What is Corporate Social Responsibility?

The definition of corporate social responsibility (CSR) is constantly changing. However, there remains the same concept that business activities affect society, the environment, and the economy. Businesses should thus act responsibly to reduce the negatives and enhance positive impact.

For small to medium-sized businesses (SMEs) CSR could mean fair working conditions, where raw materials are sourced, and proper waste disposal. From an operations standpoint, this could mean taking customers’ concerns to heart, which also lifts brand reputation. Similarly, engaging in one-off donation drives or sponsoring non-profit events is a great way to demonstrate CSR.

How do I Develop a CSR Initiative?

No one-size-fits-all formula for CSR exists, as every business model is unique. However, the roadmap will be similar:

1. Increase the awareness of how you are already meeting your goals.
2. Find small actions in areas such as human resources, supply chain, community, or environment that could be ‘quick wins’.
3. Link CSR measures more closely with the core objectives and priorities of a business. Resource Efficient Scotland is a free advice and support program to save money and reduce energy, water, and waste. The online guides and webinars are tools to start you on the way.

The following are areas companies can target within their operations to develop strong CSR:

1. Diversity, Equity, and Inclusion

In today’s connected world, Diversity, Equity, and Inclusion (DEI) has become a hot topic of corporate responsibility. DEI aims to foster a more equitable workplace, drive innovation, improve employee satisfaction, and enhance reputation.

A common practice was to hire teams to oversee these actions. However, many companies are now dismantling their DEI departments, especially in the tech sector, but still remain dedicated to DEI.

The Business Case for DEI

• Innovation and Creativity: Diverse teams bring a variety of perspectives, leading to more innovative solutions. When employees from different backgrounds collaborate, they can challenge assumptions and think outside the box, resulting in creative solutions.
• Employee Satisfaction and Retention: Inclusive workplaces foster a sense of belonging, which is crucial for employee satisfaction and retention. When employees feel valued and respected, they are more engaged and less likely to leave the company.

Best Practices for Promoting Diversity, Equity, and Inclusion

• Inclusive Hiring Practices: Implementing unbiased recruitment processes helps attract a diverse pool of candidates. Diverse interview panels and blind resume reviews can achieve this.
• Inclusive Policies and Practices: Reviewing and updating company policies to ensure they are inclusive is essential. This includes flexible work arrangements, comprehensive benefits that cater to diverse needs, and transparent pathways for career advancement.

2. Supply Chains in Corporate Responsibility

In an increasingly globalized world, the way companies source their products and materials has come under fire. Secondly, with the disturbance of the pandemic, supply chains have become stressed and unpredictable. This has brought innovative and responsible practices to light, such as onshoring.

Pre-pandemic, competitive advantage created a global economy that was almost entirely dependent on trade and offshoring. For example, China excelled in making cheap goods which traded with Germany for high-performance cars.

Now, manufacturing within a country’s borders is beginning to gain traction. SMEs that require manufactured goods are vulnerable to supply chain issues and can benefit from this new practice, which is also preferable for reducing transportation pollution.

Why Ethical Supply Chains Matter

• Human Rights and Fair Labour Practices: Ethical supply chains ensure that workers are treated with dignity and respect. This includes fair wages, safe working conditions, and the prohibition of forced labour and child labour.
• Environmental Sustainability: By adopting ethical supply chain practices such as onshoring, companies can significantly reduce their environmental impact. This involves sourcing materials responsibly, minimizing waste, and promoting sustainable farming and manufacturing practices.
• Consumer Trust and Brand Loyalty: Modern consumers are increasingly conscious of the ethical implications of their purchases. Companies that demonstrate transparency and commitment to ethical practices build trust and loyalty among their customers.
• Risk Management: Ethical supply chains mitigate the risk of scandals and disruptions. Companies can prevent legal problems, boycotts, and harm to their reputation by making sure suppliers follow ethical guidelines. Furthermore, finding sources that are reliable and closer to the market can reduce potential disruptions to a supply chain.

Best Practices for Ethical Supply Chains

• Regular Audits and Assessments: Conducting regular audits and assessments of suppliers is essential to verify compliance with ethical standards. These audits could include on-site inspections, interviews with workers, and reviews of relevant documents.
• Transparent Reporting: Transparency is key to building trust with consumers and stakeholders. This means sharing information about how a company manages its supply chain, such as audit findings.
• Sustainable Sourcing Policies: Developing and implementing sustainable policies ensures that materials are sourced responsibly. This includes finding certified materials and supporting suppliers who demonstrate a commitment to sustainability.

3. Corporate Philanthropy

5 Corporate Social Responsibility Examples

Good CSR Programs:

TOMS Shoes’ One for One Model: TOMS Shoes has built its brand around its CSR efforts and a One for One model. For every pair of shoes purchased, the company donated a pair to a child in need. This initiative expanded to include eyewear, where purchases help provide eye care to those in need. It has since shifted its model to donating 1/3 of profits for grassroots good.

Salesforce’s 1-1-1 Philanthropic Model: Salesforce employs a 1-1-1 model of integrated corporate philanthropy. The company dedicates 1% of its equity, product, and employees’ time to philanthropic efforts.

Through this approach, Salesforce has given millions of dollars in grants to nonprofit organizations. They have also provided technology to these organizations. All these efforts aim to support global social and environmental initiatives.

Bad CSR Practices:

Nestlé’s Water Exploitation Controversies: Nestlé has faced multiple controversies over its water extraction practices. The company received criticism in California and Michigan for taking too much water from local sources during droughts. Additionally, they have been criticized for paying low fees.

These practices led to environmental degradation and sparked public outrage over the impact on local communities and ecosystems. The company’s actions are seen to favour profit over environmental and community well-being.

Boeing 737 MAX Controversy: The crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 caused 346 deaths. The issues were with the Maneuvering Characteristics Augmentation System (MCAS). Boeing was unfortunately not transparent about the problems.

Investigations revealed ethical breaches, including undue influence on regulators and dismissive internal communications. The delay in grounding the 737 MAX fleet and poor crisis management damaged Boeing’s reputation. This led to significant financial losses for the company. It also highlighted issues with corporate governance and leadership accountability.