What Is CSR?
CSR is an acronym for the increasingly important and popular business practice of Corporate Social Responsibility. CSR can be practised by organisations of all sizes, and is concerned with promoting a more ethical approach to business, in which the organisation in question takes a rigorous approach to philanthropy, the environment, social issues and charitable giving.
CSR is a form of self-regulation amongst businesses. While it does not typically involve mandatory reporting, this is starting to change, with countries such as India taking the lead on applying a more stringent, demonstrable approach. In the years to come, we can reasonably expect to see CSR follow the same path as ESG when it comes to reporting responsibilities.
When undertaken with the correct intent and resourcing, CSR can make a massive impact, to employees, businesses and those touched by the positive outcomes of all associated initiatives.
Why is CSR Important?
CSR is increasingly considered to be an essential component of successful modern business practice. We only need to look at the rise of voluntary CSR reporting to see the value that an ever-expanding number of businesses place upon this important aspect of their corporate strategy.
To give some idea of CSR’s growth in the last decade, a report by the Governance & Accountability Institute found that 86% of S&P 500 Index Companies published sustainability or CSR reports in 2018. In 2011, fewer than 20% of this list did.
What’s driving the focus on CSR? Businesses are increasingly recognising the benefits of getting onboard, with a solid strategy and long term goals. This is driven by several factors, one of which being popular consumer opinion. A study by Cone Communications found that 63% of Americans are “hopeful that businesses will take the lead to drive social and environmental change.” Meanwhile, 76% will refuse to purchase a company’s products or services if they learn that the brand in question supported an issue that was out of alignment with their personal values.
CSR’s importance goes beyond consumer approval however. A solid CSR score is also becoming a core indicator for improved investment opportunity, with many funds and individuals alike seeing companies with a progressive attitude towards CSR as being “low risk” in terms of poor PR, and statistically more likely to turn a dependable profit.
A recent study showed that CSR can be shown to create significant value, benefitting the bottom line and, in particular, increasing innovation. In short, CSR is good for business – and investors know it.
Beyond the bottom line, CSR is also important when it comes to improved employee engagement and retention. A study conducted by the Lewis Institute for Social Innovation at Babson College demonstrated that businesses with a commitment to CSR saw turnover reductions of up to 50%, while productivity leaped by 13%.
What Is The C In CSR?
The C in CSR stands for corporate. Although this may conjure up images of enterprise level business, CSR can be adopted and put into practice by businesses of all sizes, across all sectors.
It’s important to remember that “business” itself has an important place within CSR – we refer to corporate social responsibility specifically, and with good reason. The most impactful CSR strategies are those which are closely aligned with the brands they are tied to. By creating policies and initiatives that complement and support pre existing brand values and ongoing ambitions, a strong, successful and above all, sustainable, strategy can be implemented.
As previously mentioned, brands should also be mindful of the growing expectation of the public for businesses to give back and do good. Business today is about a triple bottom line – profit, people and planet – and CSR has a huge role to play in ensuring success here.
What Is The S In CSR?
The S in CSR stands for social. When thinking about CSR it's impossible to overlook the social aspect of the practice, which sees the ongoing ethical interplay between business and society that is increasingly expected. Within CSR, private business is seen as part of wider public society, with a role to play and responsibilities to fulfil. This is a step back from a more traditionally capitalist approach, and for many businesses with more ingrained and insular practices, can feel like an important barrier to dismantle.
Ways of bringing private businesses into more natural, collaborative alignment with the communities that they operate within might include volunteering initiatives, sponsorships, grant programs, product donation and fundraising campaigns.
What Is The R In CSR?
The R in CSR stands for responsibility. The intention of this carefully selected word should be carefully considered. Businesses who take part in CSR should view their activity as a necessary contribution to the greater good – not a box ticking exercise or “add on” to established practice. CSR should be an ongoing commitment that is well-supported and strategically implemented.
If CSR is not embraced in a truly authentic way and treated as a genuine ethical responsibility, brands can quickly run into problems. Many of the associated benefits of CSR hinge upon a sense of true authenticity, and if the public or investors are given reason to doubt this, it can be hard to win back again.
Some classic examples of CSR backfiring on businesses include the fall out of Volkswagen’s emissions scandal (as they claimed to be manufacturing environmentally friendly vehicles) or Pepsi’s tone deaf response to the emergent Black Lives Matter campaign (which claimed to call for peace and unity, but which received instant backlash for trivialising the social justice movement.)
In order to sidestep these issues, careful planning (involving a diverse range of stakeholders) and clear internal and external communication should be put in place.
What Are Some Good Examples Of CSR?
Good examples of CSR include:
- CSR Example 1: Timberland for employee volunteering
- CSR Example 2: Dr Bronner for ethical supply chain
- CSR Example 3: FIGS for product donation model
- CSR Example 4: Rapanui Clothing for circular economy product design
- CSR Example 5: Shopify for social justice movement support
What Is The Cost Benefit Of CSR?
