The concept of Corporate Social Responsibility(CSR) emerged in the latter half of the 20th century. Corporate social responsibility means management and relationship building with partners to improve the image and increase credibility of the company. For members of the Business Leaders Forum, corporate social responsibility is a voluntary commitment by firms to be responsible towards the environment and society in which they operate.
Stakeholders are all individuals, institutions and organizations that are able to influence running a business or be influenced by it. They include investors, employees, customers, business partners, government representatives, the media, trade unions, international organizations, etc.
The concept of CSR can be applied in terms of confidence-building process of various stakeholders in the functioning of a company. The company is gaining trust by continuously striving to understand the expectations of its stakeholders.
We can distinguish primary and secondary stakeholders.
- Primary Stakeholders: owners and investors, employees, customers, business partners, local communities, environmental non-profit organizations
- Secondary Stakeholders: the public, government institutions and governments, lobbyists and various pressure groups, competitors, media, civic and business associations
A company needs to know which stakeholders are the most important. Therefore, it should create so-called stakeholder analysis before starting CSR activities by answering the following questions:
- Who are your stakeholders?
- What is their impact on your business?
- What do they expect from you?
- Which of them are your key actors?
In a relation with particular stakeholders the company has interests related to a profit-making meanwhile stakeholders themselves also have their own expectations in relation towards the company. Understanding the expectations of stakeholders contributes to the success of the company, although their performance goes beyond corporate responsibilities. Corporate social responsibility means to align the interests and expectations of other actors in society.
To question what your company’s stakeholders expect, consider the following table which can help you with examples of stakeholders and their expectations:
|Stakeholder||Expectations on the company|
|Owners and Investors||Profit|
|Growth in enterprise value|
|Customers||Quality products and services|
|Business Partners||Quality contracts and negotiations|
|Timely fulfillment of obligations|
|Employee||Reasonable salary and non-wage benefits for their work|
|Good working conditions|
|Professional growth and education|
|Reconciling personal and professional life|
|Local Community||Financial or material support|
|Know-how of corporate volunteers|
|Environmental Non-Profit Organization||Ecological production of products and services|
|Minimum burden on the environment|
Managing collaboration with stakeholders leads to mutual understanding of interests of both parties involved and initiates a subsequent dialogue that results in shared satisfaction – the so-called win-win situation (I will help you meanwhile I make profit myself). A company and stakeholders can also hold a joint CSR activity to solve their problems.
Based on the dialogue with key stakeholders, you can venture down to choose which CSR activities should be targeted. The ideal situation would be a balance between activities that favor management and those which are interesting for stakeholders.
Cooperation procedure with stakeholders is described in the following figure.
|Procedures for Cooperation with Stakeholders|
|1.Prepare a list of stakeholders and divide them into groups||2.Understand their needs and expectations||3.Schedule a process of establishing a dialogue and cooperation||4.Initiate dialogue||5.Maintain dialogue, cooperate and use a tool of feedback|
Methods of Stakeholder Engagement
- Online discussion forum
- Working Group
- Individual meetings
- Informal meetings
- Organization of joint projects
- Telephone support, etc.
The contact with stakeholders you can simply disclose information on the website, set up an online mailbox where anyone can submit a question, comment or inform you about their experience with your company. You can choose different levels of cooperation – from mere provision of information to consultation and possible co-decision.
As the company has defined its key stakeholders, you should determine what your company wants to achieve through relations with each chosen groups, and accordingly look for activities to achieve these goals. You should measure the activity with properly selected indicators whether a given activity is for your benefit or not. Then, you should be continuously monitoring and evaluating your CSR activities.
|Examples of each step in the implementation of CSR|
|Investors||Transparency||Provide reporting on CSR (use of quantitative and qualitative indicators as methodology of its creation)||Validation report by certified CSR auditor|
|Number of published indicators|
|Customers||Increase customer satisfaction and loyalty||Customer Care development||Customer Satisfaction Index|
|Expanding after-sales service||Number of loyal customers|
|Emphasis on quality of products and services||Number of complaints|
|Employees||Allowing reconciliation of work and personal lives of employees||Flexible working time||Number of alternative working modes|
|Work at home||Number of actively participating employees on parental leave|
|Engaging employees on parental leave in corporate activities|
|Local Community||Community support in place of business||Corporate giving||Financial or material contribution|
|Corporate volunteering||Number of awards|
|Community education||Feedback from local community|
|Environment||Minimal burden on the environment||Sorting waste|
|Utilization of waste||Water purity|
|Double sided printing and copying||Amount of emission|
|Use of environmentally clean fuel||Quantity of unsorted residual waste|
|Gentle handling of water and electricity|
- Incorporate CSR into corporate values!
