What is Corporate Social Responsibility?
Corporate Social Responsibility (CSR) is a self-regulatory business model practiced by large and small companies. The concept allows businesses to be socially accountable to their stakeholders and the public. By adopting clear CSR strategies, companies accept responsibility for their impact on society – including all economic, social, and environmental aspects.
Traditionally, CSR was commonly viewed as something only large corporations practiced. It often included philanthropic gestures towards charitable causes. In the past, simply having a CSR intention in place was already enough for a company to be recognized as socially responsible, even if the idea of social responsibility did not influence the business model or the production processes.
Today, however, it is safe to say that this has changed. Companies of all sizes are increasingly held responsible for their social and environmental impact by their customers. A study conducted with 1000 consumers across the UK and the USA in 2018 found that 88% of consumers expect brands to do more. They want companies to acknowledge their impact on climate change, pollution, or inequality. Customers want to see evidence that the brands they trust act in beneficial ways for the greater common good.
The great news is that when done right, CSR will not only help to meet customer expectations – CSR has the power to improve business performance as a whole, if you are in it for the long run.
Let’s look at why Corporate Social Responsibility is a concept relevant for companies of all sizes, how SMEs in particular might benefit from a clever CSR strategy, and get inspired by some impressive CSR initiatives.
- Why should companies engage in CSR?
- Types of CSR activities SMEs can take part in
- How to Start Building a CSR Strategy
Part 1: Why should companies engage in CSR?
While it’s undeniable that CSR can bring lots of benefits to business success, entrepreneurs who start with the right mindset and expectation often yield better results than others.
So what is the right mindset?
Perhaps, the simple way to put it is this: ‘We need to genuinely want to do good with our business’. A genuine intention instills in us the passion to invest time and effort into developing a good and comprehensive plan. Our message will come from our hearts and easily connect with and inspire our team and our customers. And most importantly, it gives us the courage to try new approaches and break away from the conventional.
The benefits of CSR are plenty, but let’s zoom into the long-term and sustainable impacts of CSR on businesses.
The rise of sustainability calls for better practices across all industries. We see companies looking to innovate their processes to reduce waste, use more environmentally friendly material, save electricity, or enhance social and economic mobility.
For the sports attire company Adidas, sustainability is a big part of their CSR activities. To help tackle the plastic pollution crisis of our oceans, Adidas partnered up with the initiative Parley for the Oceans in 2017. Together, they launched shoes and clothing entirely made from plastic trash found in the oceans. It was a huge success. The same year of the launch, Adidas sold one million shoes made out of ocean plastic.
But their effort does not end here. In 2021, the sports company is looking to introduce a running shoe entirely made from recycled materials. What started as a CSR initiative has become an overall goal: by 2024, Adidas plans to produce their entire product lines only from recycled materials!
2. Brand Differentiation
We’re not referring to the traditional practice of once-off donations for good causes, posting about it online, and hoping it will differentiate the brand. Consumers are getting more and more discerning, and only companies with true intentions to do good and invest time and effort in doing so will get positively recognized. CSR practices need to be incorporated into the business values and daily practices in the long-run for the message to get across.
When it comes to planet-protection, the outdoor clothing & supplies brand Patagonia leads the way. Interestingly enough, even if you are not an outdoor person who owns Patagonia gear, it is likely that you have heard of their efforts for the environment.
Patagonia is all about less rhetoric and more action. They launched different initiatives, like a Worn Wear Exchange platform, which actively promotes repairing, sharing, and recycling of preloved gear.
Other initiatives include the Patagonia Action Works program, which pairs willing volunteers and activists with environmental charities and causes in their area. All these initiatives promote sustainable lifestyles and conscious consumption.
3. Greater Employee Engagement and Retention
The idea that CSR is positively connected to employee satisfaction is not new. As early as 2003, research at the Stanford Graduate School of Business showed that 9 out of 10 MBA graduates in Europe and North America prefer a job offer from an organization committed to CSR over one that is not. And in 2015, a study by The Lewis Institute for Social Innovation indicated that companies with a committed CSR strategy in place can reduce staff turnover by up to 50%.
Of course, CSR can be done in many different ways. Actively promoting diversity and a healthy work-life balance can be one of them. The streaming company Netflix offers its employees and their families up to 52 weeks of paid parental leave at any time that suits their needs. This compares to 18 weeks at other tech companies.
Today, it is more important than ever for a business to show empathy towards the issues and challenges we are facing around the world. In a study from 2019, the consulting company Deloitte found that environmental protection is the number one concern of younger generations of employees. So, being actively engaged in efforts to reduce pollution or be more sustainable can be a great way to demonstrate that you are empathetic towards the concerns of your employees.
Facing and embracing your responsibility also makes sure you attract employees who share the same worldview as you and embrace good work ethic.
4. Customer Engagement
Similarly, customers are more attracted to businesses with a sense of purpose and to businesses that share the same worldview. This creates an emotional attachment to the brand itself that is independent of product features or service quality.
