What is corporate social responsibility?
Corporate social responsibility (CSR) goes beyond the traditional idea of profit-making for businesses— it defines the actions businesses can take to increase social good and make a positive social impact on the environment and society, such as contributing to better labor conditions, save carbon footprint, and engaging the community.
Corporate social responsibility sounds like nice, philanthropic initiatives, however, they are not totally altruistic. The effort can increase long-term profits and shareholder value by increasing customers’ trust.
The History of Corporate Social Responsibility: When did CSR start?
The term corporate sustainability planning first hit the scene in the 1960s. This is when environmental issues started rising to prominence. The book Silent Spring by Rachel Carson triggered numerous national and international agencies to get moving with corporate social responsibility.
Issues such as poverty, overpopulation, and social inequalities started to make waves in the 1980s, which contributed to the rise of corporate social responsibility among businesses. There is a need for companies to start introducing quality environmental management system into their business operations.
In short, the purpose of corporate social responsibility is the following: How do we meet the needs of the current generation without compromising the ability of future generations to meet their own needs?
Why should businesses and CEOs care about corporate social responsibility?
There are actual business reasons to drive corporate social responsibility. The rising inequalities and climate change are prompting businesses to rethink the purpose of their business, one of which is to care for stakeholders, including investors, suppliers, community, employees, and the environment.
Engaging in corporate social responsibility also builds trust with consumers and helps retain employees, especially millennials. For the last thirty to forty years, business executives and university students have been educated that the purpose of business is the maximization of shareholder value.
At the core, business is solving a customer’s need. It has now evolved to solve the needs of stakeholders to fill the gaps of inefficient government policies and ramifications of poor business practices.
What are the risks and opportunities of corporate social responsibility?
We are seeing a higher integration of corporate social responsibility into mainstream companies these days, with more promotional efforts on social media and cross-departmental initiatives. We are now seeing how these practices are creating actual business and social value.
According to a recent survey by PWC, 76% of CEOs define business success more than financial profit. Businesses and consumers are seeing the larger role of businesses in society. 64% of them have reported that corporate social responsibility as the core of their business, rather than being a stand-alone department. There is also evidence that shows that it helps increase profit and return on stock prices.
Examples of Corporate Social Responsibility in Hong Kong and the United States
Samsung has been actively involved in various corporate social responsibility programs in Hong Kong in recent years. In 2013, the company held its first “Solve for Tomorrow” competition in Hong Kong to address social problems with the aim of bringing together the creativity and passion for technology among young people around the world.
The program focused on SEN schoolchildren, attracting more than 320 primary and secondary schools and tertiary teams. Each school came up with new, creative ways to improve the learning difficulties of SEN schoolchildren.
In the United States, corporates are also finding new ways to reach quantifiable corporate social responsibility goals. For 2020, McDonald’s has goals to increase in-restaurant recycling by 50%, purchase 100% fibre base packaging from certified and recyclable resources, as well as food sources from sustainable productions.
Kroger, the second largest general retail store in the country, has also initiated its sustainability goals in 2020, such as increasing responsible sourcing through sustainably-raised seafood and cage-free eggs, as well as ramping up recycling and carbon reduction programs.
How to integrate corporate social responsibility into the DNA of your business model? Social enterprises and B Corp
When it comes to the corporate social responsibility planning process, teams have to come together for goals to start taking shape. Here are some viable steps corporates can take their planning into business system:
1. Building a good corporate governance structure to ensure internal and external accountability
2. Develop robust plans to engage responsible suppliers to identify and practice the best technology
3. Invest in the development of measurement and metrics
4. Establish interim goals along the way
5. Being transparent with progress
Social enterprises and B Corp provide a viable structure for businesses to have the traditional bottom line. The triple bottom line — pointing to the balance of people, planet, and profit — can be incorporated as the foundation of any business model. For more details about B Corp and its vision, start with caring for your employees.
Source: Sustainability Redefined Podcast, HK01