With new directives, updates in legislation, and the changing expectations of consumers, corporate social responsibility (CSR) is a bit of a moving target these days. Add in the level of nuance that tends to surround CSR and you’ve created a perfect environment for misunderstanding and CSR misconceptions. It’s no wonder that there are a lot views, expressed as fact, that don’t stand up to scrutiny. We look at a few of the more common misconceptions regarding CSR below.
Employees Don’t Care About CSR
It’s easy to fall into the trap of thinking employees only care about salary, work-life balance and other direct benefits. But, actually, this is far from the truth. A 2021 PWC survey found that 84% of employees and 78% of consumers indicate they are more likely to work for/buy from a company who stands up for the environment. In addition, a 2020 Bank of America survey found that 75% of millennials and gen z think considering ESG factors is important when investing. This shift toward values-based employment isn’t just about attracting talent but also retaining it, as employees increasingly seek roles that align with their personal values.
CSR is Only Important When You’re Dealing With Consumers
Even if you only operate in a B2B environment, CSR and ESG are important. The way your company is perceived will impact your ability to do business. Company image still has a role when trying to attract other businesses to be customers. Your business success can be influenced by how comfortable your business customers are when working with you. Being able to alleviate any concerns about your long-term sustainability will play a vital role in the perception of your company by your customers. Especially, when considering the ever-increasing focus on supply chains.
Investors Aren’t Interested in CSR – They Only Care About The Bottom Line
We’re not arguing that investors don’t care about profit. But it’s not their only concern. Increasingly, they want to understand how a business is operating and be satisfied that the business is sustainable in the long term. Corporate social responsibility and ESG factors can improve stock returns. Companies in the “100 Best Companies to Work For in America” generated 2.3% to 3.8% higher stock returns per year than their peers over a 25 year span (1984-2011). As a result, many companies now believe that they increase economic value through creating societal value, and are actively working towards that.
More and more, investors are coming to appreciate that effective CSR enables companies to keep their employees motivated and their customers happy. All of this leads to a healthier bottom line.
Moreover, the rise of ESG criteria is evidence of this growing trend. Investors are not just looking at financial returns but are actively seeking companies with strong environmental and social governance. This shift is driven in part by the growing evidence that businesses with strong CSR practices are better positioned to manage risk, avoid scandals, and capitalize on long-term growth opportunities.
Donating Money is Enough
Although charitable donations can be part of an effective CSR strategy, just giving money is not in itself enough. By limiting yourself in this way, you’re failing to take advantage of the benefits that a broader CSR program can bring to your organization. These include improved recruitment and retention, increased stakeholder loyalty and meaningful communication opportunities.
CSR has evolved into a more holistic concept. Today’s successful companies go beyond donations to engage in more sustainable and long-term initiatives, such as reducing their carbon footprint, adopting ethical sourcing, and developing volunteer programs for employees. This proactive approach not only enhances corporate reputation but also fosters community goodwill and resilience.
Only Large Corporations Need to Worry About CSR
While the ‘C’ in CSR does stand for ‘Corporate’, this doesn’t mean CSR is only an issue for big business. It is also important for SMEs. Like larger organizations, SME’s face demands to validate their social responsibility. The drive to create sustainable businesses applies to businesses of all sizes.
In fact, small and medium enterprises (SMEs) can leverage their size and agility to implement more localized, community-focused CSR initiatives. Many SMEs have a unique advantage in their close ties to their communities. This allows them to create meaningful impacts at the grassroots level. Moreover, consumers today are looking to support businesses of all sizes that demonstrate responsibility and transparency.
CSR is Immeasurable
The fact is corporate social responsibility can be and is measured. But, to get this right, it’s important to have the right metrics and the right data.
CSR and ESG reporting frameworks, such as GRI and IFRS, mean that companies now have more guidance than ever before on the metrics to use when reporting. Plus, with the right tools and structures in place, it’s easier to collect and analyze data, and make informed decisions.
