Why Corporate Social Responsibility Matters For Small Business

As a consumer, stakeholder, or employee, all your decisions and emotions are driven by your personal beliefs.

It shouldn’t be surprising that many people care a lot about things like the environment, their community, and other people.

That’s why more and more businesses are launching initiatives to be more socially responsible. Their customers, employees, stakeholders all demand it.

This is the idea behind corporate social responsibility (CSR).

While CSR is typically considered a practice for large international businesses, many small and medium businesses (SMBs) are also starting to practice social responsibility and reap the benefits.

We’ll look at CSR, in general, to start within this post, going over examples, benefits, and disadvantages of CSR. Then we’ll conclude by looking at how CSR can apply to SMBs, especially NGOs, charities, and community-based brick and mortar businesses.

Finally, we’ll look at what kind of CSR jobs are available, and how you would pursue one if interested.

What is Corporate Social Responsibility?

 It’s important to make the distinction between CSR and charity.

While philanthropy is a form of CSR, there are many others as well that are more focused on business practices themselves.

Archie B. Carroll, Emeritus Professor of Management at the University of Georgia, distilled the CSR concept into a simple diagram called Pyramid of Corporate Social Responsibility. The diagram was part of a research paper on the subject that Carroll published in 1991.

It’s a popular diagram that has been referenced since its publication in 1996.

It is broken into the following sections:

1. Philanthropic Responsibilities (Be a good corporate citizen / Required by Society)
2. Ethical Responsibilities (Do what is just and fair / Expected by Society)
3. Legal Responsibilities (Obey Laws and Regulations / Required by Society)
4. Economic responsibilities (Be Profitable / Required by Society)

Social responsibility would fall mostly under the highest level (philanthropic or “discretionary” responsibility), which refers to social responsibility.

The pyramid dictates that once the foundational responsibilities have been met, CSR should be the next priority.

CSR might be a little vague still for you. While there’s no formal definition, here’s a general definition of what corporate social responsibility is:

Corporate social responsibility (CSR) refers to the accountability that a business must have to the people and community that it affects. This includes social aspects, but also environmental and economic impacts. CSR initiatives improve society in some way.

In almost every country, CSR is voluntary, meaning that it goes beyond legal requirements.

However, CSR can affect economic performance, as customers and stakeholders care about it.

That’s why ISO 26000 (social responsibility) was created. To give a minimum set of social guidelines that socially conscious companies should meet. This certification gives businesses concrete goals to work towards.

Examples of Corporate Social Responsibility

Despite CSR being a relatively new term, it’s been informally practiced since at least the nineteenth century.

British businesses would offer housing and amenities to workers (and their families) when those were major social issues.

Let’s take a look at a few examples of modern CSR so you can get an idea of what CSR initiatives might look like:

• Unilever’s Sustainability Efforts
• Owens Corning Focus on Sustainable Building
• Metro AG
• Levi Strauss – Workers Well Being Program
• Twitter – The Fledgling Initiative
• Starbucks – C.A.F.E. Practices

Unilever's Sustainability Efforts

Unilever is a massive international food and beverage business.

They have a comprehensive section on their website dedicated to sustainability, which falls under the umbrella of CSR.

Two of their most applauded initiatives are reducing plastic usage and sourcing sustainable tea (which involves fair working practices and preserving land).

They rank high on the Dow Jones sustainability world index, which is a great index that ranks the top socially responsible corporations in a wide variety of industries.

The Dow Jones Sustainability Index uses RobecoSAM’s “Corporate Sustainability Assessment” (CSA). Does the CSA deliver quantifiable business results?

Owens Corning Focus on Sustainable Building

Owens Corning is a U.S.-based, global company that develops and sells building supplies like insulation and roofing.

They topped the “Building Products” category in the 2018 sustainability world index.

Owens Corning has several projects that focus on how they can operate in a more socially conscious way.

One that you may recognize is their partnership with Habitat for humanity.

Some of their other more notable projects, goals and accomplishments include:

• Manufacturing products from 100% wind-powered electricity.
• Earning the first “asthma & allergy friendly” certification for their insulation products.
• Hosting the “Builder Summit” conference that focuses on educating builders to use more energy-efficient and durable construction technique.

You can see that their CSR projects are all directly related to their products and services. They focus on improving the social consciousness of their industry through action, rather than just philanthropy.

Metro Ag – A Social Leader in Food Retailing

The leader of the “Food & Staples Retailing” category in the 2018 sustainability report was Metro AG.

