CSR: Doing The Right Thing
Corporate Social Responsibility (CSR) has many definitions, but can be summarised as “an organisation’s sense of responsibility towards the community and environment (both ecological and social) in which it operates”. What that looks like is very much a subjective perspective, and in this months’ article we will provide some background to the evolution of CSR and the rationale for the board to take a leadership role in its implementation as part of an organisations business model.
Triple bottom line to CSR
The concept of the “triple bottom line” has been around for many years, but it is in recent times that it has grown to take its rightful place in strategic business management. The tripe bottom line refers to three perspectives or responsibilities that should drive an organisation and form the basis of CSR.
Economic responsibility: that is, without a sustainable economic framework, organisations, whether non-profit or for-profit, will not be in a position to invest in any other perspectives. However, the model does not support profit at any cost.
Social responsibility: organisations have responsibilities to the individuals it employs and the communities in which it operates – this includes human rights, employee rights, behavioural expectations, adherence to the laws of the land and not to abuse its power. Whilst an organisation is an inanimate structure, its representatives must behave as good corporate citizens. Its status as an organisation does not dissolve its responsibility to the community in which it operates.
Environment responsibility: economic prosperity should not come at the cost of the degradation of our natural environment. This means an organisation should be firstly aware of the environment in which it operates and the natural resources it is impacting on through its daily activities. From simple activities such as recycling and waste management through to the protection of our natural environment and controlling and minimising greenhouse gases, organisations are able to have a direct impact of the natural environment that contribute to its business model.
What does CSR look like?
CSR evolved from both a compliance and performance perspective - that is, compliance in that regulators reacted to bad behaviour and forced organisations to be better corporate citizens or face the consequences of financial penalties; and performance in that enlightened organisations recognised that by being good corporate citizens and implementing a CSR policy, good things happened in a number of ways (more on this later). Here are a few examples of CSR initiatives to provide some context:
- Implementing policies to protect the natural environment in all business activities
- Adopting policies to ensure workers’ rights are protected and that employees are not taken advantage of due to their culture, education standard, religion or beliefs
- Business gives back to the community in which its operates, whether it be financially through sponsorships or other means, through to implementing a volunteer program whereby staff volunteer their time and capabilities to a community activity during normal working hours.
The range of initiatives and activities is only limited by imagination and commitment, not by the type or quantity of opportunities available in the community.
Benefits of a CSR strategy
Whilst implementing a CSR strategy will take leadership, resources and commitment, starting with the board and cascading throughout the organisation, the benefits are generally acknowledged to be tangible and sustainable and include:
- Enhancement of the organisation’s reputational and brand image – it is recognised and valued as a good thing to do
- Employee attraction, loyalty and retention – people like to be associated with good corporate citizens
- Customer loyalty – customers like doing business with organisations that focus on more than just generating profit
- Innovation – CSR contributes to an organisation’s ability to be more creative and innovative, which in turn flows on to product/service development, revenue growth and business sustainability
- All of which leads to improved profitability and a less risky business model
The development, resourcing, implementation and management of a successful CSR strategy starts with the board of directors. Without board leadership and commitment, it is highly unlikely that CSR will become part of an organisation’s DNA and thereby generate the resultant positive benefits.The board has to believe it is the right thing to do, then make it happen through policy and leadership.
There is more, much more…
This article has only skimmed the surface on CSR. Much has been written on the development, implementation and benefits of adopting a CSR strategy in organisations of all sizes and types. A simple search of the www will provide detailed information, “how to” guides and working examples of CSR and how a commitment to this approach will derive sustainable and substantial benefits to both organisations and communities alike.
Business school professor Michael Porter presents his case for letting business try to solve massive problems like climate change and access to water in this TED Talks master class on CSR.
From a governance perspective, it’s not a case of ‘should our organisation develop and implement a CSR strategy’, but when and how should we do this – because it is the right thing to do.
For further information, go to www.governancetoday.com