Measuring CSR effectiveness is something that can be done in many different ways. It’s an exceptionally valuable tool for your business to grasp in order to keep up with the fast-moving corporate world.
If your CSR efforts are underperforming it can affect decision making and may lead to a lowered brand value if left untreated. While key performance indicators of a successful CSR strategy can positively impact communities, climate change, and your brand value, it is foolish to overlook impact valuation and the measurement of CSR ROI within your company.
Of course, CSR standards and the improvement of CSR as a company is doubtless a worthwhile investment for your company, it is also widely lauded for the improvement of company reputations, as well as the improvement of staff retention and attraction of talent.
What is CSR?
Corporate Social Responsibility (CSR) is the act of businesses giving back to social responsibility projects, environmental projects, and inner company values. The projects that companies invest themselves into should be a reflection of their corporate values.
These values could be related to climate change, social responsibility, community impaction, charity work, and anything that offers external positive impact. Previously, CSR was used more to impress shareholders but in recent years it has become a major selling point for employees, prospective employees, and both existing and potential customers.
For the modern consumer, it’s simple. 52% of millennials want to buy from brands whose values align with their personal values. In fact, 63% of millennials are willing to pay more for a brand that makes commitments to sustainability and an incredible 72% of millennials with children are loyal to brands that practice ethical or environmentally progressive business, according to the 2021 consumer intel report.
Why Measure CSR?
As a consequence of the increasing importance of ethical consumerism, it’s obvious that measuring CSR effectiveness is not as clear-cut as we may like it to be. In order to check that your CSR ROI is where it should be, you must complete a CSR assessment.
A proper CSR assessment must consider the following:
- How well the social responsibility movements have been integrated into the daily routine of the company
- Which theme your CSR campaign is tackling (environment, labor & human rights, ethics, or sustainable procurement)- and how it is doing so. If it’s all of them, how you are committing to each.
- Legal requirements where applicable.
- A definition of what CSR is to your company.
- The engagement of stakeholders.
A CSR assessment helps to identify the benefits that you are reaping from your efforts. It also helps to show you any shortfallings you may suffer from an ineffective CSR campaign. CSR metrics and social return are a big factor in business strategy, and can seriously impact the public opinion of your company- in both positive and negative ways.
In short: your CSR assessment is an extremely necessary part of any CSR project.
How to Measure CSR Effectiveness
As has been established, corporate social responsibility is linked to success when used at the center of a business model. However important it is to have CSR as an intrinsic part of a business, it is equally important to ensure that the investments you make into your CSR efforts are financially viable. As such, measuring your CSR efforts is a crucial aspect of the practice.
What to Measure
The best way to keep track and measure your CSR efforts is to consider ESG (Environment, Social, and Governance). These three tangible objective metrics represent a triple bottom line that corporations use in self evaluation. Investors and consumers can also use these figures to measure a company's impact.
Let's break these down a little more:
Environmental
Companies should evaluate their environmental impact, and consider whether they are negatively impacting or polluting the planet. This could be through their supply train, their product delivery system, or the product itself. If a company concludes that they are producing negative impacts on the environment, they must take action to mitigate or remedy said impacts.
Social
Social CSR shows that companies should pay their workers a reasonable equitable wage, as well as offering a positive impact on their wider community. This could be through charitable donations, community service, or any other myriad of opportunities. Measuring social impact can be best visualized on video, such as the launch video of mission-driven company Ava: Their campaign clearly communicated the effects their products had on people and relationships. Read their case study.
Governance
Governance refers to internal management. It asks that companies have appropriate incentives for management, as well as processes in place to assure that the stakeholders of the company are well respected and represented fairly and equitably during business meetings, decisions and processes.
How to Measure CSR
So, now we have covered what you need to be measuring, let us discuss some of the best ways of how to measure them.
1. Set Sustainable Development Goals (SDGs) to Achieve Benchmarks
In 2015, United Nations member states adopted sustainable development goals (SDGs- also known as Global Goals) as a universal call to action to end poverty, protect the planet, and ensure that by 2030, all people across the planet can enjoy peace and prosperity.