They outline their top social priorities in their annual corporate responsibility reports. Most recently, their focus is on:

• Lowering CO2 emissions.
• Food waste reduction.
• Social auditing of producers.

Benefits of Corporate Social Responsibility

Now that you have a good idea of what CSR might look like, it’s time to focus on the importance of corporate social responsibility.

The reason that so many businesses practice CSR is due to the many benefits that it brings with it.

SuperGreen Solutions offers a Green Compass Sustainability Award to socially responsible businesses. They’ve found that businesses with this award get:

• 20% higher sales and margins
• 55% higher employee morale
• 38% higher employee loyalty
• 50% less employee turnover
• 16% higher employee productivity
• improved public image
• improved competitive advantage
• improved financial performance
• increased valuation
• enhanced product / operational performance
• improved employee engagement
• improved new customer attainment
• improved legal compliance
• improved new market penetration
• improved emergency preparedness

These are all significant improvements in important metrics.

Let’s briefly look at why CSR initiatives lead to those benefits.

Higher Sales and Margins

Sales and margins are not always related, but with CSR, they often both improve.

If you have customers that care about social causes, they’re going to buy your business over your competitor that doesn’t have any social initiatives. Additionally, they’ll often pay more because they care about social responsibility.

As for margins, CSR projects often reveal inefficiencies and inspire innovation. Upgrading to the latest technology that is the most socially responsible often has a cost upfront, but lowers production costs and nets a long-term profit.

Higher Employee Morale, Loyalty, Productivity, and Less Turnover

Always remember that CSR is important to not just customers, but also stakeholders and employees.

It’s common sense that when you believe that your company is trying to improve the world (even just your community) in some way, you’re going to be happier with your job and work harder. The SuperGreen statistics support this concept clearly.

What impact has the evolution of CSR had on the environment? David Miller, CEO of the World Wildlife Fund Canada, shares his view.

Are There Any Disadvantages to Corporate Social Responsibility?

Clearly, CSR is just the best thing for all businesses, right?

In general, it’s a very good thing, but not always.

Let’s look at a few ways that CSR initiatives could backfire, as well as a few examples of this happening.

Here are some disadvantages of CSR:

1. CSR can lead to more scrutiny
2. CSR can be costly
3. It can lead to lower product quality or productivity
4. It may fail in the long-run
5. Additional press coverage may be negative
   
   
   

   Corporate Social Responsibility Leads to More Scrutiny

   When you unveil a new CSR plan to the public, it can attract a lot of press.

   That’s one of the benefits after all, as it usually leads to more sales.

   But with that press comes more consumers and journalists analyzing your CSR projects and even other parts of your business.

   If you can’t deliver on your CSR promises, no matter what reason, it will often be made public and can lead to significant economic consequences.

   Corporate Social Responsibility Isn't Always Cheap

   We saw that CSR often ends up increasing margins, mostly by correcting inefficiencies.

   But in some cases, the opposite can happen.

   To meet some goals, you may have to:

   • Add extra production steps.
   • Conduct research and development.
   • Change your operating procedure.

   The first 2 will almost always end in a net cost.

   As for changing your operating procedure, it can lower costs, but it doesn’t always go smoothly. It could result in lower product quality or productivity, leading to less profitability.

   Examples of Social Responsibility Fails

   Just like those good examples of CSR we looked at earlier, Wells Fargo also has a nice corporate responsibility page.

   Their problem was that most of the things on that page were mostly for show.

   In 2016, a scandal broke revealing that millions of unauthorized customer accounts were created by employees.

   It then came out that workers were under unreasonable pressure to meet sales goals, essentially not practicing internal CSR.

   

   Since then, Wells Fargo has faced a lot of consequences. Some of the most notable are:

   • A $185 million fine.
   • Having to fire 5,300 employees.
   • An SEC probe.
   • An identity fraud investigation by California’s attorney general.
   • CEO John Stumpf being forced to step down.
   • Class action suit settlement (around $110 million).

   CSR is only effective if you actually practice it. Being a large company, the extra scrutiny from CSR initiatives may not have played that much of a role here, but it may have contributed to the amount of traction this scandal gained.

   Volkswagen is another great example of a CSR failure. Despite many promises about trying to manufacture as environmentally friendly vehicles as possible, it was found that Volkswagen was rigging vehicles to pass emissions tests to save money.

   They were forced to recall millions of cars which led to billions of dollars in costs. Shortly after this incident broke, Volkswagen posted its first quarterly loss in 15 years.

   
   CSR for Small and Medium Businesses

   Modern CSR applies to many small businesses.

