What is corporate social responsibility?
Corporate social responsibility is the way a company handles the impact of its operations and practices on society, the community, human rights, and the environment. It’s a commitment by a company to manage its activities responsibly and ethically in conformity with public expectations. Many business owners view operating a business as more than just selling products and generating profits. They also feel it can be an opportunity to help people and uphold values like fairness, justice, and integrity.
From the human resources department to the supply chain, corporate social responsibility can influence nearly every aspect of a business, and it plays a key role in a company’s corporate governance approach. Incorporating it into your operations can help you define your success as a business, build your brand identity, reduce your impact on the environment and even gain an advantage over the competition.
Why is corporate social responsibility important?
Adopting corporate social responsibility is a way that businesses can show they care about solving prevalent social and environmental issues. Some of the major reasons why corporate social responsibility is important include:
Preserve the environment
A primary component of social responsibility is embracing business practices that protect the environment. Responsible companies aim to reduce their impact on the environment by limiting energy usage, minimizing waste, and preventing pollution. Many consumers appreciate and respect businesses that show concern for environmental issues. A powerful corporate social responsibility strategy focuses on identifying ways to ensure company activities are as environmentally friendly as possible.
Protect human rights
Corporate social responsibility demands that a business’s practices are respectful of human life and dignity. It’s critical that businesses heeds the rights of their employees and customers. For instance, a business owner should treat their employees fairly by setting reasonable working hours and compensating them accordingly. A key tenet of corporate social responsibility is honoring the rights of people regardless of their race, religion, gender, ability, or other social identities.
Serve communities
One of the pillars of corporate social responsibility is community engagement and improvement. For instance, a company’s corporate social responsibility strategy may involve supporting a local charity with in-kind donations and financial contributions to help reduce poverty and enhance the quality of life within the community.
Build lasting relations
Businesses that operate abroad can abide by the rules and regulations of their host country more easily if they already have a viable corporate social responsibility strategy in place. Adhering to the rule of law and showing interest in environmental and social issues in the host country help build lasting relations and strong business ties between the investing and host countries.
Promote fair trade
Fair trade is gaining importance as one of the key instruments of corporate social responsibility. It ensures that companies, particularly those that have a monopoly in a market, pay their producers fair wages for their work. It also guides business practices to curb unhealthy competition and price wars.
Examples of corporate social responsibility activities
Here are some practical examples of social responsibility activities you can try for your business:
Parental leave for new parents
Many companies give their employees a certain number of weeks of time off for parental leave. Companies may provide leave for a child’s first year or at other times of the employee’s choosing. This can help support the well-being of their employees by allowing them to care for their infants and spend time with their families.
Re-investing a portion of profits into health and safety programs
Many companies choose to give back to the community by re-investing a portion of their profits into environmental, research, health and safety programs. Companies may choose to implement initiatives for women’s health, disease prevention, education or other causes.
Supporting charity and non-profit organizations
One of the aims of social responsibility is to eradicate poverty and improve lives. By supporting charitable organizations, your company can make a difference in addressing issues that affect society such as homelessness, unemployment and addiction.
Benefits of corporate social responsibility
Incorporating social responsibility into business practices can offer many benefits, including:
Improves brand reputation
Demonstrating your commitment to addressing social issues and conserving the environment can improve your company’s image and reputation. Your audiences may admire your efforts to make society a better place and thus become fans of your brand.
Opens up new markets and opportunities
If people like a brand, they may be more likely to tell others about it. Thus, having a strong brand reputation can help your company reach a larger audience. Conducting a successful corporate social responsibility campaign can help expand your market presence, increase your customer base and take advantage of new opportunities for doing business.
Reduces operational costs
Social responsibility can reduce operational costs by encouraging companies to engage in more sustainable practices like consuming less energy and using recycled products. Corporate social responsibility can also improve operational efficiency, which can reduce costs in the long-term. For example, supporting the well-being of employees can improve employee productivity and thus make operations more effective.
Attracts more customers
Many customers prefer to buy products from companies that are dedicated to addressing environmental and social issues. Some may even be willing to pay more for products from sustainable businesses. By engaging in corporate social responsibility, your business may attract new customers, which can increase sales.
Provides a competitive advantage
With improved brand recognition, customer engagement, employee engagement and enhanced market share, businesses that decide to embrace corporate social responsible may gain a competitive advantage over businesses that do not have the strategy.
Frequently asked questions about corporate social responsibility in Canada
Is corporate social responsibility mandatory in Canada?
No, corporate social responsibility is not mandatory in Canada. However, the Government of Canada provides businesses with guidelines on how to operate in an economically, environmentally and socially sustainable manner. The decision to follow these guidelines is voluntary, but businesses still need to adhere to a wide variety of laws, including anti-discriminatory and labor laws. You can consult with a legal professional to gain more of an understanding of these.
How do you implement a corporate social responsibility strategy?
A good way to implement a corporate social responsibility strategy in your business is to build it around your business’s purpose and mission. You can choose to support several causes, but it’s important to align them with what your business does so your efforts can be effective. You can also learn about and promote topics that matter to your target audience. This can help you connect with more people and attract customers.
Who decides the corporate social responsibility strategy?
In most cases, executive level managers, including the chief executive officer, the chief financial officer, the chief information officer, and the chief operating officers, and the board of directors are all responsible for a corporate social responsibility strategy.
