Want to Improve Your Bottom Line: Update Your Policy for Corporate Social Responsibility
The question is no longer whether your business has a corporate social responsibility (“CSR”) strategy, but what your business’s corporate social responsibility strategy entails. The new wave of CSR focuses on the impact the strategy has on the social goals, rather than simply the amount the company spent. Charitable giving is no longer enough to satisfy the discerning consumer or the scrutinizing potential new hire, CSR needs to be genuine and engaged. For example, an expensive demonstration of goodwill in the form of a sizeable donation to a specific charity will not make up for a product that is socially tone-deaf or wasteful. Similarly, a company promoting a CSR initiative centered around a current legal issue better have that issue well in hand within its own ranks.
The good news is that not only does CSR help its chosen societal cause, but also more and more experts agree that it helps a business’s bottom line as well. The tone may be set for a culture of morality and legality inside the business when CSR is taken seriously. Although the skeptics still assert that by its very definition, this form of charity cannot help the financials of a business, studies and surveys disagree.[i] Profit has shown to be generated by consumers who plainly state that they would buy a product from a company with a known CSR goal over one without. This trend will only increase as millennials’ buying power grows, since they are more concerned for CSR than other groups of consumers have been in the past.
The benefits do not stop with consumer preferences but extend to human resources as well. Millennials are the largest group of individuals in the workforce today, and they have a strong preference to work for a company that does good. Top talent is increasingly attracted to companies that offer clearly articulated CSR goals as part of their strategies. This is especially significant when the CSR strategy revolves around HR, such as a diversity or equality initiative, since the impression given by such a strategy is one of legal compliance and care. This also helps decrease attrition which is costly both in the hiring process and the training process.
Companies are also finding that if the CSR strategy revolves around environmental issues, they are seeing a decrease in costs associated with staying in compliance with environmental regulations. It follows logically that when your company emphasizes a low environmental impact, the practices follow suit, and costs for environmental regulation violations decrease as the employees align themselves with the corporate mission. Fines and costs of legal representation decrease by improving compliance. With an increased awareness of environmental laws comes the desire by employees to “do more than the law requires.”
In fact, in a paper by Karin Buhmann called Corporate social responsibility: what role for law? Some aspects of law and CSR,[ii] the researchers examined the idea of “doing more than the law requires.” They found that CSR functions as an “informal law” helping to dictate what is acceptable within a business and facilitate self-regulation to comply with the informal law. This offers an excellent opportunity for businesses to bolster a portion of their legal compliance programs by emphasizing a specific initiative. It also sends an outward signal to consumers or government agencies that may have questions, reassuring them that the company is aware of the law and working to become more compliant.
There is a direct translation to small and medium sized businesses. CSR is not just for mega conglomerate corporate entities anymore. So how do you start a CSR initiative in your business? Think about what you value, what your customers value, and what your employees value. There are so many types of CSR initiatives to choose from, whether it be sponsorship of research for a medical condition, community improvement, diversity enhancement, environmental sustainability, human rights movements, educational advancement, or another cause that fits with your business. The choice does matter, however, as the more closely the CSR strategy aligns with the day to day operations of the business, the higher the chances are for its success. Be genuine, be enthusiastic, and be self-aware, and CSR can help improve the bottom line of your business.
[i] See: http://graphics.eiu.com/upload/sustainability_allsponsors.pdf