Formulate a vision (mission) and describe your company’s values. CSR should be one of the key elements that help with formulating your mission and values.
- Summarize the current CSR activities!
Define the actions that your company is currently performing – disclose existing and potential CSR activities. Create the so-called check-sheets for the first draft summary of your CSR activities. You’ll be surprised at what you are actually doing.
Make a list of activities and open it to your peers and employees to discuss. You will discover many reserves that you may like to continue working on.
Make a list of issues that bothers you, think about activities that can help you solve these problems and turn them into benefit for your surroundings (your selected group of stakeholders).
Be aware of expectation which your surroundings (your stakeholders) await from you.
- Plan realistically!
Do not start with too many CSR activities at once. Go step by step – in the first year choose only one activity and if you perceive it as successful gradually add more. Establish sustainable budget for new activities.
- Engage employees!
Tell all your employees, explain where the concept of CSR came from, what do you expect and how it is going to affect them. Without their support, you run the risk of delays or even complete failure of your plan.
Find supporters of CSR issues among your employees and involve them into the planning to make them more interested in future results and outcomes.
To support motivation, enthusiasm and pride of your employees, celebrate every achievement of the implementation of CSR.
- Select the right people!
Effectively implementing CSR means involving it to your casual, everyday business activities. A smaller company is probably not able to hire a CSR specialist, but you cannot overload the existing employees neither. Consider the workload and try to find an employee who seems to be zealous about CSR and does not feel overwhelmed by his own work. Communicate with him and motivate him frequently, because it may easily happen that his initial enthusiasm would wore off by the time.
- Perform ongoing evaluation!
Assign another employee to carry out a regularly evaluation of CSR activities. Involving more employees in the process of evaluation, you might get more valuable opinions. Results of the periodic evaluations should show progress – then it is clear that you have chosen the right path. If CSR activities are stagnating, it is necessary to rethink and change the strategy.
- Inform the public!
Implementation of CSR is a benefit in itself, but it is necessary to provide the information to the community around your company. Communicate CSR in corporate responsibility reports, websites, product packaging and leaflets. You will achieve more when you let your CSR activities be known!
It is true that the time and financial investment in socially responsible activities must be followed by the same size investment in communication of these activities. CSR is growing in importance for companies especially in improving competitiveness – this is a great opportunity to distinguish yourself from different companies. It can be beneficial not only for well-known transnational companies, but also for smaller companies that are less exposed in media and not so known in society and public interest. Therefore it is urgently necessary to let your successes from your CSR activities be heard in the society
- You will become more transparent to your surroundings while Increasing awareness about your company.
- You will learn how to effectively supervise CSR activities and discover weak points in the CSR strategy of your compan.
- You will strengthen relationship with your stakeholders and further increase their involvement in company decisions.
- You will increase public awareness of your company’s social responsibility.
- You will be able to confront publicly professed commitments of your CSR activities with current reality.
- Last but not least, you will help to support cross-sector partnerships between businesses, government agencies and non-profit organizations.
Communication can be divided into internal and external.
- internal – with employees and coworkers – carefully explain why, what and how your company performs CSR
- external – with others – tell others that you are being responsible
Communication tools for CSR activities:
- Corporate website – information, special e-mail address, space for questions
- Annual CSR reports in printed and electronic version
- Notification by electronic or conventional mail
- Free telephone lines
- Media – PR activities, paid advertising
This brings a question: is it possible to measure the benefits of voluntary activities for which the company expects intangible benefits such as increased corporate reputation and employee motivation?