The French-Brazilian sneaker company Veja is a great example of a company fully embracing its responsibility towards the environment and society. For Veja’s founders, it is all about sustainability and transparency – transparent information about the production process, material, and reimbursements are visible for customers, but also suppliers and employees.
Veja uses this to differentiate itself from the traditional production of sneakers in socially and environmentally unbearable production processes. And customers are rewarding efforts like these.
A study from 2019 by Mintel also confirms that Millennials are more likely to buy organic and fair-trade products, and are even prepared to pay more for these products. This means that if the purpose is right, consumers are open to pay a higher price and reward an enterprise's efforts and intentions towards sustainability – as long as they are sincere and genuine.
5. Savings in the long run
As a result of stronger talent attraction and higher employee retention, better productivity, and more sustainable usage of resources, engaging in CSR in the long run translates into cost-savings for the business as well. It truly is a win-win.
But the benefits of CSR are more far-reaching than that.
More than ever before, businesses are recognized as a force that can change the world:
- Ensuring an ethical and inclusive workplace creates a better working environment for everyone.
- When businesses give and give regularly, small amounts of giving accumulated can eventually create sustainable funding for causes around the world.
- And because every business is part of a value/supply chain consisting of other businesses, when businesses advocate for sustainability, ethical practices, and generosity, this creates a positive ripple effect on all stakeholders.
- Great CSR practices can also serve as role models and best practices to others in the industry.
- Responsible leadership in a company is tied to a better overall performance of the organization.
Part 2: Types of CSR activities SMEs can take part in
You might think that CSR is tied to big financial investments that you don’t have available. Or, you might feel overwhelmed by the sheer range of CSR activities to choose from.
The truth is, CSR can come very naturally if you embrace it as a mindset rather than a PR campaign. There are many simple ways to practice social responsibility - as long as you embrace it within your culture. It might be a small decision that eventually leads to great change.
Here are some ideas to help you get started.
Become a guardian of the environment:
- Use environmentally friendly materials or make an effort to actively use more secondary materials.
- Innovate your production processes to use less water and energy.
- Commit to sustainable practices throughout your supply chain (such as recycling or embracing energy-saving methods).
Know who you work with:
- Source your suppliers carefully – make sure they have ethical business practices. Fair-trade allows everybody to do better on business as well as on private levels.
- Give to causes that are transparent about their spending – make sure the organization you work with is transparent and sincere about their intentions. With B1G1 for instance, every small action can be connected with a project. So you can give a person access to life-saving water for every email you sent, and it only costs as little as 1 cent. And you know exactly where your money goes. Whichever organization you work with, transparency remains an important consideration.
Be a supporter and advocate for causes you care about:
- Be it education, health, human rights, or environment, give to causes you truly care about. This not only makes giving feel natural but also helps you maintain the support to these causes consistently, both in good and bad times.
- Stand up for issues you’re passionate about. You’re likely to retain customers who care about the same causes as well. Of course, if the issue you’re passionate about is a controversial topic, you may want to take a stand, but stay caring and respectful in your messaging so you don’t drive away customers who may not believe in the same thing. After all, disagreements are common, but respect and empathy will help your message shine without upsetting anyone.
- But don't be a blind follower. It’s wonderful that we’re getting more vocal about controversial issues that have been around for decades. And it’s wonderful if you want to join in and support causes that deal with these issues too. But with controversial issues, it’s important to do your research, understand all sides of the argument, and how solutions to these issues work. Make sure what you support has an impact on the ground that you want to achieve.
Volunteer to work on the ground:
- Pro-bono work is a great way to utilise your skills for good, get exposure to different audiences and challenges, and to help those in need.
- Let employees volunteer on the clock for causes they care about.
- Have an annual volunteering trip for your team (another win-win situation - you are doing something valuable for your community while facilitating great team bonding!).
Don’t worry about the amount you spend, but stay consistent:
- A commonly held view about CSR is that only large businesses have enough resources to do so. But this is a misconception. Organizations like B1G1 empower small and medium businesses around the world to give from as little as one cent. One cent can bring access to life-saving to water to a person for a day while one dollar can send a disadvantaged child to school for a day. So, it's perfectly feasible for small businesses to create hundreds or thousands of impacts on a regular basis.
- A small amount can make a huge difference to someone in need. Imagine if every business gives small amounts consistently – together, we can make an enormous difference in the world.
Embed giving into the core of your business:
- CSR works best if the values of it are incorporated into your core business model. Make giving part of what you do every day. Plant a tree for each email you send or provide a healthcare plan to a person in need whenever you successfully sign a new contract. This way, you can share your success and make everything extra meaningful.
- When it’s baked into the core of what you do, giving becomes natural. Some businesses even find giving to be extra motivation for them to do better.
