In an interconnected world facing multifaceted challenges, companies play an important role in responding and adapting to these challenges for its well-being, survival as well as internal and external stakeholders and shareholders.
Developing and implementing a coherent and effective strategy aligned with Corporate Social Responsibility helps companies assure that their stakeholders - such as consumers, employees, suppliers, shareholders - are satisfied, monitor and report its risks and performance beyond financial considerations, and contribute towards a thriving business model.
CSR is being embraced across all industries, as companies are shifting their focus from being just profit-oriented to becoming socially- and environmentally-conscious ones.
Increasingly, consumers want to know how the brands they support and purchase from are addressing environmental and social issues they come across in newspapers, digital media and peer dialogues.
More number of consumers are paying attention to these efforts to inform their purchasing decisions. This change in consumer demand presents the need for companies to embed CSR into their business model.
According to a survey of 420 American consumers, 75% were likely to start shopping at a company that supports an issue they agree with, and 71% wanted businesses to take a stance on social movements.
The survey participants also valued elements like environmentally-friendly business practices, social responsibility, and support of the local community above product price. Thus, the ‘conscious customer’ is increasingly well-informed and assertive about corporate impact.
This increased scrutiny by customers is indicative of changing nature of brand loyalty whereby customers would earlier be guided by marketing tactics and now invest their time and energy in vetting the outcomes of a brand of their liking to inform their purchasing decisions.
The term ‘greenwashing’ refers to companies intentionally misleading consumers into thinking that a product or service is sustainable when it is not; the use of this term helps to describe and raise consumer awareness of fraudulent environmental claims.
The implementation of CSR activities and public disclosure of CSR reports can also create value from within the company, by motivating employees and cultivating a sense of purpose.
CSR programs have the potential to encourage cooperative behavior and closer relationships among employees, as well as increase employee engagement and identification with the corporation.
Other data suggests that sustainable practices that come from top down have the potential to attract talent, enhance job satisfaction, and improve employee retention, among other benefits. People want to feel like their work aligns with their values, and that their labor is meaningful.
Employee opinion can also swing in the opposite direction.
Employee activism is a rising movement, as employees, like consumers, maintain that companies have a responsibility to proactively address CSR issues.
Every company, irrespective of its size and sectoral focus, has a responsibility to its investors. One of those responsibilities is making sure that the company is doing everything it can to be responsible and ethical in its operations.
CSR activities may help a company attract investors by showcasing good risk management practices and awareness of impact.
A CSR report transparently indicating the achievements and outcomes of a company helps investors assess the scale and scope of aspects that the company has considered and addressed. It reflects the seriousness of a company's commitment towards CSR initiatives.
It also helps improve accountability, transparency while reducing investment risks.
and International Sustainability Standards Board (ISSB)
help align extra-financial concerns with financial reporting. These standards and targets also help share knowledge on good practices for voluntary and mandatory CSR activities.
In several parts of the world, governments are mandating formal disclosure and reporting on these standards. The European Commission, for instance, passed the Corporate Sustainability Reporting Directive in 2021, and the United States’ Securities and Exchange Commission (SEC) is currently in the process of producing a new climate disclosure rule.
Companies are more likely to prosper nowadays if involved in the community and the people around it.
Companies need to take an active role in the community, beyond just making a profit. The positive benefits of this attempt include the company’s expansion and durability of its success.
So, what are you waiting for? Start implementing your CSR strategy today!
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