CSR is perceived as an investment in intangible assets of the business, which can be evaluated using indicators. In the long term view CSR activities could provide measurable financial benefit as well (see examples in the table).
|Intangible Assets||Evaluation using indicators||Long-term measurable manifestations|
|Good reputation||Questionnaire survey||Strengthening the market position|
|Group discussion||Possibility of new business opportunities within local partnership|
|Widely in the media||Getting socially sensitive consumers as new customers|
|Streamlining risk management|
|Customer satisfaction and loyalty||Customer surveys||Strengthening the market position|
|Number of repeated orders||Increased turnover|
|Number of complaints|
|Business flexibility (creativity in bringing new products, services or processes)||Number of product or service modification||Expansion of product range|
|Added value of the product or service||Increase in market share|
|Satisfaction and workforce skills||Employee survey||Higher motivation, satisfaction and performance of employees|
|Number of off-site day||Lower employee turnover|
|Number of trained employees||Greater opportunity to recruit new employee|
|Ecological corporate culture||Power consumption||Opportunity to bid for tenders of large corporation or public administration|
|Percentage of recyclable waste||Obtaining environmentally sensitive consumers as new customers|
|Amount of emission||Increase in eco-effectiveness (reducing the negative environmental impact on a product)|
In assessing the benefits of responsible behavior, the “cause-effect” bonds are rarely visible and can only be recorded in the long term. It is typical verdict in this regard as Gary Pfeiffer, Manager at DuPont said “Over the last five years, DuPont has reduced its environmental impact by 60 % and its market value has increased by 340 %. Can I prove that these two facts are related? I can’t. Do you think I have doubts on it? I don’t.”
Organization of CSR Europe has released a set of recommended activities for small and medium sized businesses that can inspire you.
|Have you measured customer satisfaction?|
|Do you have loyalty program?|
|Have you reached some quality standards (e.g. ISO 9000)?|
|Have you held open days, panel discussions and testing of new product?|
|Have you implemented activities in educating customers?|
|Do you use social or environmental criteria for partner selection?|
|Have you created some of your partners’ CSR report?|
|Do you provide information regarding your CSR activities to your partners?|
|Have you engaged your partners in your CSR activities?|
|Have you spread the word about ethical issues among employees?|
|Do you communicate with your employees (suggestion boxes, satisfaction surveys)?|
|Do you consult with your employees on evaluation of company policies?|
|Do you provide training for your employees?|
|Do you have a business system which ensures professional development of your employees (career-development plans)?|
|Do you know the ratio of internal promotion to external recruitment?|
|Do you have system for managing health and safety?|
|Do you provide health services?|
|Do you train your employees in health and safety?|
|Do you offer reward packages, wage incentives or profit shares?|
|Do you have pension system?|
|Do you provide other employee benefits (allow sports development)?|
|Do you support the reconciliation of work and private life (flexible working hours, child care)?|
|What kind of help do you offer for redundant employees (job search assistance, retraining)?|
|Do you support local/regional/national events, projects or organizations?|
|Do you include your employee to help decide on a subject?|
|Do you reward for employees’ voluntary work?|
|Have you measured the impact of your business activities on society?|
|Do you work with secondary schools or universities?|
|Do you have environmental management system?|
|Do you have program to control/overview the consumption of energy and water?|
|Do you reuse or recycle used materials?|
|Do you have waste management policy?|
|Have you recycled?|
|Do you have policy to reduce fuel consumption?|
|Does your company complies with national and international standards (ISO, EMAS)?|
|Do you communicate your environmental policy with employees?|
|Do you provide environmental training for your employees?|
If you want to find out how your businesses’ CSR activity is currently doing, you can use questionnaires available online for free. Sincere answers to the questions will help you identify your strengths and weaknesses and provide a good basis for further analysis.
- Questionnaires are part of our CSR guide (pdf, 4 MB)
- The original version of the questionnaire can be found in the document of the European Commission Responsible businesses – Questionnaire to increase awareness (pdf, 170 kB)
For CSR reporting, it is appropriate to use an internationally recognized tool – CSR report by the Global Reporting Initiative (GRI), which can be used for companies of different sizes.
Business Leaders Forum offers consulting services in the field of CSR. We will help you to analyze the current state of your business, to set strategies and implement specific projects.