What is the main responsibility of business?
When a person starts or manages a company, it is their foremost responsibility to meet the needs of shareholders and produce profits for the business to retain, survive and ultimately thrive.
Profits and shareholders’ equity are important, but should a business generate profits at any cost?
Is the pursuit of profit worth it, if it means adversely affecting communities, people and the wider environment?
Modern companies have realised Corporate Social Responsibility (CSR) is critical.
Developing an effective CSR strategy does not diminish the pursuit of profits, but ensures companies operate responsibly to avoid adverse consequences.
What is Corporate Social Responsibility (CSR)?
An effective Corporate Social Responsibility creates social value. It refers the actions of a company to contribute value to all its stakeholders, whilst pursuing profitability.
Profits are required for a CSR strategy as companies finance CSR initiatives through profits they make.
CSR initiatives include building thriving communities, protecting wildlife, advocating for environmental care, preserving cultural heritage sites or promoting social campaigns. These initiatives are typically regarded as ‘giving back to the community’ as gratitude for customer support.
The ultimate goal of a CSR strategy is to utilise a company’s resources to create goodwill in the community. It is intended to build consumer trust, minimise its environmental impact and cultivate a favourable corporate reputation among stakeholders.
How does Corporate Social Responsibility benefit companies?
Modern consumers are well aware of the impact companies have on their surroundings. Therefore, when adopting a CSR strategy, many companies aim to gain:
A favourable reputation
Very few customers, investors, shareholders or employees will want to work, buy or associate with a company that is known for corporate greed, malpractices or environmentally destructive operations.
Companies that pursue CSR initiatives do enjoy a favourable reputation from its customers and helps build strong brand loyalty.
The ability to evolve
Companies cannot evolve in isolation from stakeholders. Companies need healthy relationships with their communities, customers, suppliers, investors, government and even competitors to expand their brand into untapped markets and thrive profitably.
Customers gladly purchase from companies who aren’t seen as greedy and have a motivated workforce that is treated well and provides excellent service. Investors will also want to secure their money with excellent companies that enjoy high customer satisfaction, employee motivation and sales.
Lower operating costs
Socially responsible companies avoid the legal, environmental and financial consequences which destructive or careless operations bring. A company, for example that properly disposes its waste, and eradicates its air, water or noise pollution avoids fines, penalties, lawsuits and clean-up costs.
Additionally, many governments provide subsidies, tax breaks and holidays to companies who promote and practice responsible business etiquette. Such tax exemptions help lower a company’s overall operating costs.
Attracts and retains employees
Employees typically do not want to work for companies that have a negative reputation, tolerate discriminatory practices or harms the society in any way.
Many modern Millennial and Gen Z employees want to work for companies with a conscience. A solid CSR strategy attracts talented team members who will gladly work for a company that is conscious of its stakeholders and operates with care.
Attract investment
Companies with the best talent, customer loyalty and growing sales will attract lucrative investments from local and even global investors who will want to capitalise on that company’s strong market share and solid customer base.
Provides a good example for future entrepreneurs
Too often we hear of irresponsible companies that pollutes oceans, destroys wildlife or practice corrupt financial schemes. This leads to mistrust from the general public.
Designing and implementing an effective CSR strategy not only alleviates public mistrust but also serve as inspiration to future entrepreneurs of what responsible business looks like. Responsible companies demonstrate to aspiring business owners what good business can and should be.
How do I implement an effective Corporate Social Responsibility in my company?
Before deciding a CSR path, it is essential to:
Choose an initiative that aligns with objectives and values
Select a CSR initiative that aligns well with your company’s values and corporate objectives. For example, if you are in the energy sector, you could position yourself as a green, environmentally friendly business to reassure the public your operations are managed with environmental care.
Develop a plan
Effective CSR needs to have a clearly defined and actionable plan to make progress. Some actions include defining:
- What is the goal of the CSR initiative we have selected?
- Why have we selected this initiative to pursue?
- Which department/team members will spearhead the CSR for the company?
- How much resources – funding, manpower, company assets, ideas will be allocated?
- How will our CSR strategy be organised, lead, marketed and evaluated?
- What activities will we organised and execute as part of this strategy?
- How will we connect and build relationships with stakeholder groups for this CSR initiative – local communities, government agencies & independent activist groups?
- How will we utilise other tools – social media, influencers, advertising platforms to build and spread awareness of our CSR campaigns?
Work with the local community
A proper CSR sees companies working alongside local community members to tackle pressing social issues and build awareness of the issue to attract more resources and find suitable solutions.
Capitalise on partnerships
Two corporate heads are better than one. If there are local activist groups or NGOs working toward similar initiatives, it would be practical to form strong partnerships with them to get more work done and create a bigger impact.
Include CSR in your company’s identity
Genuine social responsibility doesn’t just involve charity and donations. An effective CSR strategy must become an integral part of the overall corporate strategy of the company, build on their core values and be reflected in its culture.
For example, a company focusing on becoming environmentally conscious should promote national recycling efforts, have recycling facilities on its premises, advertise the issue on social media, encourage employees to recycle, stop littering and switch to environmentally clean fuel.
CSR should not be a one-time activity but must encompass and guide the company’s operations and culture to be truly effective.
