In a groundbreaking turn of events, 181 CEOs from top US companies (including J.P Morgan, Boeing, Apple, and Amazon) have redefined the purpose of a corporation. The focus will now be placed firmly on valuing customers, hiring diverse groups and protecting the environment, rather than merely maximizing profits for stakeholders. These high profile companies have highlighted the importance of adopting socially and environmentally conscious business practices, not just for today, but for the long haul.
American businessman and multi-billionaire Howard Schultz provides further insight into the important role of social responsibility for business in 2020 and beyond stating:
Companies should not have a singular view of profitability. There needs to be a balance between commerce and social responsibility… The companies that are authentic about it will wind up as the companies that make more money.
Howard Schultz
Successful business practices should work to incorporate both profits and social responsibility. How is your business giving back? Is your business adhering to its corporate social responsibility? These are questions both consumers and employees will be asking when considering a partnership with your business.
For many business owners, this can seem quite overwhelming. But when equipped with the right knowledge, social responsibility is accessible and affordable to organizations of all shapes and sizes and even brings with it many business benefits. Corporate social responsibility (or CSR for short) should not be one size fits all. It can be flexible depending on available time and resources. This is great news for business owners as it ensures full autonomy over CSR strategies.
The importance of including CSR within your business strategy is increasing each year. The reputation of an organization can be made or tarnished based on its commitment (or lack of) to social responsibility. Can your business afford to disregard social responsibility in 2020 and beyond?
What Is Corporate Social Responsibility?
Corporate social responsibility can be open to interpretation as it comes in many forms. A good start, however, is with the following description by Investopedia:
…a self-regulating business model that helps a company be socially accountable — to itself, its stakeholders, and the public.
When engaging in CSR a company adopts business practices to intentionally improve the environment and contribute to society instead of a single focus to drive profits. CSR practices should not be utilized sporadically but incorporated within the everyday functionality of a business. Potential negative ramifications on society should be taken into consideration within all business processes, extending to external supply chains. Corporate social responsibility activities can be on both a national or global level. Specific concerns can include:
- Environmentalism
- Economic barriers
- Female empowerment
- Improving the local community
A great example of corporate social responsibility in action is Coca-Cola’s approach to the 5 by 20 initiative. The initiative works to empower women globally, committing to the economic empowerment of five million female entrepreneurs across their value chain by 2020. This includes empowering small businesses from fruit farmers to recyclers in the Coca-Cola supply chain.
By implementing the 5 by 20 initiative, Coca-Cola has considered how their business directly impacts the wider community, including those within its supply chain. While Coca-Cola has vast resources at its disposal, these kinds of initiatives are scalable. Businesses should not try to do everything at once; instead, start small and create a positive impact where able. Can you identify a need for a community project on a more localized level?
CSR is not about large scale grand gestures. The focus of CSR should be centered upon incorporating relevant causes and social impact activities into the fabric of your business. Your company’s chosen approach to social impact should not deviate from established core business values. These two elements go hand in hand. The inclusion of CSR also represents how you approach customers, stakeholders, and employees.
The nuance behind CSR continues to evolve, resulting in a new focus on business “values.” Remember, the approach your business takes to social impact is a direct statement about the overall values that drive your company. Employees, consumers, and investors form their perception of your business based on how you conduct business. Business values should now include empathy, environmental preservation, and inclusion to successfully project a positive image longterm.
Why Is CSR Important?
Social responsibility is ingrained in the corporate sector, and this trend is set to continue into 2020 and beyond. A robust approach to CSR can bolster a company’s image to investors and improve relationships with customers and their communities. As a result of improved brand reputation, company profits have been shown to increase by up to 20%, while the market risk is reduced by 4% on average.
Employee morale and workplace productivity can also experience a notable increase when a clear commitment to social well-being and environmental practices are demonstrated. Research suggests employer engagement can increase by 7.5%, productivity by 13%, while employee turnover is reduced by half. Findings also highlight that 5% of employees are willing to accept a lower salary when working for socially responsible companies.
As consumer and employee expectations regarding business practices continue to expand, CSR efforts are increasingly monitored by potential stakeholders. Environmental, social, and governance (ESG) aspects are no longer niche areas for investment. A recent study highlighted more than 80% of mainstream investors now consider ESG data when making investment decisions. To evidence this shift further, $22.89 trillion of assets are now linked to responsible investment strategies globally. If your business places minimal value on its’ social impact, investors will find minimum value in your business. And this is not just for big corporations. Local and family-run businesses are the ones who need to keep their eye on this trend so they can compete in their industry. Staying accountable has become a competitive business strategy.
A comprehensive approach to social responsibility can benefit your business (big or small) on many levels, from retaining top talent to standing out from the competition and negating the potential market risk. The art of business can no longer be about maximizing profits at the expense of the environment, employees, or the consumer. Companies are required to deliver on their corporate social responsibility, not simply for profits, but because it is the only way to ensure sustainability for your business.
To learn more about how Useful Views’ competitive philanthropy strategy could help improve your business, please connect with us.