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2019-04-17 18:48:41How To Run Your BusinessEnglishSo, let’s examine what it looks like in practice as well as the leading benefits of corporate social responsibility to small business...https://quickbooks.intuit.com/au/resources/au_qrc/uploads/2019/04/What_is_Corporate_Social_Responsibility_featured.jpghttps://quickbooks.intuit.com/au/resources/how-to-run-your-business/what-is-corporate-responsibility/What Is Corporate Responsibility? | QuickBooks Australia

What is corporate responsibility?

7 min read

What is corporate social responsibility? The concept of corporate social responsibility (CSR) is a private business model that links the economic and environmental welfare of society — or specific segments within that society — to a business’ own welfare.

Within CSR, no laws compel businesses to act for the general good of society. Accordingly, corporate social responsibility (also referred to as corporate citizenship) requires self-imposed policies and procedures that ensure the business behaves in a manner that is consistent with its goals to be a force for good in the wider world.

That definition may feel a bit academic. So, let’s examine what it looks like in practice as well as the leading benefits of corporate social responsibility to small business owners.

Corporate social responsibility in practice

Define your social benefit

Your business’ positive societal impact can be broad or specific. A broad approach includes operating your entire business with an eye bent towards improving societal welfare and reducing societal harm.

A broad approach requires you to implement policies and procedures across your business. Each may have little impact individually, but when combined demonstrate a corporate culture of social responsibility.

Here are some examples of individual business practices, and their associated social issue:

  • Recycling: environment
  • Wellness program: public health
  • Matching donation program: charitable giving
  • Energy conservation efforts: environment
  • Community volunteering programs: community development

These business practices might seem minor when taken individually. But, if you implement all or many of these practices, your business demonstrates a holistic dedication to social responsibility, and your overall impact may be great.

Alternatively, you may feel especially drawn to a single societal issue. Instead of implementing many policies and practices across your organisation, you may choose to focus all of your social efforts on that single issue.

For example, assume you are particularly concerned about public health, especially the obesity epidemic. You could be a corporate leader in this area by dedicating as many resources as possible to raise awareness and combat this problem. To lead the way, you might deploy a multifaceted approach:

  • Start a wellness program
  • Subsidise employee health insurance program premiums for reaching certain activity goals
  • Offer nutrition and fitness classes
  • Cover the costs of employee annual physicals
  • Sponsor local sports teams and fitness centres
  • Partner with local fitness centres for discounted employee memberships
  • Offer healthy snack choices in your vending machines
  • Hire or subcontract a wellness coordinator to manage your wellness program

You may be drawn towards a broad approach, a specific approach, or something in the middle. If you can identify an area or areas of society where you want to have a positive impact, you are on the right track.

However, identification alone is not enough. You need to include practices and policies within your business model that help support your goal of corporate social responsibility.

Shape citizenship into your business model

Integrate practices and procedures within your daily operations to ensure your business effectively achieves your social responsibility goals.

Tackle the issue from as many angles as possible. For example, if you want your business to take an active role to fight environmental waste problems, set up practices in as many areas of your business as possible to fight the problem.

At the employee level, replace trash cans with recycling bins at desks. Place trash cans at a few designated areas around the building. This setup will encourage employees to avoid non-recyclable waste and recycle whenever possible.

At the supply chain level, request packaging that is recyclable and uses as little plastic as possible. Set up a recycling program that allows customers to return obsolete products, or used parts, so you can handle recycling of goods that would otherwise end up in a landfill.

As you implement these practices, continue to look for more opportunities where your business practices can be adjusted to meet your social responsibility goals.

Corporate social responsibility requires planning and effort. You need to identify societal issues you want to address within your business and adjust your business model to proactively achieve your goals.

Fortunately, corporate social responsibility is now a popular topic among consumers. If your business acts socially responsible, your customers will notice and respond accordingly.

Social responsibility pays business benefits

Reputation

Corporate social responsibility plays a major role in the modern consumer marketplace. A Cone Communications study found that 91% of customers, from a global pool, expect businesses to act socially responsible. 84% reported that they proactively look for socially responsible products. In fact, 90% suggested they would boycott a company if that company fails to act socially responsible.

Your customers expect you to operate your business with practices that benefit society. If that’s the case, you might ask: How will corporate social responsibility impact my bottom line?

A Nielsen study surveyed 30,000 consumers across 60 countries. 55% of those consumers indicated they would pay more for products and services from companies committed to corporate social responsibility.

The Nielsen study suggests that you may be able to offset costs associated with social responsibility programs by increasing your prices. However, if 91% of your customers expect you to act socially responsible, but only 55% are willing to pay a premium for your dedication to societal good, can you afford to aggressively pursue corporate social responsibility?

Savings

Fortunately, many socially responsible business practices can actually save your company money. Energy conservation might be the best example of this concept. There is a direct correlation between saving energy and saving money.

The less energy your business consumes, the lower your monthly power bill is. A few years ago, General Mills refitted a 45-year-old plant to increase its energy efficiency. As a result, the company saves more than $4 million annually from that single location.

But, you don’t have to be a multi-billion dollar corporation with expensive heat recovery and recycling machinery to conserve energy. Little steps go a long way when it comes to saving energy.

You can implement some of the suggestions today:

  • Program thermostats to use HVAC resources less during off-hours
  • Turn lights off when rooms are not in use
  • Take advantage of natural sunlight
  • Run fans
  • Power down computers and other equipment at the end of the day
  • Educate your employees on energy efficient practices

Energy conservation is a major societal issue that impacts the global community. By implementing some simple best practices, you can have a positive impact and save on your operating costs.

Save energy, save money is an ideal win-win type of corporate social responsibility. But, not all efforts are as easy on your balance sheet. That doesn’t mean you can’t, or shouldn’t participate.

Start small

Free options

Your business doesn’t need to throw big money at major world issues to have an impact. In many cases, nonprofits that are already working on these problems need volunteer time from your employees to help achieve their goals.

Consider community projects and nonprofits local to your business.

If you promised a certain amount of volunteer hours to such organisations, would that positively impact your community? What if every business of your size did the same thing in their local community? What if such businesses continued to grow their hours promised as their respective employee bases grew?

Service hours are free, but impactful. Here’s a list of potential community service activities that positively impact your community:

  • School mentorship programs
  • Highway clean up projects
  • Business and career planning mentorship programs at addiction and recovery centres
  • Food bank/soup kitchen volunteer programs

Actions speak volumes. If you and your employees are engaged in service in your local community, your local customers will trust your dedication to corporate social responsibility.

Invest incrementally

Your first steps towards corporate social responsibility may include only methods that save you money or require service time. That’s a great start.

But, consider growing your efforts as you grow your business. You may only be able to offer volunteer student mentors to an underprivileged school today. But next year, you may be able to make a donation.

Five years from now, you may be able to help purchase a much-needed school resource. Ten years from now, you may be able to fund a scholarship program. Twenty years from now, you may be able to build an entirely new school building.

Wherever you currently stand in your corporate social responsibility journey, consider what you can to do to grow that effort. Be courageous. Your customers will notice, and your community will feel your positive impact.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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