As Kurtosys look back on our Corporate Social Responsibility (CSR) Programme 2011, we have been asking ourselves, “are there more benefits to CSR than the satisfaction of making a contribution?” Others have been asking the same thing:
Business in the Community is a business-led charity promoting responsible business practices in the UK and abroad. The Doughty Centre for Corporate Responsibility, based at Cranfield University School of Management, uses teaching, research and advisory work to empower current and future managers to lead sustainably managed organisations.
Together, these organisations have carried out research, “to provide the proof … that show[s] why and how responsible business practices build successful organisations”.
Researchers reviewed a range of academic and business research papers published between 2003 and 2010. They reported on seven current key business benefits and two future trends associated with being a responsible business, identified by businesses themselves:
1. Brand value and reputation
This was the most cited benefit, particularly in businesses with new CSR programmes and SMEs. Brand and reputation benefits are realised when responsible activities are relevant to the business. As businesses get more sophisticated at making this strategic link they cite this benefit less, citing more specific benefits instead.
2. Employees and future workforce
This includes a range of benefits that affect current and future employees; employee motivation, productivity, recruitment, satisfaction, retention, engagement and loyalty; and the resulting benefits to the business. It covers both the benefit of the business acting responsibly in the community and towards the employees themselves. It is a benefit cited more often by SME companies.
3. Operational effectiveness
This is mainly achieved through improved stakeholder relationships, particularly with suppliers and staff, which lead to innovation in business practices. Investment in eco-efficiency e.g. reducing waste, also improves operational efficiency. This benefit was the most often quoted benefit by large businesses with established corporate responsibility programmes.
4. Risk reduction and management
This benefit is cited in connection with using responsibility to reduce the risk of poor public reputation and support the businesses’ social contract (i.e. licence to operate). It is relevant throughout the supply chain: Some businesses may ask suppliers to comply with CSR in order to manage risk. It is cited by large multi-nationals and not SMEs.
5. Direct financial impact
This benefit occurs when responsible business practices lead to improvements in financial performance. It includes; better access to capital, lower penalty payments, reduced costs, improved investor relations, increased shareholder value and better returns and revenues.
6. Organisational growth
This benefit is achieved when being a responsible business leads to opportunities for growth e.g. through new markets, new products, new customers new partnerships and innovation.
7. Business opportunity
This refers to finding profitable opportunities through satisfying stakeholder demand. The benefit is achieved when businesses view that demand as an opportunity and not a constraint and problem solve with stakeholders to achieve win-win solutions.
8. Responsible leadership (future trend)
This is when being a responsible business allows organisations, or individuals within the organisation, to take the lead on responsible issues that are of strategic significance to the organisation and from which it can make a profit.
9. Macro-level sustainable development (future trend)
This is a new and somewhat undefined benefit. It refers to the long term benefit of investing in communities e.g. promoting education, which may lead to higher employability and therefore new consumer markets.
You can read the full report here:
Business in the Community with Cranfield University School of Management, “The Business Case for Being a Responsible Business” (2011)