CSR has proven cost benefits. A recent report found that proper CSR implementation could have remarkable results, enhancing sales by as much as 20%, productivity by 13%, and cutting employee turnover in half.
While most CSR strategies will initially incur some cost to the company associated with them, in terms of their delivery, it should be noted that there are many ways in which this can be seen as an investment, which will (with due consideration) see a healthy return.
Core ways that an impactful CSR strategy can “earn its keep” in terms of (at the very least) neutralising outgoings required to sustain the associated initiatives include:
Better staff retention
CSR has a hugely positive impact upon employee engagement, and by extension, employee satisfaction. At a time when recruitment and retention is such a problematic and competitive space, this can quickly add up to a big financial win, as the costs of recruiting and onboarding are preserved, and internal morale and productivity receives a healthy boost.
CSR can also have a great effect on a business’s employer branding. The public perception of a brand and what it might be like to work for plays a huge role in attracting top quality candidates for advertised roles, and helps to ensure a critical point of distinction between competitors. As younger generations have been shown to value a company’s ethics over remuneration, this is a definite advantage over competing on salary alone.
Businesses that are perceived to have a strong and authentic CSR strategy win more customers and see more sales. When the Zeno Group conducted a survey of 8,000 global consumers, they discovered that consumers respond extremely positively to companies which are purpose driven. The study found consumers “four times more likely to purchase from a company” that possesses a strong purpose, and “four and a half times more likely to champion the company and recommend it to friends and family.”
The uplift on sales that are tied to a donation on the part of the company is just one example of this. Whether this donation is financial or product based (i.e. the “buy one, give one” model popularised by brands like TOMS) a great reputation for CSR will always help to boost revenue. Again, we see a trend for this increasing with younger shoppers – instead of donating money directly to causes they care about, shoppers below the age of 40 say that they prefer to give back via their choice of purchase with specific brands.
Improved investment profile
As previously mentioned, companies with solid CSR strategies in place are statistically more likely to attract high quality in investment. For all of the reasons listed above – better staffing success, improved employer branding, boosted sales – and a proven likelihood to be a more innovative and effective company, brands that embrace CSR are rewarded with support.
What Is CSR Reporting?
While CSR is a predominantly self-regulatory, voluntary undertaking by businesses, the need to be able to prove authenticity and demonstrate results has led to widespread CSR reporting. By defining success metrics and measuring progress overtime, many businesses are able to demonstrate clear and tangible impact.
In recent years, one of the key trends apparent within the evolution of CSR reporting has been a transition away from a more financial focus (geared towards shareholders) and a more broad spectrum approach, designed for both internal and external communications.
While many aspects of ESG (Environment, Social, Governance) reporting are increasingly mandatory, CSR remains voluntary, and as a result has rapidly become commercialised as many businesses offer frameworks for assessment, in the absence of any clear standard.
However your organisation chooses to document and report upon its CSR strategy’s implementation, the core components of diligent auditing and consistent measurement should be central. Read more about how to measure your CSR performance through clear reporting here.
How To Get Started With CSR?
The best way to start creating a CSR plan is to approach the challenge methodically. We suggest the following five steps as your organisation seeks to lay the foundation for a successful CSR strategy that will
1. Audit your current CSR activity.
2. Benchmark by comparing your present impact and activity to your close competitors.
3. Design a strategy that factors in long and short term goals, as well as realistic appraisal of resources.
4. Set KPIs that you will measure your progress and success by.
5. Cycle reporting and reviewing, improving your performance over time.
The Digital Transformation of CSR
CSR has come a long way in recent years – and so has the technology in place to support success within the field. The digital transformation for CSR has led to vastly improved reporting and strategies that can be implemented with greater efficiency and impact, thanks to higher levels of engagement from employees and improved external communications.
KindLink offers the ideal platform to help businesses of all sizes succeed when it comes to CSR. Our custom-built CSR reporting platform integrates seamlessly to provide:
Better internal and external communication (via collaboration platform and social media integrations)
Easy and consistent reporting capacity (no more shared spreadsheets and siloed data)
Increased impact thanks to efficient identification of opportunities (i.e. through KindLink marketplace which connects businesses to causes looking for support and volunteers)
Improved customer engagement and marketing outcomes, thanks to KindLink’s ability to gather and communicate impact stories, show the relatable, human side of positive CSR outcomes.
Ready for CSR Success?
When implementing productive CSR within your business, success lies in combining clear strategy and effective reporting with exemplary internal and external communication.
By combining these factors with a supportive digital platform, helping to keep all of these critically important aspects working together, businesses can set themselves up for ongoing and scalable CSR success.
Transform your CSR reporting: book a demo with KindLink today.