CORPORATE SOCIAL RESPONSIBILITY

CORPORATE SOCIAL RESPONSIBILITY

By making decisions that take into account potential social and environmental issues, companies can increase their popularity and revenue while decreasing hostility from regulators and local communities

The idea

Although the benefi ts of corporate social responsibility (CSR) have long been known by community-minded companies, recent years have seen a dramatic increase in businesses focusing on their social responsibility, with everyone from organic food companies to clothes retailers realizing the advantages of being welcomed and accepted in the communities they serve.

Organizations such as the Co-operative Group and cosmetics retailer The Body Shop have built their businesses on a foundation of CSR. Consequently, they have gained a strong reputation of “ethical” business practices that differentiates their brand. Other companies such as oil fi rms and tobacco companies that have traditionally been associated with issues such as pollution or ill health have engaged in overt ethical initiatives. However, unless these initiatives are sincerely refl ected throughout the organization, they can be no more than a publicity stunt to divert attention from unpopular activities.

CSR can provide companies with a “license to operate.” By acting as good corporate citizens they can avoid interference from governments and ensure they remain welcome. It has become an essential element of risk management strategy—a well-respected brand cultivated over decades can be destroyed rapidly by a CSR scandal.

In addition to persuading society of your ethical credentials, CSR can build your reputation for integrity and best practice. It is also a powerful tool to ensure employees have a strong personal commitment to your organization, as well as providing a competitive edge when recruiting new workers in a competitive job market. In this way, you can attract the best workers to maintain your corporate ethics in the future. However, CSR is not a quick fi x: fi rms should not do it for narrow commercial gain, they should do it because they believe in it, and in the end we all benefi t.

In practice

• Make the most of your CSR initiatives by surrounding them with publicity—emphasize your credentials and the depth of your approach.

• If you are unable to make large and grand gestures in the name of CSR, remember that even small initiatives can still be surprisingly valuable. 

• Conduct market research to understand the ethical issues that are most significant. 

• Carry out general research of your industry and location—remain in touch with the concerns of governments, local citizens, and the current social climate. 

• Subject your business to a thorough, in-depth analysis. It may be possible that you are causing harm to society without intending to do so (or even realizing that you are). 

• Be aware of cultural differences. What some societies consider to be an ethical practice, other cultures may find questionable. 

• Above all, practice what you preach. If your organization talks about being socially responsible, it is essential to follow through.