Real benefits
Many see CSR as being merely good PR, but there are real business benefits to getting involved in any corporate social responsibility programme. Owen McQuade sums up the advantages.
Businesses do not operate in isolation. Key stakeholders that are impacted by any business include customers, employees and local communities. Corporate social responsibility is a formal programme of managing these impacts in a positive way and to truly engage with these key stakeholders on a wider agenda.
Working with the local community helps businesses engage with local stakeholders. This is often done by working with local NGOs or sponsoring local charitable events. It is also effective by initiating or partnering in projects that have a direct impact on local communities.
There are obvious benefits to targeted activities such as initiatives that improve the environmental performance of the organisation, such as reducing the cost of waste disposal. This type of CSR activity goes beyond the minimum legal compliance requirements.
CSR offers companies the opportunity to enhance its reputation. Improved corporate reputation has direct benefits in making it easier to recruit staff. An improved reputation has been shown to impact directly on staff turnover, which in turn reduces the expense of having to recruit replacement staff.
CSR offers companies a formal programme for managing and improving the environmental and social impacts of their activities. There are clear tangible benefits for taking such an approach.
CSR can complement a solid corporate reputation built on a business meeting its legal responsibilities. It cannot be used a merely a cover for irresponsible behaviour. No amount of ‘green wash’ will offset a company’s poor environmental performance. Distrust amongst key stakeholders, particularly customers, will quickly impact on a company’s bottom line.
CSR provides companies with a means for measuring and managing risk. By engaging with the public through a CSR programme, the organisation will better understand both social and environmental risks. Managing social and environmental risk will directly impact on institutional investors.
Research from the University of North Carolina has shown that involvement in CSR improves an organisation’s innovation and learning. By engaging with the community, a company will better understand the significant social and technological changes that impact on their businesses. It also helps to identify new market opportunities.
With investors increasingly considering a company’s social and environmental performance, a CSR programme can help improve a company’s access to capital. Traditionally investors took a very narrow view of a company, whereas they now consider a more holistic perspective which looks at intangibles such as quality of management and the company’s reputation. Certainly, major failings in the social and environmental area can have a significant negative impact.
CSR is not just restricted to the private sector. Locally, the Information Strategy and Innovation Division in the Department of Finance and Personnel has a formal CSR programme with staff participating in many events such as a family fun day for BBC Children in Need which raised £11,000 for the charity.
The greatest benefit in terms of community engagement and enhanced reputation is when the CSR activities align with the core operations of the business. Many activities are badged as CSR when they are nothing more than corporate entertainment, such as sponsoring high-profile arts events. By getting involved in activities close to core activities there is a two-way engagement. For example, getting involved in local skills and training programmes for unemployed people can often increase the local skills pool for the company. It also offers the opportunity to build real and lasting relationships in the local community.