- The accounting company Inspire CA from Australia is an excellent example of how setting grand giving goals can result in surprising success. The co-founders behind Inspire set themselves an exceptional task - Ben Walker and Harvee Pene want to be meaningful players in ending global poverty. Their idea: giving a day's worth of access to basic requirements to people in need. The result: over 11 Million days of giving to date.
- For their program, Inspire partnered up with B1G1 and regularly gives to a project in Malawi. Co-founder Ben Walker says that they have integrated giving into everything they do. “Be it the emails we send, our AGM and planning sessions and meetings we have with prospects, clients, and suppliers... every time we do one of those activities, it means more water for Malawi.”
Part 3: How To Start Building a CSR Strategy
It’s important to not view CSR as a PR effort or one department's responsibility, but to treat it as integral to your business. And when you’re in it for the long-run, CSR has the power to improve not just your business, but also influence your customers, clients, suppliers, community and the lives of those you support.
Here are some key steps to help you get started.
Step 1: Determine the purpose of your CSR strategy
First, look at your company’s values and your personal values. What is it that you care about? Whether it is advocating for equality, providing education, eliminating hunger or tackling climate change, noting down the things you and your team are passionate about is a good start.
Then, look into what your community values or what the priority needs are. Knowing and aligning these values will give you a better idea of the kind of activities or causes will be most meaningful to all parties involved.
Reo Group, a recruitment consultancy in Australia, dedicates their work to ‘elevate human potential’. CEO Stella Concha shared with us that Reo Group always includes at least one ‘wild card’ candidate in its submission to a client to help level the playing field. This wild card might not precisely or completely fit the profile requested for the position, and is meant to challenge clients to be more inclusive in their hiring.
And their giving activity also reflects this belief. For every candidate successfully placed, they give access to e-learning to children in Australia’s most remote regions. By doing so, they are also ‘levelling’ the playing field for these children.
Step 2: Involve your team and customers in the creation process
CSR is a lot about personal beliefs and values. Your CSR program will be most successful if you get your team and customers on board. Do your best to involve them early in the creation process.
Making them feel heard is important. The better they feel about your initiatives, the more involved they will be, and the more invested they become once your program is launched.
To get your team involved, consider running an internal poll, having an all-hands team meeting to discuss first ideas and action plans, or creating a new team that runs the program bottom up.
To involve your customers, you can run a social media campaign to let your customers decide by voting which causes your business will support. Or, you can ask them directly in one of your newsletters. Giving your clients a voice in these decisions is also a great way to bond with them (and get them excited about your initiative).
CSQD, a marketing agency in Australia, involves both their team and clients in their initiative. Every month, their team gets to select 3 causes to give to, and their clients are then given a choice to support one of these 3 causes. At the end the month, CSQD gives towards all three causes, with the most popular cause receiving 50% of the total giving.
Step 3: Draft out your plan
Think about the execution of your program in detail. Here are a couple of questions to get you started:
Step 4: Start small and work from there
We all know this situation: we start a new project, we define big goals, but then life gets in the way. Or we realize that we lack the resources to follow through. Eventually, we drop the project entirely.
To avoid this moment of disappointment, it is important to be honest about what you can and are willing to do when you are planning out your program. Giving or volunteering should ideally enrich your life and business, not burden you or your employees.
Start small and let your initiative grow naturally. If you want to end world hunger, start from giving a meal (through a non-profit organization) to a child in need for every product sold. If you want to tackle climate change, start from encouraging sustainable practices in your business.
Every action counts, no matter the size or amount, as long as your engagement is consistent and sincere.
Step 5: Keep track of your impact
One of the most important things about CSR is measuring the impacts – not just on your company but on the wider community and on the people and causes you support.
Choosing a good partner for your giving activities can help you make sure that you are achieving the desired impact with your actions. There are several organizations that help you track exactly the impact you are creating (e.g. the amount of CO2 you’re offsetting, the number of trees planted, the number of meals distributed and so on). But if the organization you want to support doesn’t do so, consider asking if they give regular updates on the initiative you support. No matter which form of ‘tracking’ it is, transparency is key.
Through its partnership with B1G1, consulting firm BlueTribe Co. has been tracking their impacts by geography and by the impacts created towards each Sustainable Development Goal. Check out their Impact Page here.
Step 6: Communicating the impacts
We encourage every business to communicate their motivation to give. Doing so inspires others to begin giving as well. However, this does not necessarily mean that all businesses should trumpet how they carry out their CSR initiative. Some businesses prefer to keep details about their business’ giving activities private – which is perfectly fine. Other businesses choose to share their joy and gratitude of being a socially responsible business with their teams and clients, appreciating the roles that they play in enabling the business to grow and create greater impacts together.
It’s not necessary for you to communicate the impacts to your customers all the time – you can include that in your Annual Report, or keep it internal and use it as an internal goal. Every business is different, so stick with what works best or your business.
We hope you find the ideas here useful as a guideline and starting point, and that this guide inspires you and sparks new conversations about doing good in your business. And it is our biggest hope to see more Businesses For Good in our world as a result of this.