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The current workplace is changing rapidly and with this comes changes in what employees value from their employer, to include a strong strategy around Corporate Social Responsibility (CSR).
CSR is becoming one of the key components to attracting and retaining talent and is gaining traction as a leading strategy for organizations looking to remain relevant and desirable to future employees. But why? How does CSR connect to engagement strategies and why is this becoming so important? Based on shifts in employee values, this article introduces corporate social responsibility as a key to future organizational health and effectiveness.
The concept of corporate social responsibility (CSR) began in 1953, defined by Howard R. Bowen in Social Responsibilities of the Businessman as “the obligation to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society” . It grew out of a recognized need and demand for businesses to be accountable for more than just their own profits. While nearly 70 years have passed since Bowen’s initial proposal, much of the initial thought-process remains. Corporate social responsibility is still rooted in the idea that businesses have a responsibility to the societies in which they are embedded. Today, CSR strategies promote the value of socially conscious business practices and corporate citizenship, which means operating in ways that positively impact the wider community. Additionally, they’re often aligned to a concept known as the “triple bottom line,” which dictates that a business should be committed to measuring its social and environmental impact, along with its profits; the adage “profit, people, planet” is often used to summarize the driving force behind the triple bottom line concept.
In relation to this, another term that has risen out of Bowen’s initial proposition is one that has been gaining momentum in recent years: Environmental, Social and Governance or ESG. ESG has a foundation in CSR principles and for many, this has led to confusion on what the difference is and why the two separate terms exist today. Both terms relate to the social responsibilities of businesses but deviate in their deeper focus from there. While CSR holds businesses accountable for their social commitments in a qualitative manner, ESG aims to measure or quantify the outward impact of these. While some disagree over which is preferable, we would argue there is merit in having both. What results is a two-pronged approach aligned with the goal of consolidating decision-making and business operations in such a way as to positively impact both the internal organization, including its employees and the external environment and community in which they operate.
CSR and ESG both aim to drive transparency and accountability for organizational actions internally and within the community. As such, annual reports are increasingly becoming part of the standard social responsibility expectations of the workforce. More than 90 percent of the 250 largest companies in the world produce an annual CSR report. A growing number of investors, consumers and job candidates today are looking for, and expecting, firms to publicly disclose their scores on CSR and ESG. Additionally, there has been a rise in “impact investing” which has led to a demand for ways to rank companies on their ESG performance. ESG scores and ratings have been developed, and targets are set and reported on to reflect how companies treat their staff, manage supply chains, respond to climate change, increase diversity and inclusion, and build community links. The increased focus on accountability and commitment toward positive social good is paving the way for organizations to have a longer-term focus, leading to better outcomes for employees, the surrounding community and the environment.
In theory, CSR strategies would include initiatives in the categories of environmental, philanthropic, ethical, and economic responsibility. However, in practice, CSR strategies can vary greatly from one organization to the next; some companies focus on philanthropy only, some view it as compliance with regulation, and others still focus on the impact on stakeholders and the environment. A few examples of the vast range of programs that fall within CSR strategies include volunteering efforts, awareness days, diversity and inclusion, sponsorship of causes or nonprofits, employee wellness programs, whistleblower programs, recycling and carbon emissions reduction efforts.
What all these types of programs have in common is a focus on building a strong company culture, with impact-based values at its core. This requires seeking input internally to understand what employees care about, in order to develop missions and values which embrace CSR initiatives and are aligned with employees’ values. Organizational leaders who have truly embraced CSR have recognized the responsibility they have, not only to their external community but also to their employees. After all, the workplace is where many adults spend the majority of their waking hours and is often where people develop strong ties to the economy and society, so employers play an outsized role in employee well-being. Employees of organizations that have invested in developing missions and values framed around CSR reap the benefits from working in an inclusive environment and toward a valued social goal. Not only can such a cultural and social focus reduce work-related health problems in the workforce, but it can also boost employee retention, morale and productivity.
All of this is resulting in a trend of significant commitment and investment from leaders. C-Suite executives are leading companies to increase their CSR spending by 75% compared to five years ago, indicating executives now see CSR, not as a nice-to-have, but as a strategic necessity. These aren’t simply small investments by a few, but rather full commitments by a growing group of notable organizations. Reports estimate that Fortune Global firms spend around $20 billion a year on CSR activities. Companies who make this commitment are, indeed, seeing the benefits of these actions through profits, better retention and positive branding. In short, what we’re seeing is that investing in social responsibility pays off. By developing and providing formal CSR programs, corporations can become responsible and competitive in today’s society, which in turn can bring powerful benefits for people, the planet and society.
We believe that companies in all industries have an inherent social responsibility in relation to their people, communities, and other stakeholders. This notion is not new and no longer needs to be viewed as in opposition to the goals of the organization: profitability, employee well-being and social and environmental good can all be aligned. Given changing tides and new demands by employees to work for organizations which have values that match their own, now more than ever, it is crucial that employers optimize their practices and policies to strengthen employee engagement and well-being. Those wanting to remain competitive and wanting to meet the demands of the changing workforce need to seriously consider how a strong CSR strategy can support longer-term sustainability and greater success in attracting and retaining talent.
If this topic resonates with you and you are ready to take steps to incorporate doing good into your business, please get in touch. Our Consulting for Good program is committed to helping organizations around the world consider social responsibility and impact when tackling the tough challenges we all are facing today.
Curious for more? This piece is part of a three-part series on corporate social responsibility and employee well-being. Find Part 2: How CSR Improves Employee Well-Being and the Bottom Line and Part 3: Effective CSR in practice to learn more about why CSR matters and how you can implement successful CSR practices into your organization to promote employee well-being.