All business great and small
Why Corporate Social Responsibility strategy is essential for all
By Geoff Moore
Corporate Social Responsibility (CSR), in some form or another, is nothing new to businesses. In fact, the concept has been around for a long time. Whether it is localised; such as businesses investing money to help their local community, personalised; such as an organisation committing to using only sustainable and fair trade products, or on a global scale; such as a firm investing large sums of money into initiatives to tackle pressing environmental issues, there are a vast number of ways companies are contributing to CSR.
Over time, CSR has evolved and become more prominent in business, with the majority of companies investing large sums of money into CSR initiatives – or facing a backlash for not doing so.
Nowadays, it is not just huge multi-national companies that have developed CSR initiatives in their organisations – many SMEs have too, and so they should. However, many of these have not embedded specific CSR policies into their strategy. CSR must be looked at from a strategic perspective and consider how the organisation’s CSR strategy or initiatives link to its commercial strategy.
Of course, this may be hard to do so for a lot of small businesses. Many don’t like the term Corporate Social Responsibility – the ‘Corporate’ smacks of big business and the ‘Social’ seems very vague, making no mention of the ecological environment which nowadays has to be fundamental to any strategy in this area. Whilst the term ‘CSR’ may not suit the organisation, this does not mean that the firm should not be investing in this area as strategically as possible. In fact, for small businesses the term ‘responsible business’ may chime better, and if so, they should think of it in those terms and simply drop ‘CSR’.
Responsible business and stakeholders
When developing a specific strategy centred around responsible business, it is important to think about the organisation’s stakeholders. First, an organisation must identify who the key stakeholders for the business are, and then understand what being responsible to each of them will amount to. This helps eliminate vagueness in the strategy. Usually, the key stakeholders of an organisation include customers/ clients, employees, suppliers, the local community and the ecological environment. That’s not forgetting the investors/ owners, as of course, it helps if they are on board with this agenda. It is important that the strategy meets the needs of all these stakeholders and relates to what being responsible means to them. Also, in many cases the strategy and initiatives around responsible business are likely to have commercial benefits too, so why wouldn’t an organisation invest in this?
Responsible business and business benefits
Sometimes, initially investing to become more responsible can only feel like a cost to a business. For instance, if you are currently not paying all your employees at least the Living Wage (and ensuring your suppliers are paying their employees likewise), then this is likely to only seem like an immediate cost to the organisation, both in terms of raising the wages of those below that level, and in preserving differentials, to do so.
However, firms must look beyond just the initial costs. In fact, they must ask themselves what the long-term benefits of doing this might be. There is evidence that, not only in the area of employee wages, but more generally with other stakeholders, there are huge benefits in implementing responsible business practices. Being responsible towards employees can lead to attracting better prospective employees, improve employees’ engagement, commitment and in-role performance, and lead to better employee retention. Therefore, long-term it is extremely beneficial for firms to commit to this and attempt to quantify at least some of the ‘return’ on an investment in this area.
Responsible business has also been found to have huge benefits in terms of operational efficiencies and product quality too. It can lead to greater customer loyalty and a better evaluation by customers of your products. There are also usually some ‘low-hanging fruit’ in relation to the greening of business – saving energy saves money, for example. And all of this can add up to an enhanced reputation and attractiveness to investors.
It is important that the future leaders of not only large organisations, but SMEs and small, local businesses too, understand the importance of CSR and investing strategically in such initiatives. That is why on the Durham MBA (Full-time) we have a module solely focused on ethical and sustainable business practices, corporate social responsibility and pressing environmental dangers that are drastically affecting our world – and have been recognised for this in the Financial Times’ latest Full-time MBA rankings, finishing in the top five globally for CSR. Managers and leaders must have a committed focus on this for the future and truly believe in the importance of investing in CSR, not only to benefit their organisation, but more importantly wider society and the world.
So, no matter what its size, if an organisation doesn’t have one already, its senior team should really be putting together a responsible business strategy.
For more information on Professor Moore’s research, please visit durham.ac.uk/business/geoff-moore