Corporate Social Responsibility – voluntary choice or necessity?

The essence of companies engaging in Corporate Social Responsibility involves  both – business and social values. The secret of their success is not a profit orientation, but higher goals, such as contributing to meeting social needs and improving the quality of human life. CSR activities should be defined in the strategy of a given company and included in its code of ethics.

Corporate Social Responsibility (CSR) is an essential aspect of the strategic management of a company. It is an integral part of modern business and at the same time its self-regulation. In addition to financial benefits, it takes into account environmental and social goals, including shaping proper relations with employees, customers and other stakeholders.

The European Commission defines CSR as the responsibility of enterprises for their society

Seeing the broader context of doing business “is not a new thing. Its roots go back to the 1950s and 60s as a way to determine the impact companies have on society. Since then, it has progressed as a way of voluntarily encouraging social responsibility by big business”, Steve Clark points out on Reworked.

CSR areas and goals

The issues of interest to companies applying CSR principles today are human rights, global warming, sustainable development (including welfare and health of societies), the focus on diversity and integration. Although topics and their scopes change, the primary goals and principles of CSR, which have been applied for years, remain the same. They are:

• voluntary – there is no obligation regulated by relevant legal provisions;
• concept areas – these are generally ecology and social issues, although companies may choose them depending on the place and circumstances in which they operate;
• targeting the right stakeholders – taking care of relationships and integrating actions with them;
• taking into account an ethical aspect of a company's operations;
• improving the functioning of an organisation in a changing environment;
• achieving additional opportunities, such as a better competitive position.

CSR is primarily an organisation's responsibility for the impact of its decisions and actions on society and the environment through transparent and ethical behaviour.

The essence of CSR

There are many definitions of corporate social responsibility in the literature, as this concept is multidimensional and determined by various factors, such as progressing globalisation and competition. Their diversity also results from an individuality of entities and conditions in which they function. However, their analysis shows common points. Those are:

• supplementing economic goals with social goals;
• commitment to transparent and ethical business following principles of sustainable development;
• maintaining a social balance necessary to reduce uncertainty in a company's operations;
• economic, legal, ethical and philanthropic commitments of a company towards external and internal social groups;
• striving for social welfare, taking into account the expectations of stakeholders under the law and norms of behaviour.

The European Commission defines CSR as the responsibility of enterprises for their society. According to its definition, an essential condition of CSR is respect for legislation and collective agreements between business partners.

CSR as a way to build a brand

Nowadays, CSR strategies are not only a matter of good tone. Many organisations not only declare but take their ideas seriously and include them in a company’s policy of human resource management. Moreover, they are aware of their significant role in building the company's brand and its positive image. Thanks to the implemented CSR activities, companies become more attractive and credible on the business and employee market. If you want to implement a CSR strategy in a company, it is worth learning about its principles, which include several procedures.

Guidance on Social Responsibility is a guide for organisations in the field of CSR rules developed by the International Organization for Standardization in 2010 based on ISO 26000. Their Polish version (from 2012) contains guidelines defined as the responsibility of the organisation for the impact of its decisions and actions on society and the environment through transparent and ethical behaviour, visualised in seven key areas. These areas will be described in our next article on CSR.

CSR instruments

Each economic entity can engage in CSR in its own way, depending on its resources, stakeholder group, cultural traditions, and social and ecological situation of the area in which it operates. The implementation of CSR takes place through various instruments. Their selection should be adequate to the size of a company and its financial potential, and the scope – appropriate to the scale of operations.

However, CSR does not have to be the domain of only large companies. It is successfully used by small and medium-sized enterprises – extremely susceptible to the environmental conditions in which they operate – their activities may have an impact on the further development of the company. Thanks to them, employers can strengthen their image, build an open and pro-social organisational culture of their company and contribute to increasing the commitment and loyalty of their employees.

1. Social campaign

Social campaign aims to draw attention to a given social problem; usually conducted through marketing activities of a company, oriented to change the attitudes or behaviour of a specific group. Using social campaigns can significantly improve the image of a company in its surroundings.

2. Social report

Social report is a document prepared by a company and addressed to various groups of stakeholders, showing its social, ecological and environmental commitment and benefits of its functioning in a given environment.

3. Employee volunteering

Employee volunteering is a long-term social program of a company, which promotes and enables the voluntary involvement of its employees. Although it requires time for them to devote to such activities, their commitment can result in overall satisfaction, greater motivation and attachment to the workplace. Thanks to this instrument, a company can gain the trust of a local community and strengthen its competitiveness.

4. Philanthropy

Every company, bigger or smaller, can afford social and non-profit goals. It is worth choosing a specific program or an organisation and finding out what – donating money, time, services or products of your company – would best help in a particular case.

5. Code of Ethics

Code of Ethics is a company's values and principles to be followed by its employees and management. PARP's research shows that the code is standard in both small (80%) and large (79%) companies. It can contribute to reducing their costs, which results, for example, from reducing conflicts of interest, cases of fraud and embezzlement, as well as increasing credibility and loyalty.

6. Eco-labelling

Eco-labelling is labelling company's products with information, incl. references about caring for the environment. Eco-labels are placed on packaging (Green Point), household appliances and audio/video devices (Ekostar), cosmetics (not tested on animals), food products (Green Lungs of Poland), etc. It requires a certificate authorising the display of a given symbol. Green investments are expensive, so the choice depends on the company's financial condition.

7. Cause Related Marketing

Cause Related Marketing (CRM) is an activity of a company which results in creating a product or service, or providing support for a given cause or charity organisation. An example is the Danone Polska and PAH campaign “Share your meal” – the company donates a part of profits from the sale of Danone products to fight against child malnutrition.

8. Corporate supervision

Corporate supervision is based on controlling and coordinating the behaviour of shareholders of a capital company; as a CSR instrument, it is mainly one of the largest entities. Potential consumers, employees and investors today want to know what the company is doing to influence their community.

CSR from employees and consumers viewpoint

The organisational culture of a company is today an essential element influencing its perception. It matters from both – a consumer and an employee perspective. Skye Schooley of Business News Daily writes: “In today's socially conscious environment, employees and customers place a premium on working for and spending their money with businesses that prioritise CSR.” When companies choose to do what is useful not only for their bottom line, they also build consumer’s confidence.

Socially responsible practices may not only bring benefits to the company, but also have a real impact on the world

According to the 2019 GlobalWebIndex report, 68% of internet consumers in the US and the UK Britain would consider abandoning brand use due to weak or misleading corporate social responsibility, and nearly 50% are willing to pay a premium for brands with a socially conscious image. Consumers become loyal to specific brands when deciding to purchase products and services. They want to feel that by buying from a certain company, they serve the general good.

“When businesses make decisions aligned with their morals and principles, especially in the face of adversity [e.g. racial or social problems – ed. note], it shows their character and values are authentic”, writes Steve Clark.

Summary

In light of current events, when the COVID-19 harvest is ruining local economies, defined corporate culture has acquired particular importance. The actions taken by companies today can have a lasting impact on how communities, customers and employees view the business. Clients will be more likely to do business with a company with a clear purpose, and communities will support those who have helped them survive through difficult times.