Socially responsible business

“CSR is not about philanthropy, but about fundamental business practices.”
- Guy Ryder, General Secretary of the International Confederation of Free Trade Unions, UN Global Compact Summit, China, 2006

Over the last decade, the term corporate social responsibility (CSR) has found its way into the lexicons of most large companies as they strive to demonstrate their broader role in society.  What began primarily as a means of managing risk by measuring and monitoring the impacts of a company’s operations, CSR quickly moved into the realms of ‘expectation management’ as companies tried to anticipate and respond to the growing needs and expectations of its employees, customers and other stakeholders. 

Today CSR has developed into a new paradigm for business.  Companies are moving away from simply mitigating potentially negative social and environmental impacts. They are now thinking about how they actually do business and how they can change their business models to better understand their interaction with wider society.  For a growing number of companies, CSR is fundamentally changing the way they operate.

With this backdrop, it is important to consider the relative role of CSR in smaller, privately owned businesses.   It is true that many of the drivers for CSR in larger companies – the need to manage reputational risk; enhance the brand and improve relationships with local communities, regulators and shareholders – are less relevant to small and medium-sized companies (SMEs).  Yet, a DTI-sponsored survey by MORI¹ found that:

• A large number of SMEs were already engaged in social responsibility where defined as a contribution to the community, relations with employees and protection of the environment
• Training, employment and education were top priorities for SME investment
• SMEs were not yet defining social responsibility as an issue that could be integrated into all core business activities.

What are the business drivers for SMEs?

Owners and managers of smaller companies typically seek answers to the following questions:

• How do I respond to the growing demands of my larger customers for information about environmental, community or supply chain issues?
• How can I ensure that my lack of CSR knowledge will not jeopardise our tender application?
• How do we attract, motivate and retain good people?
• How can I reduce my company’s footprint without spending a fortune?
• How can I motivate my employees to be greener and take their responsibilities seriously?
• I want my business to be active in the community but I have limited resources.
• I’m not sure which environmental legislation is relevant to my business?

Why get started?

There are a number of reasons why companies decide to take action.   Some are self-motivated; others are in response to external factors, such as increased competition or customer demands.  The following are commonly cited objectives:

• The need to reduce operating costs
• Questions from customers about the way we do business
• The need to satisfy the long-term interests of investors 
• The need to keep ahead of the competition
• The personal values of our company founder/owner
• A growing interest from employees
• The need to retain our license to operate locally
• The need to stay abreast of relevant legislation
• An opportunity to profile our company in a trade magazine or the local press

What are the key CSR focus areas?

There is little merit in using some of the extensive frameworks published by individual companies or business groups to determine the focus of your CSR activity.  The trick is to keep things simple.  Focus on four primary areas: Workplace – Marketplace – Environment – Community, to identify the key outcomes that will directly benefit your business (see Figure 1 for an example).

What are the business benefits?

The business benefits will be dependent on the size and nature of your business, the availability of resources and the effectiveness of your actions.  However, typical benefits for smaller companies include:

• More motivated and engaged employees
• Improved customer retention
• Greater collaboration with customers and suppliers
• Innovation in new products or services
• Improved reputation and local profile
• Cost and efficiency savings
• Compliance with necessary legislation and regulations

What does a socially responsible company look like?

• The creation of wealth goes hand-in-hand with the creation of benefits to people and the planet.
• Managers are concerned about the long- and short-term effect of their business practices.
• Employees see it as a great place to work.
• Managers consider social, environmental and ethical risks and opportunities as an integral part of their decision-making.
• Customers and suppliers regard it as a good company to do business with.
• The local community values it as a good neighbour.
• Investors regard it as a company worth investing in.
• Managers actively seek feedback and ideas from employees; and suppliers and customers and are willing to learn from others.

How do I get started?

The chances are, you are probably doing things already that constitute social responsibility.  However, there is no harm in reminding employees about the importance of ‘doing the right thing’ and encouraging them to come up with their own ideas.  Here are some simple actions you might take:

• Install recycling bins in offices and warehouses with clear signposting for sorting waste
• Consider removing individual waste bins from employee desks to encourage them to think about responsible waste disposal 
• Recycle printer toners and cartridges
• Use recycled paper products in stationery and cloakrooms
• Replace paper or plastic drink cups with china mugs
• Buy fair trade tea and coffee and eco-friendly cleaning products
• Encourage employees to put computers on standby and switch off printers overnight
• Put stickers up reminding people to turn off lights
• Use windows and blinds rather than air conditioning to cool offices
• Consider setting up an employee payroll giving scheme 
• Involve employees in decisions about local charity donations
• Consider an employee volunteering event to support a local community cause
• Introduce an employee award for outstanding contribution to the community or the environment

Once you have managed to embed some simple principles into your employee culture, you can think about a more strategic approach to CSR that will directly support your business aims.  This might include:

• Collaboration with customers and/or suppliers around new product or service innovation
• Partnership with a national or local charity to directly support their objectives
• Membership in key networks or working groups to contribute and learn from best practice
• Workshops with suppliers to help overcome key challenges in the supply chain
• Increased communication of your CSR approach internally, via website and other external media

Recommended resources

• Business in the Community (BITC): BITC is a movement of 700 member companies committed to continually improving their positive impact on society.  Their website has a section dedicated to SMEs.
• Time Bank: TimeBank is a volunteer-led charity which matches employee volunteers with local community need for skills and hands-on support.
• Chamber of Commerce: Most regions have an organisation dedicated to helping companies become involved in local causes. Check with your local Chamber of Commerce or other business advice services for local contacts.
• The Small Business Consortium (SBC): SBC was established in March 2002 in response to feedback from SME owner-managers who asked for a collaborative approach to CSR by the main SME stakeholder organisations.  The Consortium is open to any SME that wants to engage in CSR.
• Charities Aid Foundation (CAF): CAF is a registered charity committed to increasing the flow of resources to the voluntary sector.  CAF works in partnership with organisations by providing a range of services including payroll giving though Give As You Earn, matched giving programmes, charity accounts, personal charitable trusts and corporate trusts/foundations.
• Business Community Connections (BCC): BCC is a non-profit organisation dedicated to helping charities obtain more support from SMEs.

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¹ Survey of Small-Medium Sized Enterprises (SME) attitudes to CSR conducted by MORI, sponsored by DTI, 2002