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LeadershipCulture

The importance of corporate social responsibility to society

By 

 — April 27th, 2021

The importance of corporate social responsibility to society

We live in a world where social responsibility is a critical factor in how employees choose where to work and where consumers decide to spend their money. Understanding the impact they have on the world around them has never been more important for large corporates.

But more than that, in order to stand out in a positive light, they need to implement and commit to a program of social responsibility activities.

The nature of CSR has evolved, it is now more than simply giving to charity; it has become an integral part of how organizations run their business and focus on consumers' perceptions of company governance, the company's positive influence on society, and how it treats its employees.

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Each year Boston-based Reputation Institute releases its list of the world's most responsible companies. The findings are based on 170,000 ratings from interviews with the public in 15 of the world's largest economies. In 2017, Danish firm Lego was named the world's most responsible company.

The public believes the company behaves ethically, conducts business fairly, operates transparently, protects the environment, and supports worthy causes.

In particular, the company was highlighted for its top-down approach to CSR activities: a key factor in ensuring that CSR is taken seriously throughout an organization. Microsoft and Google rounded off the top three.

It's clear why corporate social responsibility is important to organizations: it enhances public trust; it makes an organization a more attractive prospect for employees, particularly Millennials; it leads to more engaged employees, and let's not forget that engaging in CSR and becoming a responsible business can have a positive impact on an organization's bottom line.

But does Corporate Social Responsibility have a positive impact on society itself?

According to a research paper by Ross School of Business, it depends on the ownership type, specifically, whether a company is publicly or privately owned. Publicly listed companies have a responsibility to shareholders, which can lead to discontinuing CSR activities if the activities are at odds with shareholder expectations.

That being said, it's difficult to ignore so much of the positive work many multinational firms do for societies around the world.

An interesting blog post on Smart Recruiters highlights 20 of the top corporate social responsibility initiatives in 2017. The post outlines the Ben & Jerry's Foundation, which awards over $1.8 million each year to fund community action and societal change; the fact that Bosch devotes 50% of its research budget to developing technologies focused on supporting conservation and environmental protection; Starbucks' plan to hire 10,000 refugees across 75 countries in the next five years; and Levi Strauss' Water Less program, which significantly reduces water use in manufacturing, by up to 96 percent for some of its styles.

These are just a few examples of the positive impact these large corporations are having every day on society, whether it's by donating to needy causes, supporting environmental changes, or developing programs to help people from developing countries.

But CSR isn't just something practiced by large corporates and isn't always something that's publicized. Many firms work on their own corporate social responsibility plans by improving the lives of their employees through healthy initiatives or organizing fundraising events to benefit local charities. Though smaller in scale, these CSR programs are no less impactful and can have a hugely positive effect on staff and local communities.

It's clear that a truly effective CSR strategy cannot be just a tick the box activity. It's a case of walking the walk and not just talking the talk. Senior management buy-in is essential and that enthusiasm will filter down and have a wider impact on the general workforce.

A simple way to ensure any CSR activities are promoted and adopted by as many employees as possible is to include details of any programs, fundraising plans, and wellbeing initiatives via the company newsletter. Keep employees up to date on outcomes from any CSR activities with videos or snappy articles and make sure to send these updates out regularly.

Benefits of corporate social responsibility

Increased employee satisfaction

How a company chooses to treat its employees plays a significant role in its overall success. If employees feel unappreciated and believe they are simply a means to an end for their employers to make money, it will greatly affect the standard of their work.

On the other hand, employees who feel that the work they do matters and that they are a valuable asset to their employers will naturally feel more motivated to do their best to help the brand succeed. Offering employees opportunities to volunteer in the community during regular office hours is a great opportunity for personal growth and development.

Always remember that when employees are active in the community, they are acting as brand ambassadors for the business. How employees feel about their company will be evident in their interactions with the general community. This is why brands that hope to have a positive reputation must strive to have enthusiastic and satisfied employees.

Improved public image

In the world of modern technology, those organizations associated with corporate responsibility are gaining fast praise and recognition for their contributions. When local communities witness companies making an effort to help out in one way or another, it greatly aids those companies in receiving a positive reputation and an increase in business.

