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Corporate Social Responsibility Through Business Lenses

Corporate social responsibility (CSR) has become an important practise for organization to demonstrate their commitment to environmental, social and governance (ESG) practices. By engaging in CSR initiatives, companies aim to contribute to the United Nations Sustainable Development Goals (SDGs) which show care, responsibility and dedication to the global well-being as well as their company lifespan.

Corporate Social Responsibility PR

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Reasons for Corporate Social Responsibility

Companies engage in Corporate Social Responsibility to enhance their reputation and build a positive brand image. By addressing social and environmental issues, businesses can:

  • Gain customer loyalty and attract new consumers who value ethical practices. This commitment to responsibility also makes employees happy, especially the younger generation who prefer to work for companies that prioritize CSR. As a result, businesses can attract and retain top fresh talent that will boost employee morale and satisfaction.
  • CSR initiatives help companies manage risks by addressing potential issues before they escalate and ensure compliance with regulatory requirements to reduce the likelihood of crisis such as legal issues.
  • Companies that engage in CSR attract potential investors who increasingly consider social and environmental factors when making investment decisions. This gives companies a competitive advantage over their rivals in the industry.
  • CSR efforts often lead to innovation and increased efficiency, such as reducing waste and cutting energy costs. By building stronger relationships with local communities, companies gain community support and improve their relations.

 

The evolution of Corporate Social Responsibility

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Reasons for Corporate Social Responsibility

According to ecolytics.io, Corporate Social Responsibility began in the late 1800s when business leaders started improving working conditions and giving to communities and charity. The term CSR was coined in 1953 by Howard Bowen, who argued that businesses have a duty to benefit the society.

Over the decades, CSR expanded from simple acts of charity to addressing broader issues like environmental impact and human rights. In the 1990s, globalization made businesses consider their global impact.

Today, CSR is a key part of business, influencing consumer choices and employee preferences and focusing on goals like sustainability and equality. As transparency and environmental concerns grow, CSR will continue to be essential.

Main responsibilities of CSR

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  1. Environmental responsibility
  2. Stakeholder responsibility
  3. Ethical responsibility
  4. Philanthropic responsibility
  5. Financial responsibility

Key principles of Corporate Social Responsibility

There are 7 principles that govern the practice of Corporate Social Responsibility and ensures its success when business practices are done accordingly.

1. Sustainability: During all trials and tribulations plus the successful times an organization goes through, they must have a sustainable way to keep organizational practices going which also includes continuing with CSR. The Katamba.book under com says that “Some corporations use resources in their processes, especially the natural resources which can become depleted and make it difficult to sustain the operations.

In such cases, corporations are urged to use resources sparingly and engage in practices which are designed to renew the source base, such as the planting of trees and forests”. And further suggests that “Where possible, such businesses should prioritize their renewable resources. And some corporations have to spend more money on research and development to finding methods of conserving and developing alternative sources”.

2. Accountability: A business is always held accountable for the decisions and actions it does outside their company premises to ensure all they do is for the greater good of the environment. Therefore, all decisions must be responsible and considerate to those abiding in the areas. For example, in order to minimize pollution, they can do their charity drives using biodegradable materials such as packaging food items in non-plastics or come up with a cleaning campaign where they take a day off to work with community members in cleaning their environment.

3. Ethical and fair behaviour: The way in which companies operate must be fair to all stakeholders which includes employees, suppliers, investors, leaders and customers. In doing so, all their CSR initiatives can be done ethically because mutual understanding and goal alignment will be at the forefront of all things to be done.

4. Transparency: Every internal activity done by an organization must be clear for both internal and external stakeholders to make sure they know and understand the decisions of the company they choose to support and how they benefit them. This gives them the understanding of knowing why the Corporate Social Resposnibility activities are taking place and how they link to their overall business objectives. Reporting and publications can be used to show that information online so that every stakeholder concerned can find it publicly.

5. Respect for human rights (stakeholders): Any activity an organization engages in must be in sync with the International Bill of Human Rights which protects and advocates for equality and inclusion among all races, colour, gender, age among others. This includes developing and implementing clear human rights policies, conducting regular human rights impact assessments and engaging with stakeholders to understand and address their concerns.

Organizations should also ensure fair labour practices, respect workers’ rights, and eliminate forced and child labour from their supply chains. Promoting equality and non-discrimination through diverse and inclusive workplace policies is crucial, as is investing in community development initiatives that enhance education, healthcare and economic opportunities.

