Tough love - a guide to Corporate Social Responsibility in hard times
Why we work is the simple question that perhaps best explains the emergence of Corporate Social Responsibility (CSR) and why it has moved from being a peripheral concept to a crucial aspect now of modern business practices.
Reflecting wider changes in society, our expectations as employees are more complicated than the simple receipt of a pay cheque. We are all, to some degree, looking for meaning in our time at work. This implies that today, companies are not only expected to generate profits but also to contribute positively to society and the environment.
If you are involved in decisions around people in your business, such as an HR professional, understanding CSR is essential for guiding your organisation towards a sustainable future, attracting and retaining top talent, and enhancing your company's reputation.
Of course, it is a challenging time in many markets. It would be easy to assume that CSR can be dialled down until the good times return, but this would be a mistake. In many ways, it matters more. So, in this comprehensive guide, we will cover the various aspects of CSR in hard times, including its definition, development, implementation, and impact on businesses and communities. We will also explore the emerging trends and career opportunities within the realm of CSR.
Understanding CSR: What is Corporate Social Responsibility and why is it important?
At its core, Corporate Social Responsibility refers to a company's commitment to conducting business ethically, while also considering its impact on society and the environment. It goes beyond mere compliance with laws and regulations and encompasses a proactive approach towards making a positive contribution to the world. CSR includes practices like environmental sustainability, ethical labour practices, community engagement, philanthropy, and supporting social causes.
If this sounds a step into a world of complexity, you are not wrong. But done well, the importance of CSR cannot be overstated. There are several compelling reasons to integrate CSR into business strategies. First and foremost, CSR aligns businesses with the values and expectations of the society they serve. In an era of conscious consumerism, customers tend to support and be loyal to companies that demonstrate social responsibility. Additionally, CSR initiatives can build trust and loyalty among employees, investors, and other stakeholders, thereby enhancing the company's reputation and brand image.
Creating a CSR policy: How to develop and implement Corporate Social Responsibility strategies
It is rare to start from scratch. Even in a start-up context, you will find some key ingredients already in place, whether it is about personal passions or priorities in the local community. The key to developing a comprehensive CSR policy is to build on what you have to make it integral to the business. The key steps to create and implement an effective CSR strategy are:
- Conduct a CSR assessment: Begin by evaluating your company's existing practices and identifying areas where social and environmental improvements can be made. Engage with stakeholders, including employees, customers, suppliers, and local communities, to understand their expectations, concerns, and aspirations related to CSR.
- Set clear objectives: Establish specific, measurable, achievable, relevant, and time-bound (SMART) CSR goals that align with your company's values and business model. These objectives should be based on the outcomes of the CSR assessment and should address the most significant social and environmental issues relevant to your organisation.
- Integrate CSR into business operations: CSR should not be seen as a separate department or a mere corporate gimmick. Instead, it should be integrated into the core operations and decision-making processes of the organisation. Embed sustainability and responsibility into every aspect of the business, from supply chain management to product development and marketing.
- Employee engagement: Engage your employees in CSR initiatives to foster a sense of purpose and engagement within the workforce. Encourage volunteering, organise charity drives, and support employee-led CSR projects. Employees who are actively involved in CSR activities are more likely to be committed to the company and its values.
- Stakeholder partnerships: Collaborate with non-governmental organisations (NGOs) and local communities to co-create meaningful and sustainable projects that address social and environmental challenges. Engage in genuine partnerships that bring together the expertise, resources, and perspectives of all stakeholders involved.
- Measure and report progress: Establish metrics and Key Performance Indicators (KPIs) to assess the impact of CSR efforts. Regularly report progress to stakeholders, both internally and externally, to maintain transparency and build trust. One thing that you can’t accuse the CSR field of is a lack of relevant metrics – there is a wash of options. The most practical route therefore is to select your indicator framework, such as the Global Reporting Initiative (GRI), to help structure your CSR reporting. We will come back to this below.
Examples of Corporate Social Responsibility: Inspiring companies and initiatives
The best-known examples, which can be inspiration for your own CSR journey, are often of companies that have taken time to become leaders for a cause. Patagonia, the outdoor clothing company, is known for its commitment to the environment, as is Unilever on sustainable development. Unilever's Sustainable Living Plan is an ambitious initiative that aims to reduce the company's environmental footprint while improving the health and well-being of more than one billion people by 2020.