   However, some parts are more important than others, and some parts of CSR don’t apply altogether.

   Let’s break down how CSR applies to SMBs and look at some real examples in different industries.

   
   Benefits of CSR that do Apply to SMBS

   Any small business where you serve a local community can practice CSR.

   However, it doesn’t really apply to something like a small web development agency that has clients across the world.

   If your business is in an industry where being socially responsible is important, you get many of the same benefits we looked at for large corporations:

   • More sales
   • Happier employees
   • Can compete with chains It’s hard to compete with large chains on price. But if your business is more socially conscious, many consumers will buy from you instead.

   More Sales

   Local media usually covers CSR initiatives of SMBs, which your potential customers will see.

   Happier Employees

   Employees of SMBs feel they have more effect on a company’s impact, making CSR initiatives even more beneficial for your staff.

   Competing with Chains

   Employees of SMBs feel they have more effect on a company’s impact, making CSR initiatives even more beneficial for your staff.

    

   Parts of CSR that don't Apply to SMBS 

   The biggest difference between CSR for large businesses and SMBs is that reputation typically has less of an effect.

   A large company can lose 20% of their stock value overnight if a negativity story affects their reputation. On top of customers, CSR also applies to shareholders that an SMB wouldn’t answer to.

   Even if a small business doesn’t follow through as well on a CSR promise, they’ll likely lose some sales, but there’s usually a limit to how fast and deep the news will spread (unless it’s really bad).

   
   The Keys to Benefitting from CSR

   If you’re going to implement CSR projects in your business, there are 2 keys to making sure they are effective.

   David Goodman, president of SuperGreen Solutions, often mentions the “four Ps” of business performance:

   • Profit
   • People
   • Planet
   • Promotion

   Even if you clearly care about people and the planet by implementing CSRs, they don’t do much good if no one knows about them.

   You should mention your initiatives in your newsletter, website, presentations, and anywhere else possible. Additionally, if you’re a new business, reach out to journalists who write about CSR topics and pitch them your business to write about.

   The second key to success is obtaining credibility.

   A rising problem that will only grow is “greenwashing.” The term refers to businesses that promote their “green” policies, but never actually implement them, or do a poor job with them.

   In certain industries, consumers are growing skeptical of claims and want to see certifications from third-party organizations. Find a local one that has standards you can meet, and then mention this certification in your promotions once you obtain it.

   
   Finding and Getting Corporate Social Responsibility Jobs

   It’s a trick to narrow down CSR jobs because they have a huge range in titles. Some may explicitly be called “CSR director,” while others might just mention social responsibility or sustainability in the job description.

   It depends a lot on the amount of CSR a company does, and the specific initiatives.

   It also depends on the size of the business. A large company will have specific roles for CSR, but SMBs often have employees of all roles contribute to CSR projects.

   Here are the general steps you should take to find a CSR job:

   1. Pick an industry
   2. Network
   3. Use job boards

   
   Pick an Industry

   CSR projects in different industries look drastically different. Some industries focus on renewable energy, while others mostly focus on community projects. Pick one and develop any necessary skills you’ll need.

   Network

   Like any type of job, many jobs are won through networking. Attending major conferences and getting to know employers may be how you obtain this type of non-traditional job.

   Use Job Boards

   Even though the titles vary, you can search on most online job boards by keyword.
   It’s good to start with large job boards like Indeed and Glassdoor.

   On Indeed, you can search by keyword and it will show you any job posting that mentions your keyword (e.g. “social responsibility”).
   
   

   

   
   
   Glassdoor maybe even better.

   Again, you can search by keywords, but all job postings also have a “review” tab where current and former employees of that company can share their experiences.

   

   These reviews will help you find out if the company is serious about CSR initiatives and you’ll get to make an impact, or if the projects and titles are mainly for show and your impact could be limited.

   
   Conclusion

   Corporate Social Responsibility is something that businesses of all sizes can have, across most industries.

   It comes with many economic benefits that can help a business grow, like increased profits and happier employees.

   I strongly encourage you to consider CSR in any business you run, whether for personal motivations or the economic ones we looked at.

   If you know any business owners who are on the fence about CSR, please share this article with them, particularly the example sections.
   
   
   

About the Author

Dale Cudmore has over 5 years of experience writing for some of the most well-known digital marketing sites. He focuses on actionable marketing strategies and tactics for small businesses that help them reach the customers they deserve. He plays the cowbell in our imaginary band.

This Article was reproduced with permission from Digital.Com

View the original article here: https://digital.com/blog/csr-small-business/