Every business seeks to maximise its profits, but Corporate Social Responsibility (CSR) would seem to contradict this logic by taking away some of the company’s resources.
At its heart, Corporate Social Responsibility is about an organisation taking responsibility for the impacts of its decisions and activities on all aspects of society, the community, and the environment. Corporate Social Responsibility is more than just donating money; it’s about contributing to the health and welfare of society, and operating transparently and ethically. More importantly, this way of operating should be embedded in the business, rather than as an afterthought.
What many may not know is that Corporate Social Responsibility also helps to build a good corporate reputation. In other words, companies agree to do more for society than simply creating jobs and paying wages and taxes with the expectation of some reward — such as a good reputation or a competitive advantage in the local market.
Corporate philanthropy can serve to promote solidarity in a society in which different groups agree on what is ethical and beneficial, according to the researchers. In societies built on this consensus model, CSR can smooth out the effects of economic inequality, and corporations voluntarily support public benefit projects to achieve this goal.
It can be understood that CSR helps to build a reputation as a responsible business and as a good citizen.
Keeping social responsibility front of mind encourages businesses to act ethically, and to consider the social and environmental impacts of their operations. In doing so, organisations can avoid or mitigate detrimental impacts of their business on the community. In some cases, organisations would find ways to make in their services or value chain changes that actually deliver benefits for the community, where they once didn’t.
In addition, CSR supports public value outcomes; put simply, public value is about the value that an organisation contributes to society. A sound, robust Corporate Social Responsibility framework and organisational mindset can genuinely help organisations deliver public value outcomes by focusing on how their services can make a difference in the community.
This might happen indirectly — where an organisation’s services enable others to contribute to the community — or directly, through the organisation’s own activities, such as volunteerism and philanthropy.
Another benefit of a strong Corporate Social Responsibility framework is that it is essential to building and maintaining trust between the company and clients. It can strengthen ties, build alliances, and foster strong working relationships with both existing and new clients. One way this can be achieved is by offering pro-bono or similar services where a company can partner with not-for-profit organisations to support their public value outcomes, where funds or resources may be limited.
In turn, this helps deliver public value outcomes that may not have been delivered otherwise. Studies have shown that a robust Corporate Social Responsibility framework can also help a company become more attractive to potential future employees who are looking for workplaces with socially responsible practices, community-mindedness, and sound ethics.
The era of social enterprises is upon us. Now more so than ever before, the most successful, respected, and desirable businesses exist to do much more than make money; they exist to use the power of business to solve social and environmental problems.
Study after study has shown that socially responsible businesses (aka social enterprises) not only provide sustainable business models, but also have improved marketing, employee recruitment, employee satisfaction, legal treatment, customer loyalty, brand perception, and richer partnerships.