You need to know what corporate social responsibility is and understand how to leverage it in order for it to work for you.
Like every other entity across the earth, your company has an impact on the society around it. Whether that impact is positive or negative rests on how well the concept of corporate social responsibility is understood by stakeholders and embedded in your corporate culture.
What is Corporate Social Responsibility?
Corporate social responsibility (CSR) represents the idea that every company bears a responsibility to the societies that exist wherever it operates or has partners. It stems from the idea that no company can be properly valued without proper recognition of the physical and human context within which it operates.
Consider it a form of self-regulation that is expressed in terms of strategies and initiatives that are aligned with the organization’s goals.
“Socially responsible” means different things to different companies. The closest to a unified principle that exists is how companies allow their efforts to be guided by what is known as the triple bottom line, which stipulates that a business should be focused on measuring its environmental and social impact in tandem with its profits.
The Different Types of Corporate Social Responsibilities
Corporate social responsibilities have traditionally been categorized into four different types: philanthropic, environmental, ethical, and economic.
1. Philanthropic responsibility
CSR activities in the philanthropic mold are those that are specifically designed to make the world a better place. Without losing sight of ethical and environmental constraints, a company driven by a philanthropic mindset will designate a portion of its earnings for philanthropic uses.
Volunteer work, donations to charities, and nonprofits that share the company’s ideals, as well as donations to causes the company considers worthy, are a few examples of philanthropic practices that companies resort to. Some companies even take things further by creating their own charitable vehicles to guide their philanthropic efforts.
Philanthropic responsibility is not geared toward profits and may not directly impact the performance of the business.
2. Environmental responsibility
Environmental responsibility subscribes to the idea that businesses ought to operate in a manner that is as considerate of the environment as possible. Sometimes referred to as environmental stewardship, environmental responsibility is quickly becoming the most common form of CSR companies practice today.
There are several ways companies show their commitment to environmental responsibility:
- Reduction of pollution, where companies seek to limit the amount of greenhouse gases they emit during operations, the amount of single-use plastics they employ, the levels of water they consume, and the general waste they leave behind;
- Increasingly opting for renewable energy sources, where companies turn to sustainable resources and recycled or partially recycled materials when sourcing raw materials;
- Counteracting the negative impact made on the environment by human activity, for example by planting trees to absorb greenhouse gases, donating to environmental causes, or funding research dedicated to helping the environment.
Environmental corporate social responsibility initiatives may impact the company’s profitability because they generally improve operational effectiveness and efficiency.
3. Ethical responsibility
Ethical responsibility is making sure the organization behaves in a fair and ethical manner to the people across its value chain.
When a company subscribes to ethical responsibility as its form of CSR, it strives to achieve fair treatment of all stakeholders of the business, including customers, suppliers, employees, partners, investors, and leadership.
Ethical responsibility can be expressed in different ways like:
- Establishing a minimum wage of its own that is higher than the wages established by regulators because they feel the latter doesn’t constitute a livable income;
- Mandating that sourcing for products, ingredients, components, and materials are done according to free trade standards, free from forced labor or child labor;
- Ensuring they pay a fair price to suppliers along the supply chain to ensure that they thrive rather than just survive;
- Taking care to provide reasonable working conditions for employees up and down the supply chain of the business.
Ethical responsibility initiatives tend to have a bearing on a company’s revenue because they impact factors like working conditions, healthcare, talent retention, productivity, and brand reputation.
4. Economic responsibility
Economic responsibility is when a company considers all the above forms of corporate social responsibility whenever it makes a financial decision at any level, from the boardroom down to the factory floor. Companies that are economically responsible are not simply looking for maximum profits but are rather concerned with how they can merge profit-making with positive impact on the environment, stakeholders, and society at large.
How to Make Corporate Social Responsibility Part of a Sustainable Culture
Any effort geared towards incorporating CSR into sustainable corporate culture must begin with an inventory and audit of existing programs. Contrary to expectations, the majority of CSR initiatives are spearheaded by internal managers, without the active engagement of the C-suite, leading to poor coordination and a lack of an overarching logic to drive efforts.
Only after inventory does the necessary next step make sense, which would involve the development of coherent CSR strategies that would require full backing from the CEO and the board. These strategies include:
1. Trimming and organizing initiatives within categories
Non-coordination of CSR initiatives within categories is less obvious than non-coordination across categories, but no less disastrous. Companies can combat this by eliminating initiatives that do not address important environmental or social issues that are aligned with the company’s purpose, values, or identity.
For example, a fast-food chain may do away with programs that cater to recycling in favor of choosing to use sustainably grown ingredients.
2. Establishing metrics to gauge effectiveness and success
For each category of CSR initiative, outline metrics that will indicate success. Metrics will not necessarily be the same across categories that differ. Stakeholders should be well-drilled in why these metrics matter, and their impact should be measured regularly to gauge progress.
3. Coordinating CSR initiatives across categories
This goes beyond tying all CSR activities into serving the same social or environmental issue. Rather, it demands that your company develops a coherent portfolio of CSR practices that are mutually reinforcing and consistent with the values of the business.
4. Developing an interdisciplinary CSR strategy
To consolidate your CSR programs, the company should establish a position dedicated to integrating initiatives across all categories, convening key actors for planning, and maintaining communication to ensure coherence and coordination among separate disciplines.
Committing to CSR as outlined above requires creativity and buy-in across the entire organization, but the resulting benefits go beyond profits and can be enjoyed in both the long and short term.
5. Leveraging technology solutions for better and more predictable outcomes
Corporate social responsibility technology solutions have a lot to offer companies that are committed to socially responsible practices. Global supply chains are complex, and it’s difficult to keep track of all the moving parts.
Logility’s corporate responsibility solution can offer much-needed transparency, sustainability, and resilience to a company’s CSR efforts by fostering a strong collaborative supply network that enhances corporate reputation with consistent social and environmental data. This data could then inform ethical sourcing decisions and facilitate transparent reporting and better risk management across the supply network.
- Increased visibility into social compliance data for all suppliers that are part of a company’s supply network;
- Carrying out, monitoring, reviewing, and submitting corrective action plans where aspects of social compliance are concerned;
- Increased insight into each supplier’s level of compliance to environmentally and socially responsible practices;
- Assessments of total emissions from each supplier and root cause analysis to determine a corrective action plan.
Logility empowers companies to commit to CSR by increasing the visibility of the supply chain, and in the process, making it easier for them to seize new opportunities and more effectively manage complex global interests. To learn more, contact Logility today.