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Corporate Social Responsibility is a way for companies to hold themselves accountable for their bigger role in society. CSR takes place when for-profit companies support or engage in activities that benefit the community or the environment. This is often called ‘giving back’ or ‘doing their part’ as an active member of society. Corporate Social Responsibility contributions can take the form of a donation, an organised activity, or a campaign.
In this article, we break down what constitutes Corporate Social Responsibility, look at the differences between CSR and corporate sustainability, and why Corporate Social Responsibility is still important today.
At its heart, Corporate Social Responsibility is corporate philanthropy. Giving without expecting something in return. This is done at the company’s expense, unlike a usual business transaction where an exchange takes place. Extends a company’s purpose beyond pure profit making.
Some examples of Corporate Social Responsibility:
Since the concept was coined in the 1950s, CSR has been used as a measure of a company’s social or environmental impact footprint. Although Corporate Social Responsibility and sustainability are sometimes conflated, there is a significant difference between both in corporate parlance today. Simply put, CSR has little effect on a company’s business model and its operations and vice versa, whereas sustainability concerns the business’ operational impact. In the latter case, the business model may undergo transformation to achieve sustainable targets and goals.
Along with the rise of corporate sustainability, Corporate Social Responsibility has become only one facet of a multidimensional approach to managing an organisation’s impacts under the wider umbrella of sustainability or ESG. Business leaders and sustainability practitioners draw a distinct line between CSR and sustainability, the key difference being the extent to which environmental and social impact is integrated into business priorities.
CSR is a way for companies to build goodwill with the communities where they operate, strengthening their social and relationship capital as well as generating positive publicity. From a brand perspective, strong Corporate Social Responsibility can be invaluable to a company’s public image, which can enhance talent attraction and investor interest.
For example, a sports equipment manufacturer with a focus in product innovation may sponsor equipment for a Paralympic tournament, leveraging its expertise in product design to support the development of sports in marginalised communities.
In fact, this was what Nike did with the Go FlyEase sneakers, a hands-free shoe for ably-challenged sportspeople. Upon its launch, the sneakers created waves among the disabled community for their inclusive design. Although this was not a Corporate Social Responsibility drive, it is easy to connect the dots with a CSR campaign with some forethought.
Regulators, investors, and civil society are interested to see how a company is contributing to community development and environmental preservation, and CSR can be an easy way to establish this relationship.
When it comes to allocating a CSR budget, it can feel like you’re spoiled for choice. How do you make the most meaningful contribution? The best approach is one that aligns a cause with the company’s purpose. Many companies take the easy route and donate or volunteer a day at charity, but this approach yields little long-term impact for beneficiaries and for the company doing the CSR.
Sustained value can be maximised when a CSR strategy is put into place that plays into the company’s story and builds a relationship with the beneficiary that goes beyond one-off contributions.
To determine an approach to your company’s CSR programme, try asking these questions:
While you’re planning your CSR programme, avoid the following practices to ensure your focus remains on driving impact and getting the best value for your spending:
Company A, a manufacturer of waterproof diving headlamps, uses a shark as its corporate mascot. The CSR team selects a shark conservation NGO to partner with. Together with the NGO, they identify the areas of support most needed, which focuses on the bigger challenge of increasing the local shark population.
The CSR team allocates funding support over the campaign’s three-year period with key goals and targets to protect the reef ecosystem and increase breeding activity. The support includes sponsorship of headlamps to the conservation team for field use. The CSR team works with the NGO to measure the success of the programme and publishes annual progress updates to ensure accountability.
CSR reports were quite common before sustainability reports overrode them as the preferred disclosure format. They still serve an important purpose in communicating the relationship between a business and its stakeholders, especially if your company is not ready for sustainability reporting yet.
A Corporate Social Responsibility report should convey your Corporate Social Responsibility strategy, objectives, plans, initiatives, and outcomes in a way that demonstrates the value created for stakeholders.
An honest, transparent account of your CSR programme should include:
CSR can be an excellent stepping stone to the adoption of broader sustainability strategies, and the same goes for CSR reporting. It’s worth taking the time to ground your CSR programme by having strategic objectives and measurable impact.