The SDGs provide a unique opportunity to elevate communication on sustainability. Governments have emphasized this agenda through SDG 12 — recognizing how important it is for companies to adopt sustainable practices and integrate this information into their reporting cycles. The expectations on companies are huge. Companies that align reporting and communication with the SDGs will be speaking in the same language that increasingly is adopted by governments, foundations, NGOs and even investors.
Lise Kingo
CEO & Executive Director, United Nations Global Compact
These goals are useful benchmarks for your company, and can be used to help guide your CSR initiative as it develops, as well as the way in which you communicate your CSR goals. When you are communicating or executing your goals and achievements, be it via video, programs, or other initiatives- even if this particular piece of work is focused on one of your achievements, be sure to keep your other SDGs in mind, and monitor how your company is contributing to them.
The sustainable development goals for the United Nations are as follows:
- No Poverty
- Zero Hunger
- Good Health and Well-being
- Quality Education
- Gender Equality
- Clean Water and Sanitization
- Affordable and Clean Energy
- Decent Work and Economic Growth
- Industry, Innovation, and Infrastructure
- Reduced Inequalities
- Sustainable Cities and Communities
- Responsible Consumption and Production
- Climate Action
- Life Below Water
- Life on Land
- Peace, Justice, and Strong Institutions
- Partnerships for All The Goals
As you can see, this offers a comprehensive cover of most social and environmental inequality across the world, as well as plans to fix the problem. These sustainable development goals are a great way for you to see whether your company's SDGs are appropriate, achievable, and headed in the right direction.
2. Set Relevant KPIs
It is very difficult to truly measure the effectiveness of a CSR campaign without setting goals (KPIs), calculating value, and tracking results. To set your goals, consider what you wish your long-term goal to be, and set several smaller goals that will help you along the way.
For example, if you want to reduce the number of homeless people in your city, you can set several smaller goals along the way to the larger goal. Things like resume workshops, food drives, counseling and coaching sessions, and free dry cleaning for interviews. These goals can steadily build into back-to-work programs, subsidized rent, and improved policies within the local government, helping to stop people from becoming homeless in the first place.
Calculating the value of your CSR program is not as simple as a direct ROI. Social Return on investments such as this may (at least to begin with) far outweigh the monetary return. You can use this formula to work out if your investments are viable.
Tracking your results really is as simple as ensuring you have the correct data to achieve the CSR objectives that you set out at the beginning of your journey. This data also allows you to adjust and change your approach according to what is working and what isn’t.
As with every campaign a company invests itself into, Key Performance Indicators are an invaluable tool for ensuring that you are on the right track and that you keep on top of how effective your CSR efforts are.
A great way to do this is by using both short-term and long-term goals. The short-term goals should add up to a large part of your long-term goals. This will help you both along your way to achieving the goals, and also, to see if and where you are falling short. Over time, keeping track of the KPIs will help you to finesse your CSR efforts.
There is no ‘right way’ to measure your CSR efforts. Each company has a different approach, and as long as the approach works well for you and your company, it works. That being said, if the company makes a list of long and short-term goals and uses them as KPIs, measuring success will be much easier and quantifiable.
It’s extremely important that the KPIs you select are ones that work towards your greater goal and will provide an accurate measurement of what you wish to achieve with your program, whether this is employee satisfaction, customer satisfaction, or sustainability goals.
A few examples of KPIs you might consider tracking are:
Employee Satisfaction KPIs:
Employee Satisfaction - Conduct an internal survey, and see how many of your employees are happy at work and feel they have a fulfilling role. A high employee-satisfaction score means that there is less movement within a role.
Volunteer Programs - If your company has a volunteering program, see how many of your employees sign up to join in. Having a volunteer program is a great way of ensuring that your employees values correlate with that of the company.
Diversity & Inclusion - By having a diverse team, you are showing prospective employees that they are welcomed and appreciated. This also helps your existing employees to feel respected and heard.
Staff Turnover Rate - If your staff often leave or if you find yourself replacing certain roles regularly, it’s a sure sign that there is something wrong, and employees are left dissatisfied in their work.
Skills Development and Career Progression - One reason for a high staff turnover rate can be because there isn’t a clear path for employees to grow within their roles. It’s important to offer employees the opportunity to better their skills and to grow within their roles.
Customer Satisfaction KPIs:
Customer Retention Rate - If your customers are returning again and again, it’s a fair bet that you’re doing something right. However, if you are finding that you struggle to keep customers, it isn’t a good sign and implies that the majority are dissatisfied with your service.
