In brief - Businesses can be socially responsible without reducing competitiveness
Companies are increasingly recognising the importance of contributing meaningfully to the community and learning how to integrate corporate responsibility (CR) into their business models, while maintaining economic viability.
Adopting corporate responsibility may give your business a competitive edge
Although innovative products, price point or even convenience are all vitally important to gaining a competitive edge, using your resources, skills and profits to help communities in need may give your business a competitive advantage.
The corporate responsibility concept (CR, and also known as 'CSR', corporate social responsibility) helps businesses respond to the ethical, legal, environmental and social expectations of their stakeholders, while at the same time helping them achieve their economic imperatives. Underpinning CR is the notion that companies can, and should, do their part to make a meaningful and positive contribution to the community.
CR combines business management tools, such as global reporting guidelines, governance, risk management processes, supply chains, labour standards, reduction of carbon emissions and anti-corruption measures, with philanthropy, such as volunteering, fundraising, donations and community engagement.
Responsible and sustainable business valued by employees and consumers
CR is swiftly becoming mainstream for forward-thinking businesses. One of the key drivers has been the development of the global community, greatly assisted by the rise of social media which has brought together citizens advocating for people and the planet. Their concerns include climate change and adaptation, food and water security, increased global tensions and the ever present divide between rich and poor. This global community is being pushed along by the next generation of employees and consumers who are acutely in tune with responsible and sustainable corporate activity.
Against that backdrop, a well structured, carefully coordinated and well executed CR program can bring a business a great many competitive advantages such as:
- increased customer loyalty
- favourable community and government support
- improved brand image and reputation
- increased sales, higher profits, investor attraction
- operational cost savings
- enhanced innovation
- improved productivity and quality
- improved recruitment and retention of staff
- better risk management processes
Crucially, beyond competitive advantages, CR programs have the ability to make a huge and lasting impact on communities.
How do I structure my company's CR program?
CR programs need to be properly structured and led from the top.
- Resources and personnel - resource your CR program properly and employ the right sized team to lead the charge.
- Stakeholder engagement - identify who your internal and external stakeholders are and consider how your company's activities affect them.
- Policies and procedures - get your house in order. Ensure your suite of policies addresses key areas of risk, including health and safety, supply chain management, environmental and community impact and anti-corruption.
- Reporting - integrate your strategic plan with your policies and procedures and link them with the legal, ethical, social and environmental imperatives of your stakeholders. Then track and report on performance.
- Community investment - give back to your local community as well as your workforce. The options are unlimited but should be closely aligned with your core business. Use your existing competencies for the betterment of the community. Donating funds is one way to make a significant contribution, but also engage your people through volunteering, fundraising and awareness raising.
Triple bottom line approach endorsed by the United Nations
CR must help, not hinder, a business, so it is important that CR fits with your company's needs, capacities and priorities and doesn't impede its economic viability. The United Nations advocates for the "triple bottom line" approach, which it recognises as a successful tool for meeting social and environmental concerns without reducing competitiveness.
According to the website of the United Nations Industrial Development Organization (UNIDO): "The perspective taken is that for an organization to be sustainable, it must be financially secure, minimize (or ideally eliminate) its negative environmental impacts and act in conformity with societal expectations."
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.