6. Respect for rules of law: Organizations must always abide by the laws and regulations of all operating businesses. They can do that by ensuring all activities comply with local, national and international laws, including those related to labour, the environment and anti-corruption. They should maintain transparency by providing clear and honest reports on their CSR efforts and outcomes.

7. Respect for international practices: This is an important element of being a responsible global citizen. Although a business can be one entity, it is run by humans, they make the decisions and they give a go-ahead for any activity. Their CSR efforts must be governed by those practices.

 

The role of stakeholders in CSR

Stakeholders in simple words, are the lifeblood of any organization. Including them in Corporate Social Responsibility activities should be the primary consideration when developing the strategy. These activities are in their best interest, so their concerns must be accurately addressed and they should be given the opportunity to make an impact.

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Stakeholders can be active economic participants, beneficiaries or those negatively affected, as well as observers. Identifying all these stakeholders can be a long and challenging process, but it is worth it to ensure they are all included in different decision-making processes.

Why they matter in CSR

  • Stakeholders often bring new ideas and solutions to the table. Their involvement can drive innovation and help the organization adopt more sustainable practices.
  • Engaging stakeholders in CSR activities builds trust and enhances the organization’s reputation. When stakeholders see that their concerns are being addressed, they are more likely to support the organization.
  • Including stakeholders in the decision-making process leads to better outcomes. Their diverse perspectives and insights help in crafting more effective and sustainable CSR strategies.
  • When stakeholders are involved, the organization becomes more transparent and accountable. This involvement can lead to more ethical practices and reduce the risk of misconduct.

Measuring and reporting CSR performance

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Measuring and reporting Corporate Social Responsibility performance involves using various metrics and key performance indicators to evaluate a company’s impact on society and the environment. Effective CSR measurement requires a strategic approach that integrates clear and relevant KPIs into each CSR initiative.

For example, companies might measure their greenhouse gas emissions, track employee engagement through regular surveys or assess the social impact of their philanthropic efforts by the number of beneficiaries or the outcomes of funded programs. It is important to ensure that these metrics are meaningful and aligned with the company’s CSR goals to avoid misleading results.

Reporting CSR performance involves compiling these metrics into comprehensive reports, often referred to as sustainability or CSR reports. These reports must always be transparent and include both successes and areas needing improvement to build trust with stakeholders. Companies can use various frameworks like the Global Reporting Initiative (GRI) or software solutions such as IBM Envizi to streamline data collection and ensure consistency and reliability in their reporting processes.

Transparency not only helps in demonstrating accountability but also in engaging stakeholders effectively to show a genuine commitment to social and environmental goals. Regular and detailed reporting, possibly supported by automated systems, helps organizations manage their CSR strategies more efficiently and enhances their credibility in the eyes of their stakeholders.​

Here are 5 ways to measure CSR efforts within an organization:

1. Measuring the social impact to find out how many people were reached during the activities, how many were helped, how many missed out to find data on how much or far they must go on their next initiative.

2. Engaging with stakeholders to find out how the CSR activities were received, what they thought about them and what can be done to improve their efficiency for upcoming projects, this includes both internal and external stakeholders.

3. Analysing how compliant the organization was in terms of the ethical standards and code of conduct to ensure no corruption took place and every communication was transparent.

4. Measuring the carbon footprint generated by the organization during the CSR initiative helps identify which factors adds more greenhouse gas emissions and helps find innovative ways to reduce them. For example, a company may decide to use one bus to travel to the venue where the activity is taking place rather than using 24 private cars which emits more gas into the atmosphere.

6. Checking the financial performance to see how much money was used during the activities, the percentage of sales growth after the CSR activities and the cost savings.

 

 

Challenges and criticisms of CSR

In all situations, there will always be challenges and criticism, this is the same for Corporate Social Responsibility too. Here are challenges and criticisms of CSR below:

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1. Support of all company departments: In some organizations, it may be difficult to try make sense to all existing departments. It may take some time and demonstration or the breaking down of a strategy to get everyone on board because all of them have different priorities and a set of rules they follow for success. Usually, CSR is an initiative that comes from the PR department therefore, they must ensure their strategy and communication is flexible enough to make sense to others too so that there is full understanding and engagement.

