Corporate social responsibility (CSR) is about businesses being responsible and sustainable, and having a positive impact on employees, customers, the local community, shareholders and other stakeholders.
Many people assume that CSR is solely a consideration for big businesses and that it is not relevant to smaller business. However, it is as important to smaller businesses as it is to larger ones. An increasing number of smaller companies now realise the benefits of CSR.
In 2015, the CSR agenda in Ireland was enhanced with the launch of a new service for small and medium-sized businesses (SMEs) by Business in the Community, the network for responsible business. The new service is called Responsible Business for SMEs and aims to inspire and support smaller business to improve and report on their responsible and sustainable practices.
Business drivers and benefits
The key drivers for CSR include:
- The growing movement towards ‘ethical consumerism’, whereby consumers are making purchasing decisions based on whether businesses act ethically or not
- The backlash against companies from the last financial crash and corporate scandals, which put ethics and corporate behaviour into the spotlight
- A recognition that CSR practices could improve business performance and enhance the reputation of companies with their customers and other stakeholders
CSR is now regarded as having some positive benefits to companies, and these are as applicable to smaller businesses as they are to multinationals:
- Customer engagement: When customers see companies acting in an honest and transparent manner, they will respond positively. This is driven by the phenomenon of ‘ethical consumerism’. A survey conducted by Ipsos/MRBI for BITC found that 89% of people believed it was important that businesses showed a high degree of social and environmental responsibility.
- Employee engagement: CSR promotes employee engagement and builds loyalty, which can result in lower staff turnover than competitors. Productivity is also affected positively, both in the short and long-term.
- Recruitment: Businesses are better able to hire staff, as businesses with good CSR policies are considered by graduates and other job seekers to be more attractive than other firms.
- Investment prospects: Investors are attracted to businesses that act responsibly and are ethically-minded.
- Innovation: Constant interaction with customers enables companies to keep abreast of emerging market trends and often leads to the development of new products and services.
- Tendering: government bodies, large firms and others are increasingly asking about their suppliers’ CSR practices. If you can demonstrate that you have better environmental practices than a competitor, for instance, you may stand a better chance of landing a contract.
- Competitive advantage: By publishing your sustainability credentials, you can differentiate your business from others in your sector.
CSR is often most visible at a community level. Staff outreach programmes, volunteering and social inclusion projects generate goodwill and support. Responsible businesses put something back into their community. This could be donating money to upgrade a playground, or helping to redevelop a community centre.
Small businesses are the beneficiaries of the CSR practices of larger companies. Some retailers, often in response to customer demands, are seeking to do business with their local suppliers. Local growers and food producers are being given opportunities to stock local stores and, sometimes, this acts as a bridgehead into national and even international markets.
CSR case studies
Any doubts about the business benefits of CSR are easily dispelled by the Responsible Business for SMEs case studies. Here are three examples:
- Carambola Kidz says it has 95% staff retention through flexible workplace policies
- KDD minimises its environmental footprint by recycling 100%, resulting in cost savings, improved competitiveness and enhancements to its brand
- Fuzion harnessed the power of social media to support teachers and school children in counteracting cyber-bullying
Irish business Tico Mail Works, which is featured in this ThinkBusiness.ie case study, reduced its energy bills over a five-year period and undertook an energy audit to monitor consumption. It also became one of the first SMEs in Ireland to produce a sustainability report. These practices have had a positive effect on costs, which enables the business to undertake more CSR initiatives, such as:
- All employees participating in a profit-sharing scheme
- Sourcing most of its goods and materials from Ireland
- The addition of a six-month leave of absence programme for staff
3 Action Points