Increasing Importance of CSR(Corporate Social Responsibility)
Increasing
importance of Corporate Social Responsibility in the Corporate Sector
The
era of the social enterprises is upon us. More so than ever before, the most
successful, respected, and desirable businesses exist to do much more than make
money. They are expected to use the enormous power of their business to resolve
social and environmental problems.
Study after study has shown that socially responsible
businesses (aka social enterprises) not only provide sustainable business
models, but also have improved marketing, employee recruitment, employee
satisfaction, legal treatment, customer loyalty, brand perception, and richer
partnerships.
Ten
years ago, for instance, only about a dozen Fortune 500 companies issued a CSR
or sustainability report. Now the majority does. More than 8,000
businesses around the world have signed the UN Global Compact pledging to show
good global citizenship in the areas of human rights, labor standards and
environmental protection. The next generation of business leaders is even more
likely to prioritize CSR. According to data released this month by Net Impact,
the nonprofit that aims to help businesses promote sustainability, 65% of MBAs
surveyed say they want to make a social or environmental difference through
their jobs.
The top five
reasons to have (and/or work for) a socially responsible business are:
1. Employees want demand
their company to be socially responsible
Five years ago, it was considered good if a company simply
did not harm the environment. However, times have changed, and now employees
demand that their company do more than simply not be bad. They need to do good,
too. According to Forbes:
·
32% of employees would seriously
consider leaving their job if their company gave no / little money to charity;
·
65% would seriously consider leaving
their job if their company harmed the environment;
·
83% would seriously consider leaving
their job if their employer used child labor in sweatshop factories.
Furthermore, a landmark international Corporate Social
Responsibility (CSR) study of human resource practitioners conducted by the
Society for Human Resource Management (SHRM), reveals that CSR practices are
seen as important to employee morale (50%), loyalty (41%), retention (29%),
recruitment of top employees (25%) and productivity (12%).
2. Consumers expect better business practices (and will pay
for it)
Just under a year ago, a study was published showing that
the average consumer will drive en extra 11 minutes to buy a product that
supported a cause. Since then, more data has been released supporting the fact
that consumers will adjust buying behavior from average companies to socially
responsible companies. According to the same article by
Forbes:
·
More than 88% of consumers think
companies should try to achieve their business goals while improving society
and the environment;
·
83% of consumers think companies
should support charities and nonprofits with financial donations.
The important consideration is that consumers know that the
corporation is making donations out of its own pocketbook, not asking for
donations by its consumers. In fact, 35% of consumers dislike being asked to
donate money at the checkout counter.
3. It creates competitive immunity (and makes your business
more sustainable in the long-term)
According to the Harvard Business Review, “Strategy… is about choosing a
unique position – doing things differently from competitors… These
principles apply to a company’s relationship to society as
readily as to its relationship to its customers and rivals”. Furthermore “CSR
can be much more than a cost, a constraint, or a charitable deed—it can be a
source of opportunity, innovation, and competitive advantage.“
In addition to helping companies differentiate themselves in
an already crowded marketplace, social responsibility also inspires innovation
within corporations thereby developing longer-term immunity and business
sustainability.
4. Capitalism is evolving, and society is too:
Even investors are pulling away from companies that don’t do
go. This was recently evidenced when investment firms and stockbrokers pulled
money away from BP due to its operations in Alaska. In addition to market
reactions, society as a whole is also evolving. In the article titled The For-Benefit Enterprise, Hareed
Sabetti notes that new trends are supporting these businesses, including
“Public policy, financial markets, accounting standards, and professional
services.” As a result, Hareed predicts that “We will see the
emergence of a fourth sector of the economy,interacting with but
separate from governments, nonprofits, and for-profit businesses. The rise of that sector is likely to reshape
the future of capitalism.”
As the market evolves to support these for-benefit
enterprises, early-movers and leaders have the most to gain from this shifting
system. In other words, the sooner companies shift to being socially
responsible, the more successful they will be in the future.
5. It is a moral imperative
Nobody is better positions to create long-term, sustainable
change than businesses. According to Michael E. Porter and Mark R. Kramer at
the Harvard Business Review, “When a well-run
business applies its vast resources, expertise, and management talent to
problems that it understands and in which it has a stake, it can have a
greater impact on social good than any other institution or philanthropic
organization.“
No matter the lens that you view a social enterprise
through, they are becoming increasingly popular and beneficial. Whether it is a
new or existing business, the future success of it will be increasingly tied to
its ability to do good through its day-to-day operations. So in the words
of Hillel the
Elder, “If not you, who? If not now, when?” Since
businesses have the greatest potential to improve the health of our planet and
citizens, as they become prosperous, they have a moral obligation to improve
the conditions of a system that has helped them succeed. It is good to see
Google setting the trend for other Fortune 500 companies to follow suit. Please
view https://environment.google/
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