Fair and Ethical Marketing - your marketing should be representative of who you are as a company, and it should not attempt to scare or violate your potential customers in any way.
Complaints and Resolving Complaints - How you deal with complaints as a company shows your customers if you value them or not. It’s important to handle complaints fairly and respectfully.
Social Media Interaction - Be sure that you only interact with companies who share your values. Interacting with customers is a good way to personify your brand as well.
Sustainability KPIs:
Community Participation and Involvement - Actively participating in the community is a great way of ensuring that your company is making sustainable choices. Giving back to the community allows you to be sure that your company is valued.
Contribution to Society - One of the best ways for a company to commit itself to social sustainability is to actively contribute to society. This could be anything from funding a youth program, improving literacy in the area, and offering free evening classes for adults.
Sustainable Consumption - All of your contributions could be irrelevant if your company leaves high levels of waste behind it. Try cutting down on printing, rolling out low-water usage toilets and sinks, or allowing employees to work from home to cut down on emissions from commuting.
3. Compare yourself to Industry Leaders
In the corporate world of CSR, there are many leaders who you can look to for inspiration. Long gone are the days we can look at one off or annual donations to charities and consider this a good CSR program.
These days, companies must seek out a more proactive approach to their CSR efforts. Ben and Jerry’s have consistently been touted for their commitment to CSR, and they make sure they partner with some of the CSR leaders in the industry, for example: Greyston Bakery.
Greyston Bakery’s concept is relatively simple. Regardless of who you are and what troubles have befallen you in life, you can get a job with them. Simply show up, and put your name on the list. When a job opens up, the next person on the list is given a call and then the job.
This program has helped a myriad of people, from ex-convicts, to ex-addicts, from single mothers, to homeless people. It has offered people from all walks of life stable, reliable employment, and that all important employment block for their resume.
Greyston Bakery is famous for its powerfully compassionate slogan: “We don’t hire people to make more brownies, we make brownies so we can hire more people.”
While this approach won’t work for every job in every company, it is a startling demonstration of human compassion for those less fortunate in the community, and those who are simply down on their luck. It also demonstrates how important social commitment can be to a business model- afterall, supplying brownies to ice-cream giant Ben & Jerry’s is no small feat.
4. Check your Industry Standards
While there isn’t a unified standard on measuring CSR efforts, there are collective industry standards. Compare your business to others in your industry to see where you fall, and follow the example of the front runners until you can reach an equal standing.
Regardless of whether your company is a small business or a large corporation, you can check the existing standards using the following resources:
- GRI Standards - This resource offers both universal and sector standard resources. It dives into detail about the impact you may be having across different sectors that CSR covers, from financial to environmental and social. It offers transparency on your sustainable development and can be used when discussing your business with your stakeholders.
- SASB Standards - Compare your current standards with others in your industry by using this large selection of existing corporate standards. As this article mentions, it’s important for you to be at least in line with , if not above and beyond, your competitors.
- B-Corporation Certifications - As one of the largest and most recognised certifications for seeing who is doing what correctly, the b-corp framework is an extremely useful tool for recognizing what needs to be done as a collective and an individual. Use their resources to identify where you can improve, and how you can do so.
- International Framework Agreements - An international framework used to help people everywhere identify what they are doing right, and if there are any holes in your current procedures, agreed on by a global union federation.
5. Have a Clear Goal
If you don’t have a clear goal in mind, it can be extremely difficult to measure your progress on the way to your CSR goals. Be sure to set this goal using well researched information and input from communities. You should set this goal using a host of KPIs that promote the greater ideal.
If you aim to create a space where you can deliver social and environmental benefits, you should also be able to enlist the help of both internal and external stakeholders for the business. The goal, or the KPIs used to achieve it, may shift slightly or change- this is fine. By having a clear goal, you can define a clear direction and quantifiably measure how successful your CSR efforts are.
6. Check What Your Employees are Thinking
It isn’t possible to have a truly authentic CSR program if the wellbeing of your employees is not considered. A good way to measure your CSR effectiveness is by taking the time to speak to your employees and taking the time to discuss whether they feel their beliefs are in line with company motivations and whether the job they are doing is congruent to their personal wellbeing.