2. UN SDG goals confusion: The United Nations has a whooping number of 17 goals to be reached by 2030, companies are often confused with aligning the correct goal to their CSR or organizational goal to see positive results. As a result, companies find it daunting to analyse all 17 of them to find the most aligning one in terms of contributing positively while not deviating from their initial mission. Being able to find correct goals to accomplish allows all employees to use their expertise to make a positive difference without complications and match the competency of the company.

3. Stakeholder expectations: Before a company engages in Corporate Social Responsibility, it needs to find out what their stakeholders need, why and how. It may not be in terms of the products or services they need but how they prefer to receive information, or the other way around really. First of all, communication that takes place before, during and after the activities must be transparent, timely and encourage a two-way communication whereby stakeholders are able to receive information and communicate back their opinions.

Secondly, when delivering the goods and services during charity drives, it is important to not make people feel like charity but instead family. Elements such as hugs, thought-provoking conversations and maybe games can be incorporated to build a sense of oneness.

4. Green sheen: Green sheen also called greenwashing has been experienced by so many stakeholders of different companies where they lie about their true intentions towards the health of the environment to sustain it. A company must ensure it avoids any misleading claims about its products, services and activities during their CSR projects to stay away from any legal and regulatory actions that may follow as consequences. Falling in this pit always results in bad company reputation and broken stakeholder trust which may take a long time to mend.

5. Resources: CSR activities require careful planning, implementation, measurement and evaluation. By resources we mean money, time, hands/effort, collaborations and tools. All these must be allocated correctly and efficiently to minimize waste and very poor results. An expert contribution article on LinkedIn says “CSR can be seen as an additional cost or burden that takes away resources from your core business activities. However, this is a short-sighted and unsustainable view that ignores the long-term benefits and opportunities of CSR.

To overcome this challenge, you need to integrate CSR into your business strategy and operations, rather than treating it as a separate or optional function. You also need to allocate adequate and realistic resources to your CSR projects and activities, and leverage external partnerships and collaborations to access additional expertise and support”.

6. Impact measurement: Measuring CSR impact is challenging because there are no standard metrics which makes it hard to compare and report progress accurately. Collecting and analysing data is time-consuming and costly, especially for companies with various initiatives. CSR metrics cover many areas which needs more than one approach and resources plus they must be adapted for different causes, which adds to the difficulty.

Future trends in Corporate Social Responsibility

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  • Digital inclusivity: Digital inclusivity ensures everyone can access the internet and the wealth of information it offers. As our world becomes more digital, it has become important that every individual has the opportunity to stay informed about local and global events. Access to this information can inspire ideas to fight issues and crisis such as global warming and support a sustainable future as a unity.

Also, digital tools can help companies save money. For example, conducting online research for their social responsibility efforts is more efficient and less expensive than traditional methods. This allows companies to save time and costs, which they can later use to enhance their sustainability initiatives.  

  • More CSR adoption: Not all companies or organizations engage in Corporate Social Responsibility, and that is a turn off for most top talents that would be interested to work for those companies. It would be a positive sign to see more and more organizations trying to work for a sustainable future in a noticeable way rather than just mentioning “sustainability” in their reports.
  • A good moral compass: Bad CSR or rather Public Relations practices are seen as infestation that slowly kills the integrity and credibility of a company. Therefore, they must start practicing ethical CSR to avoid negative publicity that could lead to being cancelled as an organization. This is especially focused on ESG reporting where companies are able to lie about their impact towards sustainability and not governed by transparency.
  • Virtual volunteerism: Virtual volunteerism enhances a company’s social responsibility efforts by offering flexible ways for employees to volunteer online, making it easier for more people to participate. It allows companies to support a wider range of global causes, using the diverse skills of their employees to make a bigger impact. This method saves money on travelling and all kinds of logistics and builds stronger connections between the company and various communities that helps in promoting cultural understanding and improves the company’s reputation. Participants are also able to build more professional networks with people of same interest.
  • Blockchain: Blockchain is emerging as a key trend in Corporate Social Responsibility due to its ability to enhance transparency and trust in business practices. By providing a secure ledger, blockchain allows companies to track and verify their supply chains, ensuring that products are ethically sourced and environmentally friendly. This technology also facilitates transparent reporting of CSR initiatives which allows stakeholders to verify claims of sustainability and social impact.

Looking for more expert insights on Corporate Social Responsibility and other business practices? Dive into our blog section to stay informed and inspired. Our blogs cover a wide range of topics designed to help you navigate the ever-evolving business landscape.

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