Organizations sometimes underestimate the power of corporate social responsibility (CSR) and environmental social governance (ESG) for their organization’s reputation. But public opinion can impact everything from who chooses to work at your organization, which organizations will partner with yours, and whether or not consumers will choose to purchase – and praise – your product.
Consider the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. Prior to the crisis, BP was an industry leader in the oil and gas sector with a strong sustainability reporting platform. After the accident, BP was criticized for its perceived lack of both transparency and compassion from the leadership team. The environmental disaster cost BP over $65 billion, and they’re still rebuilding trust in their brand over a decade later. The public perception held a multitude of people responsible, from the executive team to government agencies and up to the president at the time.
In light of the pandemic and social justice movements in 2020, some organizations are prioritizing a broader group of stakeholders, instead of centering decisions around shareholders alone. And this is important from an employer branding perspective: Ninety-five percent of employees in one survey believe businesses should benefit all stakeholders, including employees, customers, suppliers, and the communities they operate within. And 70% of employees told McKinsey their sense of purpose is defined by their work.
ESG also translates to more loyal customers. According to Deloitte, trust is a deciding factor for consumers. 68% of consumers spent more on a trusted brand compared to a brand they use, but trust less. These consumers are also comfortable with their favorite brands collecting more data about them.
Social responsibility has become significantly more important as a result of the pandemic, with global political climates, environmental awareness, social activism, and other critical issues impacting our world. When done right, CSR lets businesses show they’re passionate not only about their work, but also about the world around them. CSR can be a powerful recruitment and retention tool, helping businesses differentiate themselves amongst the competition and increase brand loyalty.
The United Nations defines CSR as how companies integrate social and environmental concerns into their business operations and interactions with stakeholders. Companies now strive to achieve a balance of economic, environmental, and social imperatives, while addressing the expectations of their shareholders at the same time.
Environmental, social and corporate governance (ESG) also refers to sustainability in a business context, as defined by Deloitte. ESG criteria is a set of standards for company operations that includes the impact on the environment, internal controls, and on the communities where it operates, such as supplier and customer relationships. ESG criteria is now an increasingly popular way for brokerage firms and investors to evaluate companies.
ESG is a broader commitment to sustainability, while CSR is an individual organization’s corporate values. Put simply, a strong CSR strategy can lead to higher ESG ratings. One long-term goal for any business should be a commitment to crafting a strong, differentiated employer brand of corporate social responsibility internally.
This is all great for your company, but your CSR activities can’t be successful if you don’t have a clear strategy in place. Here are some tips to get started.
The benefits to your organization are great, but if you don’t believe in CSR, then your efforts won’t be genuine, and employees and customers can see that. Don’t pursue CSR just for the sake of it. You need to believe in your organization’s purpose in society and create a strategy to achieve it.
What do you stand for and believe in? As an organization, you need to be very clear on what you stand for and integrate your brand promise and values into your strategy. Some companies may start with projects like fundraising for a cause or supporting a chosen charity that clearly aligns with their values. Try incorporating environmental social governance values into your mission statement so that every employee is aware of your values on an everyday basis.
It’s important to consider a local focus for impactful CSR initiatives. Even if you’re a global company with a global CSR campaign, understand how your activities can have an effect in local communities. How can your offices get involved in their immediate and extended communities? This builds trust, momentum, and consistency in your overall CSR initiatives.
A CSR strategy requires executive buy-in, but you need employee involvement as well. Involving employees in the process builds motivation and a sense of autonomy, and can promote innovation. Employees are also more likely to participate in CSR activities when they have been able to direct or contribute to the strategy and activities.
A plan doesn’t work if it’s not communicated to everyone. Let employees know early on what you’re planning and how they can get involved.
Give new CSR incentive programs a little boost. Encourage healthy competition by providing employee-chosen rewards for funds raised or volunteer hours.
Setting up and implementing a CSR strategy can, in some cases, mean a high initial outlay. And while it benefits organizations in a number of ways, you may still need to answer to various stakeholders, including stockholders, investors, and employees.
When you’re planning your CSR strategy, it’s key to understand and track several key metrics, such as monetary outlay, stock prices if you’re publicly traded, sales and production costs, and the return on your investment – whether it be impact on revenue, or measures like reputation, retention or employee engagement. Don’t begin a CSR program until you know the implications from all aspects of the company.
The Wall Street Journal outlined six areas that organizations can measure to determine how their social impact efforts are driving business value.
Organizations have a strong influence in our society, and more customers are expecting them to play a positive role in how we live and purchase. Setting up a CSR strategy is not only smart, it’s expected.
Read our Environmental, Social, and Governance report to learn how Ceridian is committed to supporting a better world of work for our customers, employees, and our communities.