I'm assuming at this point you already know what CSR is (if not, click here) but you're wondering whether it's actually worth caring about. A Business environment is a complex one, and more often than not you need a stronger argument than 'CSR is just the right thing to do'.
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The thing is, CSR is not just about giving as much money to charity as possible. It's not really about giving money away at all, so the idea that all it does is eat into profit is a bit of a illogical one. Rather, CSR is a mindset that when applied to different areas of a business, can Produce Genuinely Impressive results. That being said, it's important to point out that the business case for a CSR programme in individual businesses will vary greatly depending on exactly what that business is planning to do. This article will therefore give more of a broad business case for CSR, with examples of some companies that are starting to reap the rewards.
"[CSR is] a mindset that when applied to different areas of a business, can produce genuinely impressive results"
Staff
When most people think of CSR, they often think it solely revolves around external relationships. A commonly overlooked aspects of CSR is internal management of employees. Ironically, this is probably one of the stronger business cases for social responsibility.
The theory is relatively straight forward. If staff are paid and treated fairly, and a working environment is creating in which staff can challenge the status quo and innovation is encouraged, chances are that the staff will be pretty happy. Research carried out by the Social Market Foundation and the University of Warwick has since linked that employee happiness to productivity, stating that a group of 'happy' employees were on average 12% more productive, with some reaching heights of 20%.
This could have an enormous affect of profitability, but happy employees can also lead to future benefits too. Not only will it be easier to retain your top talent, you'll soon become a company of choice for future talent to seek employment. This may all sound like basic HR theory (which it is), but that doesn't mean it isn't a fundamental part of being a responsible business.
Cost savings
Although slightly more of an environmental point, there is a strong argument to suggest that CSR can lead to measurable cost savings with regards to both energy and resource efficiency. Technology is constantly evolving and the payback time on environmentally friendly equipment is only going down. Whether it be simple measures such as reducing water pressure/temperature or more advanced strategies such as installing solar panels, there are endless opportunities to save some money by going green.
Brand differentiation
Competition is always fierce amongst businesses, and CSR is becoming a seriously credible tool with regards to brand differentiation. A 2015 global CSR survey found that 81% of consumers would make personal sacrifices to address social and environmental issues, and are starting to look to companies as 'partners in progress'. As social media enables individuals to become aware of wrongdoing and injustice all over the world, social activism is surely only going to rise, and people's purchasing patterns will begin to reflect that.
Consumers want companies whose values align with their own, and a strong CSR strategy can do just that. However, I do believe there is a distinct 'early adoption' benefit with regards to brand differentiation. Companies that proactively look to CSR as a genuine business need will see far more success than those who jump on the bandwagon later on, regardless of their sincerity. Some examples of good practice with regards to brand differentiation are The Body Shop, Unilever (Sustainable Living Plan), and M&S (Plan A).
Risk reduction
Whilst this concept is slightly harder to measure and accurately predict, there is certainly an argument to suggest that successfully managing your relationship with the wider community can the reduce risk in the long term. If consumers see you as a company that benefits society, you're unlikely to face activist campaigns and suffer reputation damage. If you're a really large company, you may also receive favourable deals from local councils or the government, encouraging you to continue operating in that particular community.
To wrap things up
Hopefully this post has highlighted some areas to look at when it comes to compiling a business case for CSR. It's important to reference my earlier comment that every individual CSR programme will have a slightly different business case depending on a number of factors such as industry, business size, programme type, business location etc. Having said that, the four points outlined in this article should provide a great starting point, or at the very least something to think about when approaching CSR from a commercial perspective.
If you have any follow up questions relating to anything in this article or anything to do with CSR in general, please click here to submit your question and I will make a future blog post with my answer.
Sources
http://fortune.com/2015/10/29/happy-productivity-work/
https://corpgov.law.harvard.edu/2011/06/26/the-business-case-for-corporate-social-responsibility/
http://www.cnbc.com/2016/04/18/run-a-green-business-make-money.html?slide=1
http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/sustainable_brands/study_81_consumers_say_they_will_make_
http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/sustainable_brands/study_81_consumers_say_they_will_make_
This post first appeared on Sell No Evil | Corporate Social Responsibility, please read the originial post: here
