Companies that embrace the principles of sustainability and responsibility bolster their economic growth objectives and social and environmental factors
The concept of Corporate Social Responsibility (CSR) is as broad as the various interpretations of companies and the strategies deployed. However, all analysts and companies agree that a company which is successful because it makes a profit and has market share is not necessarily a company that creates value. In all CRS models, value goes beyond mere financials to span a much vaster concept, irrespective of the model adopted.
A company that generates profits is not necessarily a company that creates value: to do that, it has to think inside a system
By its very existence, its interactions with people and a community, its use of resources and its placement of its products on the market, a company cannot expect to act independently of its environment, especially in today’s world where distance is no longer an issue and we are well aware that our actions have a global rather than just local impact.
A company firstly defines its CSR strategy for itself. For example, it needs to be financially viable: even if this is not the first thing that comes to mind when you talk about social responsibility, a company’s strength, its ability to maintain and grow its value over time and to take wise decisions are the building blocks for CSR. This is also true of legal compliance: compliance with regulations, avoiding any sort of loopholes, is also a sign of ethical conduct and demonstrates a sense of responsibilty towards the community. The company’s organisation, its enhancement of its employees, the creation of wealth and well-being all have a direct impact on the people who participate in the creation of a company’s value.
Centralised responsibility covers everything included in the broadest understanding of what CSR stands for: this includes a company’s charter of values, its awareness of environmental issues, respect for human rights along its entire production chain (both internal and external), the selection of its partners, etc..
A third area of responsibility is external: all those projects that do not directly relate to the company’s business operations but are organised by it as part of its CSR programmes such as sponsorships, social initiatives, funding, foundations, etc..
CSR covers a company’s entire charter of values including its financial, environmental and social aspects.
Although there are no universally recognised CSR models and we have only described a few possibilities, it is clear that this issue is far-reaching and multi-faceted. What should be taken for granted is the fact that profit maximisation is no longer the only or perhaps the most important objective: companies have pivoted their focus from just financial performance to the creation of both economic and social value.
How can this be achieved? Through systematic ongoing stakeholder engagement. A proactive relationship with stakeholders means a company can conceive and bring to fruition strategies that are truly built around the common good.
The first principle is that of accountability: stakeholders must be kept in the loop through transparent and voluntary communication about how the company intends to honour its commitments with them. The second principle is that of inclusiveness, which implies that a company shall be aware of its accountability to its stakeholders, including those without the means to express their needs and hopes (the environment or future generations).
A conventional outlook hinges on the obvious competitiveness factors of the marketing mix (products, prices, distribution, advertising), supplier screening, customer retention, market strategies, etc.. A company that limits itself to this approach and bases its strategy solely on these factors lacks the fundamental links in its value chain: staying competitive, which is tomorrow’s challenge, also depends on a number of intangible values such as the company’s reputation, its image, its relationships with its customers and all its stakeholders. These values are more and more important to a company’s success, immediate and medium to long-term. CSR considerations increasingly influence a company’s financial performance.
CSR is part of a sustainable development system that includes financial and environmental accountability