What is Corporate Social Responsibility today?

Climate Innovators Journal

Published on 2021-10-28

Individuals’ daily behaviours have an environmental impact, whose negative consequences are often only visible in the long-term, when it is too late. Even the smallest individual action leaves a footprint. If positive or negative, it is up to us. Of course, this is true for business as well. That’s why companies are increasingly including CSR within their business agenda, often as the result of consumers asking for brands and companies’ greater involvement in societal and environmental issues.

What is CSR? 

Corporate Social Responsibility is a complex of social and environmental systemic actions which are supposed to have a positive impact on the business’ economic performances in the short, medium, and long-term.

It is a responsible business model, which takes into consideration well-defined and specific rules ensuring a respectful behaviour towards the environment and the society. It includes the company’s responsible behaviour towards consumers, its employees, and partners, as well. Also, it encourages a continuous dialog with the community, through the participation in urgent social problems solving.

Companies must understand that, although they are not directly involved in social problems, dealing with them is a component of their way of doing business. Indeed, it is not possible to develop long-term projects if social-related themes are not tackled in the course of business development.

CSR does not exclusively refer to specific departments’ projects. In fact, it includes all company activities. It incorporates different subject matters, such as corporate governance, human rights, working conditions, corruption prevention, collaboration, and dialog with the different stakeholders (employees, associates, consumers, government, investors and others).

For example, an organization cannot define itself as socially responsible if it has developed an important project for children, but its employees are working in uncomfortable conditions and haven’t been receiving their salary for some months.

CSR must not be confused with charity. Indeed, the 90-page long ISO 26000 Guidance on Social Responsibility covers the charity theme only in a couple of lines, within the context of social investments.

Also, CSR is related to Environmental, Social and Governance criteria (ESG), but they are not the same. On the one hand, CSR represents a company’s culture of corporate responsibility and corporate sustainability, focusing on its social and environmental commitment. On the other hand, ESG strategy represents the measurable outcome of CSR practices. In other words, CSR represents the qualitative side, and ESG the quantitative aspect. 

 

The benefits of Corporate Social Responsibility

  • It positively affects company reputation (greatest trust from public opinion)
  • It improves relationships with clients, local communities, and other stakeholders
  • It enhances the working atmosphere and employees’ involvement. It has a positive impact on the company’s ability to hire new talents, motivate, and retain its employees
  • It implements innovations
  • It reduces costs and optimizes energy consumption
  • It improves the company’s competitiveness, attracts investors, and opens up new market opportunities
  • It reduces risks related to corporate reputation and activities. It helps overcoming time of crisis
  • It helps long-term sustainable economic development

 

CSR and stakeholder

Employees

Employees work to build the company’s future, indeed much of a business success depends on them. Thus, it is important to create comfortable working conditions, social protection, training, and a friendly environment where they have the opportunity for professional development.

People need to feel free to express their thoughts and opinions fearlessly, as well as being listened to. Indeed, happy and motivated people work more efficiently.

People need to feel esteemed and find a work-life balance.

A 2019 survey by Deloitte, interviewing 13,416 millennials across 42 countries and 3,009 GenZs across 10 countries, demonstrates that employees attribute a high importance to corporate culture.

Also, other recent Deloitte’s studies demonstrate that 70% of millennials interviewed, take into consideration the company’s CSR activities when deciding for which companies to work.

Furthermore, 77% of graduated interviewees are likely to accept lower salaries as long as they work for a company having a sustainability development strategy.

They consider social values a priority. They want to contribute to the improvement of the world. They want to see corporate activities’ impact, as well as their own. They value playing an active role in social and environmental changes.

 

Potential customers

Obviously, every company has its own target. However, let’s take millennials as an example of active consumers across different product categories, open to experiment.

According to millennials, companies are not doing enough with respect to environmental protection, training, and employees’ growth. They think that companies are not paying enough attention to diversity and they believe that their social contribution is below their expectations.

 

Investors

Information about a company's performance with respect to CSR is very important in determining potential investors’ decisions.

Environmental, Social, and Governance (ESG) criteria are increasingly playing a crucial role in investment decision-making. According to a 2018 EY survey, interviewees believe that ESG standards may help to mitigate the risk. Almost all interviewees (96%) claim that such information has occasionally (62%) or frequently (38%) played a crucial role in their decision-making.

 

How to develop CSR

The main catalyst to sustainable development with companies are:

  • Top management initiatives
  • Creditors or investors requests (as a binding provision for investments)
  • State obligation (non-financial statement)
  • Employees’ voluntary initiatives brought to management’s attention.

 A company is likely to embrace sustainable development when all the mentioned elements are in harmony. However, this is not always the case. All factors are important, but since corporate strategic decisions are taken at the top management level, top managers’ initiatives have been identified as the main catalyst in the last years.

 

CEO role in CSR

In the context of the 2019 European Business Summit, which took place in Bruxelles, an entire day was dedicated to the development of Sustainable Development Goals (SDG). Large companies, NGOs, and EU Parliament representatives reported their observations and discussed essential factors for the achievement of the SDG in the short-term.

Top Managers’ involvement within the sustainable development matter, was a topic of discussion. Top Managers were thought of as SDG drivers within the company. Indeed, they should be advocates and motivate employees to be socially responsible. Also, the relevance to integrate SDG within the corporate strategy was underlined.

Attending CEOs confirmed their interest in achieving SDGs , since they cannot keep on doing business on a dead planet.

Also, during the Summit A New Deal for Europe was presented, signed by 100 CEOs. Through such documents, CEOs band together in a concrete action to accelerate sustainable growth, face climate changes, and create inclusive prosperity. In collaboration with CSR Europe, corporate leaders underline the deepening dialogue and their commitment with politics, civil society, and partners across commercial and industrial sectors.

 

Today, more than 90% CEOs support SDG, but only 17% are including them within middle-level KPIs

 

In 2019, The European Association of Sustainability Professionals in collaboration with KPMG and Green Flex, conducted a survey interviewing 186 people across Italy, France, Germany, Spain, Serbia, Turkey, and the United Kingdom. Among the interviewed sustainability managers, 46.8% are members of strategic planning and 57.6% are involved, but not officially.

Also, the study focuses the attention on the regularity of meetings between CSR managers and CEOs. A higher cadence does not imply a higher quality or a higher employee position within the company. However, it is an indicator of how much its functions are taken into account in the decision-making, or CEO’s involvement in CRS matters.

Furthermore, according to a survey conducted in 2019 by Reputation Institute, corporate members expect CEOs to be personally involved within CSR.

 

Individual social responsibility and CSR, may exist one without the other?

When talking about the company, it refers to a group of people doing business together and achieving the same goals. The company’s direction relies on their values. In other words, CSR depends on all the people working for the company. Everyone shares such values and spreads them within their family, friends, colleagues, and planet.

Each of us leaves a footprint on Earth. If positive or negative, it is up to us.

 


 

Translated and adapted from The Good In Town. https://www.thegoodintown.it/dalla-responsabilita-alla-csr-cose-esattamente-oggi/.    

Photo by Victor on Unsplash
 

About the author

Maryna Grytsenko

CSR and Sustainability Manager, graduated in Economics, I worked on corporate responsibility in the fields of finance, catering and mass media. Sustainability for me is a way of life. Communication and Sustainability Consultant. Developing communication strategy for CSR projects at The Good In Town.

The Good In Town is a POP Benefit Corporation, with the goal of communicating to a broad range of audience the sustainability effort of people and organisations. They also work as editorialists and communication strategy consultants, and support social responsibility projects.


 

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