulous businesses.

It also considers all levels within the supply chain, including employees who aren’t directly working for the company – for example, preventing small scale farmers from being ripped off by offering fairer payment for their crops.

Ethical Corporate Social Responsibility though sometimes difficult to enforce is geared at helping to ensure that employees, customers, and all other stakeholders obtain the fairest deal possible.

Philanthropic Corporate Social Responsibility

Philanthropic Corporate Social Responsibility goes beyond operating as ethically as possible but also getting involved to actively better society.

It’s frequently associated with donating funds to charities, with numerous businesses supporting specific charities that resonate with their businesses.

However, philanthropic CSR doesn’t refer only to making charity donations. Companies also invest in communities or participate in local projects.

The major intention here is supporting a community in ways that go beyond just hiring.

It represents a business’s commitment to society, showing that it values the community beyond providing a workforce or source of revenue.

Volunteer Corporate Social Responsibility

Local communities and charities consistently require help.

Smart business leaders are aware that engaging productively in community activities is beneficial for the company too

  • afford staff the opportunity to help local schools
  • work with the city council.

Volunteer Corporate Social Responsibility initiatives allow businesses to choose where to channel volunteer efforts to best help the community along with the company too.

Corporate Social Responsibility companies

How can you make your own corporate social responsibility?

Identify the Core Strengths of Your Business

When building a team or setting a goal, you need to ensure that every resource needed to support that team or achieve that goal is available.

So what does your company do best?

  • a great communication team
  • robust and solid logistics background
  • clever and creative engineering resources.

Whatever that strength is, lean on it when building out this new facet of your company.

Understand the Values of Your Clients/Customers

If this is a bit unclear, make significant efforts to find out. Since one of the main goals of Corporate Social Responsibility is improving your brand’s reputation with your audience.

Investing in activities or things that stakeholders don’t relate to will most likely end up as a waste of effort and resources.

Identify issues that matter to them (environment, education, healthcare, and wellness, etc.) and develop in that specific area.

Consistently Engage Your Employees

A Corporate Social Responsibility policy will only succeed when the individuals executing it daily buy into it too.

Draft employees across all levels to your internal CSR engagement team, tap into their enthusiasm, ideas, and feedback to develop a solid strategy.

They’ll then go out and engage every component of your business.

Whatever your brand is focusing on, set up metrics that will enable you to measure your performance and then incorporate these results into communications like press conferences, annual reports, or even your website’s “About Us” section.

Ensure that the metrics’ design captures the different parts of the CSR strategy, including employee buy-in and satisfaction levels, community impact, reputation contributions, etc.

When CSR is properly implemented, it becomes ingrained into the company’s value and culture, positively affecting the way the brand operates.

CSR should become inherent in an organization’s mission and message, and hold a strong place in its marketing and advertising.

However, companies should understand that promoting their Corporate Social Responsibility model is only beneficial if they’re already acting on such plans; otherwise, a false claim of bringing any form of change to those in need could trigger bad publicity.

Corporate social responsibility examples

Many well-known corporate social responsibility organizations are larger, more established companies with a comfortable means to contribute to society. With a solid, proven, and profitable business plan, these companies are better positioned to undertake and launch large scale corporate social responsibility initiatives.

For such organizations, business isn't only profit-driven. They take active steps to give back to society through sustainable projects, collaborations, and partnerships. Below are examples of a few businesses with different types of CSR initiatives in place

Microsoft

Microsoft is ranked among the best socially responsible companies across the globe.

The company operates several initiatives, including 4Afrika, focused on helping African entrepreneurs and youth develop skills and opportunities.

This scheme has birthed over 500,000 online SMEs, assisted many startups to expand their operations, and upskilled over 800,000 individuals.

Similarly, Microsoft partners with governments and charities through their global initiative, YouthSpark to offer free computer programming courses and resources to help create educational, entrepreneurial, and employment opportunities for over 300 million youth, worldwide.

Unilever

The UK’s biggest deodorant manufacturer, Unilever in 2014 embarked on an environmental corporate social responsibility initiative.

They began to compress their deodorant cans, reducing the carbon footprint of the aerosol spray can by 25%.

Unilever achieved this milestone by using 25% less aluminum and 50% less propellant gas.

The deodorants still last the same length period as the previous designs; however, they’re half the size, as a result, 53% more cans are accommodated in pallets.

This also meant that fewer lorries are needed, leading to a reduction in transport emissions too.

Unilever, in addressing certain business processes from product design phase to shipping, cut costs in addition to their environmental impact.

Google

Google is reputable for running multiple charity initiatives, providing millions of dollars in grants and investments.

It also participates in a volunteer program, allowing its staff to dedicate up to 20 hours of their work time annually to volunteer in their communities.

Additionally, Google has a matching gift program where employees’ donations between $50 and $12,000 are matched at a ratio of 1:1.

This global giant, beyond these programs, has launched and executed several initiatives focused on improving specific regions.

For example, their partnership with Learning Equality is geared towards making content accessible online to allow individuals with no internet to gain better access to learning resources.

By consistently maintaining the availability of these materials through a cloud library, Google aims to contribute to decreasing the gap between disadvantaged communities in Africa, Latin America, and India and countries with superior access to technology.

new reputation management

The Bottom Line on CSR

Socially responsible organizations cultivate positive brand recognition, attract top-tier employees, and increase customer loyalty.

Corporate Social Responsibility has become a significant aspect of a company’s brand and culture and is an essential element of public relations.

Many clients/consumers make conscious efforts to associate with brands that resonate with their values.

People support businesses that are committed to positively impacting the greater community.

CSR isn’t only important to customers but employees alike. While job searching, individuals are attracted to an organization’s mission and values.

Just as consumers want to purchase from businesses that align with their personal beliefs; top talents seek to work for organizations that support initiatives that are important to them.

Therefore, having a poor corporate social responsibility reputation can create severe negative effects on the overall bottom line of a business.

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