Corporate Social Responsibility (CSR) and Your Company
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If we are to move towards a sustainable future together, the corporate sector needs to do its part. Corporate Social Responsibility (CSR) is the model for this–it demonstrates that, when it comes to sustainability, a company’s responsibility extends beyond its economic goals. Fulfilling social responsibilities requires taking on ecological and social goals that are not just empty promises.
Understandably, piling CSR on top of your economic goals for your business can sound like an uphill battle. That’s why we’ve put together this article to help demystify CSR and provide you with achievable goals for you to make your contribution.
CSR in a nutshell
- CSR is more than just sustainability measures and includes social responsibility initiatives
- Companies who commit to their CSR goals are likely to see image and cost-related benefits
- CSR can be divided into internal, middle and external areas of responsibility
- The ISO 26000 standard serves as an essential basis
Definition: What is Corporate Social Responsibility (CSR)?
The European Commission defines Corporate Social Responsibility as ‘the responsibility of enterprises for their impact on society’. It is broken down into these features:
- Primary relation to social and environmental aspects.
- Voluntary measures intended to serve society. By engaging with them, you as an entrepreneur are going beyond what is required by law.
- A focus on business activities. While charity can play a role, CSR is about how you run your business. The intent being that social responsibility is incorporated directly into your business decisions.
CSR is largely made up of fair business practises, a human resources policy that is humane and equal, the sustainable use of natural resources, protection of the climate and preservation of the environment, and ultimately the broader commitment to society as a whole.
Why is CSR so important?
Running a company, each decision you make impacts the environment and affects society. The resources you use and employees who work for you are your responsibilities. How you choose to use them to drive your company forward will determine your impact.
Following CSR will ensure that the use of your material, financial, and human resources is in line with your profit margins
In this way, CSR will benefit both the wider culture and your company as it continues to meet its goals. The measures for this include:
- Creation of prospects for ecological action and resource conservation
- Fair and equal treatment of all employees
- Cost savings through innovative and more efficient processes
- Improved company image
- Creation of a competitive advantage over the competition
- Appealing company culture for new employees
These measures should make it clear to you that CSR initiatives will pay off for you as well. It’s about mutual profit, not individual sacrifice.
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The history of CSR at a glance
CSR first became known to the public in 1990, but at the time it was focused on social responsibility and didn’t include the environmental component.
Expanding globalisation and the growing threat of climate change fuelled the spread of CSR and its adoption of environmental responsibility.
2011 saw CSR defined by the European Commission. The UN established the Guiding Principles on Business and Human Rights and updated the OECD Guidelines (Organisation for Economic Cooperation and Development). For the first time, private-sector companies were given sustainable measures to follow and communication on the topic began at an official level.
Since 2017, German companies have been required to publish a CSR report, ensuring transparency of your measures towards the betterment of society and the environment.
What CSR activities are there?
Each CSR measure fits into one of three areas, making it easier for you to prepare your goals:
Inner area of responsibility
In this area, your focus is on enacting social responsibility in the core of your business. Fair business practises and compliance with the law are chief among your focuses here.
CSR is voluntary, so your internal responsibilities concern compliance with employee protection. In many countries this is hardly regulated, potentially leading to unethical labour practises.
Under CSR, your adherence to fair working conditions and wages extends beyond what is required by law. CSR enables you to set an example as a company, not just achieve the bare minimum.
The International Labour Organisation has five standards outlining the global minimum standard for employees:
- Freedom of association and the right to collective bargaining.
- Elimination of forced labour
- Elimination of child labor
- Prohibition of discrimination in employment and occupation
- Compliance with the ILO core labour standards can also be counted among them
Intermediate area of responsibility
Covering your company’s entire value chain, this includes labour standards, environmental standards, and supply chain management. The intermediate area also encompasses stakeholders’ interests, for instance, local residents who will be affected by your company’s production.
The UN Global Compact initiative has compiled a list of 10 principles which can help you navigate this area of CSR. Launched in 2000 by Kofi Annan, the UN Secretary-General at the time, it has since become ‘the world’s largest and most important initiative for responsible corporate governance’.
Concrete measures you might implement for this area of responsibility might be:
- Additional occupational health and safety measures
- Employee-oriented personnel policy
- Ecological design of the site
- Economical use of natural resources
External area of responsibility
This is where charity enters the equation. All voluntary social and ecological initiatives you implement under your company’s name that go beyond core business values belong in this area.
These include, for example:
- Internal climate neutrality initiatives
- Local involvement
- Releasing employees for volunteer work (corporate volunteering)
ISO Standard 26000 as basis for CSR
An international NGO, the International Organisation for Standardisation (ISO) is made up of national standards bodies publishing various proprietary, industrial and commercial standards.
ISO 26000 is their latest contribution to this catalogue of standards, listing voluntary standards to assist companies in implementing their CSR.
What ‘ISO’ means
Understanding CSR, CR, and sustainability
Companies often conflate corporate social responsibility with sustainability.
The concept of CSR is narrower than sustainability, however. Where sustainability and sustainable management describe the overall goal of responsible action, CSR denotes the specific measures taken to achieve that.
You might also come across the term corporate responsibility (CR). Describing the same thing, this alteration to the terminology is designed to move away from corporate responsibilities always being tied up with ‘social’ ones. Given that corporate responsibilities now include environmental aspects, they are not merely social anymore and so the initialism can be misleading.
That said, both CSR and CR have the same principles.
Corporate Social Responsibility: Where to start?
When you decide to tackle CSR in your own entrepreneurial activities, approach it by beginning with the outer areas of responsibility and working your way inwards. So even before making your donations to the local kindergarten, consider the working conditions of the production sites–begin with production. Focusing here first may not lead to the most impressive immediate gain, but if production is taken care of, all subsequent CSR tasks will be easier to handle.
This doesn’t mean you should scale back any charity projects–just that considering production first will offer perspective on sustainability overall. Especially when making future decisions.
For more information on concrete examples of implementing responsible actions, visit the International Labour Organisation and UN Global Compact network websites.
Aim for realistic, achievable goals for your company to meet and get as many of your team involved as you can. Promote transparency and open communication with each goal: your company will only progress if everyone combines their efforts to meet the same responsible goals.
Sustainability at Penta
Penta aims to cut its annual emissions by at least 10%.