Corporate social responsibility has been around for a while and was the buzzword amongst many a boardroom circa 15 years ago. Many conferences were set up on how to be more socially responsible. Companies knew it was a good thing and it was the right thing to do, but implementing it and measuring its success was difficult. 2018 and we now know that cost brings us many benefits, such as better position within the market, increased sales, operational costs savings, steady growth, market reputation and many more. European Business Magazine considers the world of CSR.
What is corporate social responsibility?
Before, companies were accountable only to their shareholders, but today they need to consider interests of all stakeholders. One way to accomplish that goal is to adopt corporate social responsibility. It “refers to transparent business practices that are based on ethical values, compliance with legal requirements, and respect for people, communities, and the environment”. This means that companies need to fulfil the economic, legal, ethical, and philanthropic expectations of the society at a given point in time.
Although such initiatives are mainly voluntary, many companies today are socially responsible, because this brings them numerous benefits. Those who are socially responsible have a much better reputation and from what is becoming very clear, increased sales, faster growth, better shareholder price, etc.
Are you among socially responsible companies? If not, it is time for you to become one.
What you need to do to be socially responsible
Corporate social responsibility is often linked to ecological sustainability, but it does not end there. It includes much more. Companies are also involved in the resolution of other social problems, such as poverty, inequalities, etc. Companies are also achieving better CSR results through partnering with others.
Given the latest data about climate change and the public’s level of interest in doing better things for the environment, it is no wonder why the pressure of the society on companies is so large. Global warming has already started to melt the Greenland and Antarctic ice sheets, which has increased the global sea level by 35 centimetres in the last century, double that of the previous century. Also, surface temperature has constantly risen by 0.302 degrees Fahrenheit since 1969, while the amount of carbon dioxide that is absorbed by the upper layer of the oceans is rising by 2 billion tons per year. Although latest NASA research  still gives us hope, this is an alarming situation for all of us. If we do not act right now, who knows what will happen to our planet and us.
Companies have already realised that ecological sustainability is one of the most critical issues today. Many of them invest in their operational processes to ensure less pollution. One example is Toyota which is completely dedicated to its contribution to the goal of the Paris Agreement to keep a global temperature rise below 2˚C. However, some are just strong on words, but in practice, they do the opposite. For example, Amazon promotes itself as a socially responsible company while there has been enough evidence to suggest otherwise as it overpacks its products.
However, companies also need to contribute to other issues such as poverty, social inequalities, labour and human rights, and others. In doing so, a good example to others is given, while at the same time, companies will be seen as good employers. Most multinationals have initiatives in this direction. For example, Starbucks offers many youth opportunities, has a supplier diversity program, and greener stores; while BMW has developed the Schools Environmental Education Development Project with the goal to raise awareness of environmental and social issues. Still, although 90 percent of executives are aware of the importance of the integration of sustainability into the business, only 25 percent of them really implement such initiatives in their businesses.
Does it pay to be socially responsible?
Corporate social responsibility is not cheap and comes with a price. However, investing in new operational anti-pollution solutions are the necessity today. No matter how much it will cost you, it will surely pay off. Maybe not at once, but in the long-term. Socially responsible conduct is always rewarded by society. Among the top 10 companies with the best CSR reputation are Microsoft, Google, Disney, BMW, and Apple. When you analyse them, it pays to be among them, being socially responsible. It pays off!
Companies that are socially responsible everywhere are recognised to care about the whole of society, not just for their own, and not just for financial gain. Behaviour is also ethical, which is why it is commendable. As many executives claim, corporate social responsibility has brought them numerous benefits. They have a better reputation and happier employees and customers, while their profitability has increased as well as the price of their shares.
At a time when we are all concerned about our future due to global warming and pollution, it is important that all of us contribute to sustainability. Companies are the largest polluters, so they have the greatest responsibility for environmental protection. Also, customers, investors, and other stakeholders, with their behaviour, influence companies to adopt corporate social responsibility. According to research, 75 percent of professional investors first examine the position of a company toward environmental, social and governance issues and after that, they make the investment decisions. Similarly, customers are choosing the products of socially responsible companies, while avoiding socially irresponsible companies. Thus, if you accept this way of operation, you can count on loyal customers and investors willing to help you grow your business. However, if you act socially irresponsible, you will quickly disappear from the market.
Obligatory non-financial reporting from 2018
Recently adopted Directive 2014/95/EU that amends Directive 2013/34/EU with the rules on disclosure of non-financial and diversity information by large companies from 2018 will be a turning point for social responsibility. Although some argue that this regulation undermines the basic business principle – profit – it actually contributes to companies’ better competitiveness. Socially responsible companies will be set apart from those who are not acting in this way since going forward, all companies need to report all their social responsibility actions.
Now we will clearly see who is truly socially responsible. Will you be among them?