You can also check that your employees are happy by using data driven studies, such as the Employee Net Promoter Score (eNPS), and the Employee Satisfaction Index (ESI). Both of these metrics help companies to measure the overall satisfaction of employees and their overall engagement with company values.
If you do choose the metric approach, it is important to differentiate between pay grades and sections of the company. If your higher-paid employees are all very satisfied with their work, but the lower pay grade isn’t happy, there is a problem somewhere.
Likewise, if all of your New York offices have a high employee satisfaction rate but your Los Angeles office has a low employee satisfaction rate there is no congruence throughout the business, which is a problem that should be addressed. It is important to separately evaluate the satisfaction levels of employees in each of those environments.
7. Get Certified
There are a multitude of different corporations that offer memberships to companies that reach a certain standard, be it in environmental or social CSR. One of the most famous of which is B-Corp.
A company can say they are a Certified B Corporation once they have applied and been recognized to comply with B Corp’s standards of verified social and environmental performance, public transparency, and legal accountability.
The application process is rigorous, and the nature of the certification demands that companies show evidence of improvement of their social responsibilities year on year. It can also be expensive- depending on the certification (1% for the planet for example asks companies to donate 1% of their gross sales to approved causes) so many companies may choose to forgo the official certification.
However, that doesn’t mean that you can’t look at the requirements to be a member of these corporations, and follow their guidelines as best you can on your own. This is a great way of ensuring that you are working towards the higher end of the industry standard.
8. Hire a Specialized CSR Manager to Do the Job
While it may not feel like you need a full-time employee to execute your CSR strategy, you could not be further from the truth- especially if you want to measure the outcome of your strategies effectively.
While CSR is something that should be practiced by those at all levels of the company (and especially managers), having a dedicated CSR manager means that you can rely on them to execute plans and to inspire the management- who will, in turn, inspire their employees.
Research has shown that having a CSR manager helps to properly involve staff from all levels, and incorporate CSR practices much more effectively than CEOs, other managers, and so on.
It’s not surprising to hear that a person doing a whole job is better at it than 3 people doing a third of a job, who have no real motivation to see it through. A CSR manager helps to unite people within your company, keep track of performance statistics, and drive home the point.
9. Measure Increased Revenue and Efficiency
Of course, while CSR is a great idea, it is also important for any business to consider the bottom line. Equally, efficiency is a crucial aspect of running a business. Luckily, CSR can offer important things for a company to help bolster these metrics. Measure the brand differentiation you've created through your CSR campaign by taking a look at traditional revenue and efficiency metrics through the lens of your CSR campaign, looking specifically for ways that your efforts may have affected these figures.
10. The 5 Rs & 1 I
The 5 R’s and 1 I aim to measure the overall success of a CSR campaign, by looking at the:
- Revenue - Specifically looking at customer retention, new customers, and cost savings.
- Reputation - Customer perception of the brand, awareness of the brand.
- Recruitment - Attraction of talent to the organization.
- Retention - Are your employees staying? How are their levels of satisfaction and involvement within the company?
- Relationships - Consider your business partnerships and whether they are thriving.
- Impact - Are your KPIs reflective of a job well done?
Keeping track of each of these variables is a lot of work, and ensuring that you are keeping track of your inputs, outputs, and outcomes is certainly a challenge. However, you will find that making the effort to track these different areas will give you a much deeper insight into the performance of your CSR campaign.
Conclusion
As mentioned at the beginning of this article, there is no universal way of measuring your CSR effectiveness. There are many different ways for your business to see the success of an investment, and they are rarely based on the ROI. This is because CSR aims for the bigger picture, a picture that shows the health and prosperity of a company, a community, the employees, and the shareholders.
Research has also shown that one of the best ways of communicating a company’s ideals is to share a visual story. Simply, people pay far more attention to videos than they do any other type of medium. Measuring your CSR is important, and it's equally as important to share what you have been doing so you can reap the benefits.
One of the best ways to ensure that everyone knows about your CSR investments is to create a professional video showing your efforts. It is of the utmost importance to ensure that your video is professionally made and tells a clear message. Prodigium Pictures specializes in creating CSR videos for companies of all sizes, so make an appointment with us today and tell the world about your CSR campaign.
