What Is CSR and Why Is It Important in 2021?
This article is an excerpt from a larger Corporate Social Responsibility Video and Communication Guide that Prodigium Pictures is working on in collaboration with Frank Connelly who is the head of CSR Communication for SIE Society. The full guide will be released later this year. If you are interested in receiving an early copy of the guide, fill out this form. You can also check out our “What We Do” section to learn more about how we help purpose-driven companies authentically and effectively communicate their purpose and CSR initiatives through video storytelling.
What is Corporate Social Responsibility and why is it important in 2021?
According to the Corporate Finance Institute, Corporate Social Responsibility, or CSR, is defined as “strategies that companies put into action as part of corporate governance that are designed to ensure the company’s operations are ethical and beneficial for society.” These practices can involve environmental sustainability, ethical labor practices, supporting socially positive causes, making charitable donations, and any other practices that companies put into place in order to minimize harm and increase their positive impact on the society.
However, some industry leaders, such as John David of Rathbone Greenbank Investments, have pointed out that today, the term CSR has “grown beyond its strict dictionary definition,” and CSR is “now an umbrella term for all the ways in which a company should have regard for its impact on the world beyond its profit and loss.” In addition to the expansion of the definition of CSR, reporting on and communicating your company’s CSR efforts has also become a more integral part of CSR as a whole. Reporting frameworks, like the United Nations’ Sustainable Development Goals, Environmental Social Governance, and key metrics, like the Employee Satisfaction Index, and Greenhouse Gas Emissions metrics have become an increasingly popular way of measuring social impact and providing evidence of your impact to your industry peers and the public.
It is also important to keep in mind that CSR is not just for big businesses. You don’t have to have a huge profit margin to implement responsible business practices. In fact, being a smaller business can make it easier to accurately track and authentically communicate the effects of your CSR efforts. Additionally, nonprofits can also implement CSR, or OSR (Organizational Social Responsibility) practices as they apply their organization.
Why is this important in 2021?
In a world of instant access to information and ever-increasing public demands for corporate transparency and accountability, CSR has become essential to business success across industries. Moreover, the events of 2020 have shone a light on the public desire for companies and organizations to operate ethically, contribute to the greater social welfare, and take stances on pressing issues when appropriate.
Customers are becoming more and more vigilant about corporate and organizational practices, and information about your company is most likely available on all corners of the internet whether your company put it there or not. In 2021, CSR practices and effective CSR communication are no longer an option, they are a necessity.
CSR as a key to business success
Hopefully, most companies, at least purpose-driven companies, operate with the intention of having a net positive effect on the lives of their customers, employees, and other stakeholders. CSR-oriented practices are vital to companies who wish to monitor and evaluate their larger impact on the world. However, there are some less obvious benefits to CSR that may not have occurred to you. Some of these benefits of CSR include:
A stronger brand image and customer loyalty
- 90% of Gen Zers in the U.S. believe that companies must act to help social and environmental causes, and 75% will actually do research to see if a company is being honest and authentic when it takes a stand on issues (Cone Communications 2019). Moreover, customers are 400% more likely to purchase goods from a company when they believe that company has a strong social or environmental purpose (Zeno Group 2020). If companies want to establish brand loyalty in today’s economy, they have to make ongoing efforts to improve and maintain their socially and environmentally responsible practices. Occasionally throwing money at a charity that may or may not be aligned with a company’s values simply doesn’t cut it anymore.
Attracting and retaining key talent
- According to the Deloitte Millennial Survey, “Millennials feel accountable for many issues in both the workplace and the wider world. However, it is primarily in and via the workplace that they feel most able to make an impact.” The survey goes on to show that 45% more Millennials will stay in a job for more than five years if that job offers an opportunity to make a social or environmental impact. CSR initiatives show your current and potential employees that their work at your company has an impact beyond just generating profits. Even if other companies in your industry offer higher salaries or benefits, employees may choose to stay in a job where they have a greater sense of purpose. A 2017 study by MetLife actually reported that 9 out of 10 people surveyed would choose to work for a company with similar values over a job that pays more. Social impact is a relatively inexpensive way of increasing employee satisfaction relative to increasing salary or benefits, and often just as — or more — effective.
Advantages in fundraising
- Over the past few years, several large firms such as BlackRock Investment Institute, have increased their focus on impact investing (SITE), and there’s evidence that this swing toward social impact investing is much more than just a trend. In 2006, 63 investment companies (asset owners, asset managers, and service providers) with $6.5 trillion in assets under management signed a commitment to incorporate social and environmental issues into their investment decisions. By April 2018, the number of signatories had grown to 1,715 and represented $81.7 trillion in assets (Harvard Business Review). Today, more than half of global asset owners are currently implementing or evaluating social and environmental impact considerations in their investment strategy (FTSE Russell).
Overall, Corporate Social Responsibility isn’t just another corporate buzzword, it’s a sign of a fundamental change in how companies and consumers view the role of businesses in society. At the very least, Corporate Social Responsibility has a positive Return on Investment, not just financially, but in terms of employee satisfaction, productivity, public opinion, brand loyalty, and most of all, social impact.