While many companies have a commitment to become ‘net zero’ on carbon emissions, Scottish and Southern, an energy provider, have taken a lead on the concept of a ‘just transition’ - recognising that greening the economy needs to go hand in hand with more inclusive outcomes for those hardest hit by the change. Sodexo, a global services company we partner with, focuses on improving quality of life; their "Better Tomorrow 2025" strategy includes goals like improving gender balance and enhancing employee well-being.
Other companies may not be known for a specific cause, but for the way in which they take action. We have worked with Salesforce, a leading cloud-based software company, to make a success of its commitment to use 1% of its employees’ time for charitable causes. Alongside this, the company commits to donating 1% of its equity and 1% of its product to good causes. Another company we partner with which is well known for the breadth of its community programme is Barclays. Through the "Barclays Community Investment Programme," the bank invests in skill development, financial literacy, and social inclusivity.
Even so, these same companies can be targeted by critics concerned about other factors. In 2023, the investment firm Baillie Gifford walked into media criticism when it opted to sponsor the International Book Festival in his home city of Edinburgh. The firm has promoted investment in renewable energy but was criticised for not doing more. CSR is not risk-free. Taking action on CSR is about managing risks, but it is also about building your understanding of potential risks too.
So, understanding where you want to focus is an essential first step in your journey on CSR. There are some actions which will be essential for all, not least those which have come to be covered as a legal or regulatory requirement. Gender equality for example is enshrined in law, but there is still more that companies can do to make it a reality in the workplace. But don’t expect to be able to lead on every topic.
Make a list of the key societal issues that connect most closely with your business. Ask yourself, where you want to be on each issue:
- Compliant with the law, but no more
- Compliance plus, being one step ahead of changing regulatory and legal requirements
- Leadership, helping to shape the agenda for yourself and others.
The role of CSR in building sustainable businesses and communities
It is worth an added word on two elements of CSR which tend to be universal. The first is the influence of CSR on the core operating model of the business and the second is the impact of the company on the local communities with which it comes into contact.
- Sustainable businesses: CSR initiatives promote responsible resource management, waste reduction, and the adoption of renewable energy sources. By embracing sustainability, businesses can achieve cost savings, improve efficiency, and reduce the ecological impact of their operations. This, in turn, enhances their resilience and ability to withstand environmental challenges and regulatory changes.
- Sustainable communities: Companies that actively engage in community development and welfare contribute to the long-term prosperity of the regions in which they operate. CSR initiatives can focus on various aspects of community development, such as education, healthcare, infrastructure, and economic empowerment. By investing in local communities, businesses can create a positive impact and foster goodwill among residents.
The Importance of Corporate Social Responsibility in London
In the UK, it is fair to say that London, as a global business hub, has seen a surge in CSR initiatives as companies recognise their role in creating positive change. One example is the bank Morgan Stanley. Through the "Healthy Cities" initiative, closely linked to its work in other cities, Morgan Stanley looks to take positive action on a range of critical urban challenges, from affordable housing and clean energy through to economic opportunity for underserved communities.
The benefits of Corporate Social Responsibility: From enhanced reputation to increased profitability
Critics of CSR will argue that it is all adding costs to a business. Champions of CSR argue that done well, it is about adding value to the firm and that it can be cost-neutral or indeed cost-saving. But this is not a theoretical debate. There is now enough evidence to give compelling weight to the way in which effective CSR can contribute to five key business benefits:
- Enhanced reputation and brand Image: Companies with strong CSR practices enjoy a positive reputation among consumers, employees, investors, and other stakeholders. Positive public perception enhances brand loyalty and trust in the company, leading to increased customer retention and attracting new customers.
- Employee attraction and retention: In today's competitive job market, as we suggested earlier, many employees want to work for companies that make a positive impact on society and the environment. Organisations with robust CSR initiatives often attract and retain top talent, leading to a more engaged and motivated workforce.
- Increased customer loyalty: Consumers increasingly prefer to support businesses that demonstrate social and environmental responsibility. CSR initiatives can lead to increased customer loyalty, as people feel good about contributing to a company that makes a positive difference.
