Accelerated technological advancements, increased social-media exposure, public protests, global economic changes, the emergence of the Y and Z generations in the workforce, and new consumer communities are all reshaping the way we do business.
In this ever-changing environment, companies are expected to be transparent, ethical and responsible towards their stakeholders. To this end, they have to have clear answers to these questions:
- Do we ensure a safe, healthy, supporting, and developing environment for our employees?
- Does our organizational culture cater to diversity, inclusion, and belonging?
- Do we treat vendors and customers fairly and transparently?
- Do we work for and have an impact on our community?
- Does our code of ethics property guide us through our business engagements and decision making?
- Are we committed to improving the quality of the environment and achieving energy efficiencies?
- Do our public relations truly reflect our social involvement?
The answers to these and other questions are at the basis of a company’s social responsibility strategy.
So, what is Corporate Social Responsibility (CSR)?
No, it’s not only contributing to society.
CSR is a business-management approach in the modern era that embeds social, environmental, social and governance (ESG) values into a company’s responsibility to its stakeholders. These stakeholders include employees, customers, vendors, the local community, and the wider public, all of whom are directly and indirectly affected by what a company does.
CSR is a developing evolutionary process
In the past, companies built their social reputation primarily on the basis of donations and philanthropic activities. Corporate governance then evolved into ethical management and environmental damages reduction, and in recent years embraced the creation of a ‘common value’ that fuses business, societal and environmental principles.
Today, as a further step in the evolution, the vision is more holistic and proposes a 360-degree internal-external approach. This approach is manifested by the overall CSR strategy, vision, materiality map, objectives, and business leadership of an organization.
What’s the value of taking a stand?
- From the employees’ perspective, companies that embrace CSR foster an organizational culture that has a positive impact on motivation and satisfaction reinforces the sense of belonging and pride in the workplace.
These characteristics create true ‘ambassadors’ that recommend a company as an attractive and fair place to work in.
- From the point of view of organizational innovation, employees who are involved in social business activities and in the community improve the organization’s ability to create new ideas, develop skills, identify opportunities, expose social injustice, and promote projects and solutions that adapt to their environment.
This also helps them learn managerial skills like project management, communications, how to set objectives, and how to assess employee performance.
- In terms of marketing differentiation, companies that adopt a true CSR strategy for the long term success in maintaining the reputation of their brand among the wider public in social media. It has been proven that CSR content distributed by the company and its brand ambassadors increases the rate of awareness and engagement. A good CSR strategy also attracts new audiences and markets, as the products and services are exposed to a diverse population that is not necessarily the ‘normal’ target audience.
- A CSR strategy is also directly related to short and long-term, effective and accurate risk management. For example, clear and measurable environmental and safety objectives are translated into a reduction in negative financial, individual and image effects, as well as in a decrease in energy costs, work accidents, penalties and fines from regulatory bodies, and in the prevention of public protest that directly affect the company’s image and profitability.
Financial growth – recent publications by Kantar Consulting and Just Capital point to a correlation between high-performance companies and companies that provide a fair, healthy, and safe work environment. They also found that companies with a social purpose grow twice as much as other companies, especially due to their exposure among the Y and Z generations.
- In terms of investors and global analysts, the most influential investment company today has changed course. Larry Fink, BlackRock’s CEO, published at the beginning of 2020 a letter to the company’s customers around the world where he spoke about transparency and accountable capitalism. “Companies must be deliberate and committed to embracing purpose and serving all stakeholders – your shareholders, customers, employees, and the communities where you operate,” he wrote.
The company then announced that it was withdrawing its investments from portfolios companies that harm the environment and violate human rights. At the same time, they are expanding sustainable investments in the areas of environmental quality, society, and government.
Pitango also announced that Cecile Blilious was Head of Impact and Sustainability. Blilious is the founder of Impact First Investments (Impact1st), an entity that makes impact investments in technology companies. The fund indicated that Blilious will lead to the implementation of ESG methodologies in its portfolio companies.
At the same time, international rating firms Sustainalybics and MSCI are offering company rating services to investors according to their social and environmental performance.
- CSR at the core of a business contributes to improving organizational culture and enhancing value for customers. An effective and authentic connection between the employees and the company’s values improves the organizational culture and its communications with its customers and supply chain. According to a study conducted by Edelman in 2019, this connection contributes to an increased sense of trust in issues like confidentiality, ethical use of data, and technology.
How is all this done?
In one sentence: companies must put on their ‘CSR lenses’ and use them in their decision-making processes, vision, mission, objectives, and organizational culture.
In a few more words: They must add to the mix authenticity, relevance, prioritization, and performance-communication differentiation.
Where do you start?
Stay tuned for the next installment of this post…