Increased customer loyalty

Any business seeking to obtain loyal customers must understand that customers are loyal to brands that share a set of corporate beliefs and values that align with their own. A study shows that millennials, who have been the largest generation group alive in the U.S since 2019, prefer brands that center upon authenticity, local sourcing, ethical production, a great shopping experience, and giving back to society. CSR programs are an opportunity for organizations to display their corporate values and reach those customers who share a similar set of ideals.

Increased creativity

Another benefit of CSR initiatives is that they work as a way to encourage and restore lost motivation in employees. Through social involvement, workers are motivated to participate in company discussions and put forward any ideas, thoughts, and opinions they have.

This input will be extremely useful for organizations when it comes to problem-solving and the creation of new products and internal processes. Allowing employees the freedom and support to speak up and offer new viewpoints allows them to feel a greater sense of belonging in their roles, and encourages them to find new and innovative ways to carry out their jobs.

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What is an example of social responsibility?

Commitment to Sustainability (Lego)

With the powerful influence of being one of the most well-known toy companies in the world, Lego has taken the initiative to encourage children, through the use of their products, to understand the importance of fostering a healthy planet. After making a powerful promise to reduce its carbon footprint, Lego became the first toy company in the world to receive a World Wildlife Fund Climate Savers Partner.

Lego displayed its commitment to the environment by announcing its plans to use only environmentally friendly materials to produce all of its core products and packaging by the year 2030.

The company has already taken numerous steps to make this goal a possibility, including shrinking their box sizes by 14 percent and opting to use a certain amount of sustainably sourced materials for their signature building blocks.

Hospitality For All (Hilton)

Possessing 380,000 team members worldwide, Hilton stands out for providing a consistently positive experience for its workers—no matter their job role. From front-line, hourly staff all the way up to its executives, Hilton holds the powerful motto, Hospitality For All.

The company understands the value of its employees and accepts that any interaction between frontline staff and customers has a significant impact on the overall customer experience. Hilton recognizes that a significant amount of its success can be found in the way it treats its employees, and as many as 96 percent of employees of the company have said that it is a great place to work.

Worker Well-being initiative (Levi Strauss & Co.)

In 2011, the renowned fashion brand Levi Strauss and Co. launched an initiative known as Worker Well-Being (WWB) with the goal of creating a more sustainable supply chain. In its WWB guidebook, the brand states that: “Worker Well-being initiatives can increase the quality of life of workers and translate the benefits of healthy and happy employees into meaningful business impacts.” Since this point, Levi has branched out with this initiative into 17 countries, impacting 190,000 workers, representing 65 percent of the company’s production volume.

Coffee and Farmer Equity (C.A.F.E.) Practices (Starbucks)

According to the coffee giant, their C.A.F.E practices were launched in 2004, in collaboration with Conservation International, as a comprehensive set of social, economic, environmental, and quality guidelines that dictate how coffee should be ethically sourced.

C.A.F.E has a set of standards suppliers must meet in different aspects of their operations, including:

  • Waste control
  • Water quality preservation
  • Energy conservation
  • Biodiversity preservation
  • Humane working conditions

This particular set of standards are upheld across all Starbucks suppliers, in addition to 99 percent of the brand’s coffee beans now being ethically sourced.

Why CSR is important

By taking part in CSR efforts and being conscious of the social, cultural, and environmental consequences of their business practices, organizations will reap benefits for both themselves and the wider community.

Although CSR initiatives play a role in a brand’s marketing and advertising, these initiatives should be true to a company’s values and message, and never be just for show. Businesses that disregard the importance of CSR run the risk of receiving a bad reputation, which can lead to a loss of customers and financial difficulties.

The importance of CSR is especially apparent in today’s world where consumers want to spend their money on products and brands that follow ethical practices, or whose values and actions align with their own personal beliefs.

Due to this, CSR is not merely a business trend but rather something that is going to be important for a long time to come. By making CSR a priority, brands will not only be working towards building loyal customers and a successful business they will also be contributing towards something that will help others and have a positive impact on the world in general.

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