- Risk mitigation: By actively addressing environmental and social challenges, companies can mitigate risks associated with regulatory changes, reputational damage, and supply chain disruptions. Proactive CSR efforts can help companies stay ahead of emerging risks and adapt to changing market demands.
- Access to capital: Investors are becoming more attuned to ‘Environmental, Social, and Governance’ (ESG) factors when making investment decisions. Companies with strong CSR practices may have improved access to capital as they are perceived as more stable and responsible investments.
Think of ‘ESG’ as ‘CSR’ for investors. And yes, let’s unpack this briefly.
Components of Corporate Social Responsibility: Environmental, Social, and Governance (ESG) factors
One way to define CSR is to categorise into three main components known as Environmental, Social, and Governance (ESG) factors:
- Environmental: The environmental component of CSR focuses on a company's efforts to reduce its environmental impact and promote sustainable practices. This includes initiatives to reduce greenhouse gas emissions, conserve water, minimise waste, adopt renewable energy sources, and protect biodiversity.
- Social: The social aspect of CSR deals with a company's interactions with people and communities, both within and outside the organisation. It includes efforts to promote employee well-being, support community development, ensure ethical labour practices, and contribute to social causes.
- Governance: The governance component of CSR refers to the systems and processes that guide a company's decision-making and behaviour. Strong corporate governance ensures ethical conduct, transparency, and accountability in the company's operations and interactions with stakeholders.
Corporate Social Responsibility jobs: Career opportunities and skills required
Who leads on CSR? To some eyes, this is the role of the CEO. To others, it is around the top table, at executive and non-executive levels, but can be embedded in the roles of others. With one business we work with, Midcounties Co-operative, the leadership is through a ‘Chief Values Officer’ with active participation and involvement from the Board, elected in turn by its members.
In truth, there are specialist skills and knowledge that is often required for CSR and the growing importance of CSR has led to the emergence of various job roles and career opportunities for professionals seeking to make a positive impact. Here are five common CSR-related job roles that we see:
- CSR Manager/Director: The CSR Manager or Director is responsible for developing and implementing the company's CSR strategies and initiatives. They work closely with other departments to embed CSR into the company's operations and culture. Key skills for this role include strategic planning, project management, stakeholder engagement, and communication.
- Sustainability Analyst: The Sustainability Analyst evaluates and analyses data related to the company's environmental and social impact. They identify areas for improvement and measure the effectiveness of CSR initiatives. Key skills for this role include data analysis, environmental knowledge, report writing, and an understanding of sustainability metrics.
- Social Impact Consultant: Social Impact Consultants work with companies and non-profit organisations to design and implement effective social impact programs. They assess social needs, develop tailored initiatives, and measure the outcomes of these projects. Key skills for this role include program development, partnership management, impact assessment, and cross-sector collaboration.
- Community Relations Specialist: The Community Relations Specialist is responsible for managing relationships between the company and local communities. They identify opportunities for collaboration and development, ensuring that the company's operations are in harmony with the needs and aspirations of the community. Key skills for this role include community engagement, communication, conflict resolution, and cultural sensitivity.
- Environmental Compliance Officer: The Environmental Compliance Officer ensures that the company complies with relevant environmental laws and regulations. They monitor the company's environmental performance and work to mitigate any negative impacts. Key skills for this role include knowledge of environmental law, regulatory compliance, auditing, and risk management.
How to measure the impact of Corporate Social Responsibility efforts
To demonstrate the effectiveness of CSR initiatives and their contribution to the company's goals, it is helpful to measure their impact using appropriate metrics and tools:
- Key Performance Indicators (KPIs): Establish specific KPIs that align with the company's CSR objectives. For example, KPIs may include reductions in greenhouse gas emissions, waste diversion rates, employee volunteer hours, or the number of beneficiaries reached through community projects. These metrics provide a quantitative view of the company's CSR progress.
- Global Reporting Initiative (GRI): The GRI provides a comprehensive framework for reporting sustainability efforts, helping companies structure their CSR reporting in a transparent and standardised manner. This framework enables businesses to communicate their CSR performance to stakeholders effectively.
- Social Return on Investment (SROI): SROI is a methodology used to quantify the social impact of initiatives, assigning monetary values to social and environmental outcomes. SROI analysis helps companies understand the broader value created by their CSR efforts, beyond monetary returns.
