Gone are the days where businesses only needed to focus on profitability above all else.
These days you can’t go to any website without being confronted by their social impact standing. Companies nowadays are not only wildly encouraged to take part in various social issues, but also have most of them in writing for the company’s policy. It’s a way for them to stay involved in the community while also making sure the work they do is being utilized for the greater good of society like through Ecovadis sustainability reports.
Today’s companies are more than just expected to care about making the world a better place for their employees and their employee’s families. They’re expected to serve their communities, listen to their customers, take public stances and action on important issues, value and support employees, work for sustainability, and respond to current events. Corporate social responsibility – or CSR – makes this easier.
You can think of CSR as a self-regulating business model. It aids companies in being socially accountable to itself, its stakeholders, and the general public. The causes they champion can range from climate change, social responsibility, community impaction, charity work, or anything that offers external positive impact. CSR was previously used more to impress shareholders exclusively, but in recent years has become a major selling point for employees, prospective employees, and both existing and potential customers.
With 52% of millennials wanting to buy from brands whose values align with their personal values, it’s a no brainer to have a CSR policy in place. Then comes the hard part – evaluating them.Typically, the best way to keep track and measure your CSR efforts is to consider ESG (Environment, Social, and Governance). These three tangible objective metrics represent a triple bottom line that corporations use in self evaluation. Investors and consumers can also use these figures to measure a company’s impact.
Let’s take a look at them one by one.
Environmental
When someone hears the word environmental, their mind often goes straight to “sustainability”. They wouldn’t be wrong in this case. But for mega corporations with an ethical responsibility to give back, companies should evaluate their environmental impact and consider whether they are negatively impacting or polluting the planet. Corporate social responsibility is rooted in preserving the environment. A company can pursue environmental stewardship by reducing pollution and emissions in manufacturing, recycling materials, replenishing natural resources like trees, or creating product lines consistent with CSR. This is typically done by taking a more comprehensive look through their supply train, their product delivery system, or the product itself. If a company concludes that they are producing negative impacts on the environment, they must take action to mitigate or remedy said impacts.
Social
The “S” in CSR stands for “social”, meaning how just and fair companies compensate its employees. Companies shouldn’t just pay their workers a reasonable equitable wage, but offer ways to make a positive impact on their wider community. It requires a company to contribute to society, whether a company donates profit to charities, enters into transactions only with suppliers or vendors that align with the company philanthropically, supports employee philanthropic endeavors, or sponsors fundraising events.This could be through charitable donations, community service, or any other myriad of opportunities. Measuring this is usually done by looking at impact reports or deploying feedback forms.
Governance
Governance refers to internal management. It asks that companies have appropriate incentives for management, as well as processes in place to assure that the stakeholders of the company are well respected and represented fairly and equitably during business meetings, decisions and processes. It also includes acting fairly and ethically. Instances of ethical responsibility include fair treatment of all customers regardless of age, race, culture, or sexual orientation, favorable pay and benefits for employees, vendor use across demographics, full disclosures, and transparency for investors. This can usually be measured by drawing up transparency reports and having annual reviews of different leadership practices in place at a company.
Companies looking to measure its success beyond the bottom line results can adapt CSR strategies that extends beyond the products they sell. Engaging in CSR means a company operates in ways that enhance society and the environment instead of contributing negatively to them, and there’s never any harm in that.