- Stakeholder surveys: Collecting feedback from various stakeholders, including employees, customers, suppliers, and local communities, is essential for understanding their perceptions of the company's CSR efforts. These surveys provide qualitative insights and help identify areas for improvement.
All this measurement can seem daunting and of course it is most important to take action on CSR rather than simply to take count, but setting a framework for measuring does have the benefit of allowing you to track progress over time, to set informed targets for action and to embed CSR in the wider data and performance framework of the firm.
Skilled volunteering – a sweet spot for CSR
There is one option on the CSR menu which is a particular sweet spot and this is skilled volunteering. Through our work to support companies on this, we have seen an upsurge of interest in this as a way to engage employees as well as a way to have meaningful social impact. The most recent research on volunteering suggests a significant increase in skilled volunteering.
It is a sweet spot, because it has a three way benefit:
- Charities are actively looking for the kind of professional, generalist and specialist skills that can come with volunteers from business.
- Employees find it highly motivating and engaging to be able to volunteer in work time
- Designed right, volunteering programmes can help as a tool for businesses in terms of learning and development.
The future of CSR: Emerging trends and innovations
As the world continues to evolve, so does the landscape of CSR and we would pick out four trends which are already starting to reshape the future of CSR:
- Impact investing: Impact investing is a growing trend where investors seek opportunities that align their financial goals with positive social and environmental impacts. Companies that can demonstrate a clear and measurable social or environmental purpose are likely to attract impact investments.
- Circular economy: The circular economy model aims to minimise waste and make the most of resources by promoting recycling, reusing, and refurbishing products and materials. Companies are exploring ways to redesign products, supply chains, and business models to align with the principles of the circular economy.
- Diversity, Equity, and Inclusion (DEI): Companies are recognising the importance of fostering diverse and inclusive workplaces. By promoting diversity at all levels of the organisation, companies can improve decision-making, enhance innovation, and create a more equitable and just work environment. Inclusion is no longer a secondary consideration; it's an accelerator propelling companies forward. As you traverse the CSR landscape, remember to prioritise diversity, equity, and inclusion. The convergence of diverse perspectives helps to give birth to innovation and cultivates a work environment where everyone thrives.
- Technology for good: Technological advancements are being leveraged to address societal and environmental challenges. From renewable energy solutions to AI-driven sustainability analytics, technology has the potential to play a transformative role in advancing CSR efforts.
Tough love – why CSR matters now more than ever
If a business were a person, then CSR would be that person’s emotional intelligence. As with emotional intelligence, CSR is about a company understands those around it and responds in ways that reflect their needs and perspectives. Just as it is hard to build relationships without emotional intelligence, so it is hard to build purposeful, successful companies with supportive employees, customers and investors, without CSR.
This is why CSR matters even more at a time of economic pressures. Of course, priorities change. Costs will be under scrutiny. Jobs may be uncertain. You will know your business drivers. But if you step back from what you are doing on CSR, you lose the opportunity for others to contribute to recovery. This is exactly the time at which you need your staff - and your customers - feeling close to you, willing to support you to succeed.
You need to be tough in hard times, but you also need tough love.
As the nature of work changes, with more flexible patterns of engagement, more remote working and pressures around finances and well-being for staff, so it is all the more important to find answers to the question we started with: why work?
And now we have an answer. When we work, we are likely to find meaning in what we do if we can see that we are doing more for our world.
It is about purpose. CSR... Corporate Social Responsibility is a way to get ahead by nurturing a purpose-driven workspace.
CSR for the 21st century
Pilotlight is a charity that helps people and charities to do more for their world. We do this by bringing charities together with business and business experts who can tackle the pressing issues charities are facing.
So far, we have worked with around 1,000 charities. And since 1996 we’ve developed partnerships with over 180 of the UK’s top businesses including Barclays, Ipsos Mori, Lendlease, Morgan Stanley, Sodexo and KPMG.
For our pro bono volunteers, we call them Pilotlighters, supporting charities is a way to give back, but also a unique learning experience. The learning outcomes we track, for Pilotlighters and for charity leaders, include:
- coaching and listening skills
- understanding of different leadership styles
- understanding of society and different sectors.