Across Australia and New Zealand, companies are talking more than ever about their contribution to greater good - for people and the planet
Corporate social responsibility (CSR) has moved considerably from ‘a nice to have’ to a ‘must have’. Where it was once a voluntary decision of individuals within a company now, we see greater emphasis on mandatory schemes at regional, national and even transnational levels. For those unfamiliar, CSR also includes social and environmental impact and requires companies to consider the interests of all stakeholders when going about day to day operation including investors, suppliers, consumers, employees and the community.
In the current climate, this presents an interesting question for companies who are going to have to strike the right balance across areas like shareholders priorities, the provision of jobs or saving the planet.
There is no doubt that modern companies have realised the importance of operating and thinking in an ethical and sustainable way. Social impact has evolved from a PR play to an important part of a companies’ strategy. This trend is often in part to also attract top talent as new professionals’ value and even seek out companies where positive social and environmental initiatives are prioritised and social responsibility is part of the company’s ongoing strategy or culture.
In Australia and New Zealand, CSR programs have become central for many companies. In the early 2000s, one of New Zealand’s largest banks announced its policy to move to triple bottom line reporting, which broadens a business’ reporting focus to include social and environmental impact as well as just the financial. Since then, it has pursued a large range of CSR activities including community contributions (company branded helicopters), as well as environmental initiatives. Recently, green growth lending targets have been set as well as the introduction of electric and hybrid cars – a partnership with Sir Peter Blake Trust which encourages environmental awareness and leadership development. And most recently, this bank has become a living wage employer.
Seeking to be an industry leader in environmental sustainability, Australia’s largest airline recognises that the cost of inaction outweighs the cost of action. Determined to embed environmental performance and sustainability principles within all management systems, policy and practices, by 2020 they are striving to save 20 per cent on electricity and water consumption, reduce waste by 30 per cent, improve fuel efficiency by 1.5 per cent each year and cut net emissions by 50 per cent come 2050. Having initiatives in the air and on the ground allows them to better achieve their goals of helping protect our environment for present and future generations.
It has become evident New Zealanders increasingly care about climate change and their concern for the environment with the introduction of the new Climate Change Response Amendment Bill. Colmar Brunton’s Better Futures research (2019) shows us that 55 per cent of New Zealanders express high level of concern around the impact of climate change on New Zealand. This figure has increased a notable 31 per cent from 2010 and as it is argued New Zealand is a progressive country, there is a strong consensus emerging they could play as a global leader with this issue. The Bill means New Zealand will need to dramatically reduce their emissions, particularly from transport, energy and agriculture, and offset the ret through new forestry. If a country like New Zealand can’t do it, who can?
Interestingly, in the latest edition of Isentia’s Leadership Index released in March 2019, New Zealand leaders discussed CSR in 12% of the media coverage analysed, behind financial results at 57%. Potentially a good precursor to what might now be another impressive topical lead for New Zealand.
In another study conducted by Business Insider Australia, 77 per cent of consumers said they would choose to pay more to purchase from companies demonstrating community responsibility. This shift is a result of consumers expecting less of institutions and governments in particular. In an era of fake news and celebrity style politics, consumers are looking more to companies to do the right thing by society and are prepared to pay for the peace of mind.
External-facing reputation isn’t the only thing that needs to be worried about. Engaging in positive social and environmental initiatives can have a big impact on companies, both internally and externally – some of these include:
· Increase in company revenue
· Boost in employee productivity
· Reduced staff turnover
· Protected brand value
· Improved Research and Development
· Controlled risk management
Nowadays, instead of using traditional accounting practices, it is encouraged for companies to look at its success from financial, environmental and social perspectives. Triple Bottom Line (TBL), also sometimes called people, planet and profit measures a company’s success by examining growth from an economic, social and ecological perspective.
Profit – the traditional measure of corporate profit, the ‘bottom line’
People – a measure in some shape or form of how socially responsible an organization has been throughout its operations.
Planet – a measure of how environmentally responsible it has been.
Using this method will continue the success for current and subsequent generations and help leaders build more sustainable and socially responsible companies.
3 ways to leverage CSR
Choose your social and environmental initiatives based on the fit with your company’s strategy and develop long-term relationships with social causes. Use employee volunteer programs, product donations and advocacy support, however, be modest in promoting CSR to gain customer goodwill and third-party promotion as this can detract from the CSR initiative. The key here is it has to be authentic or be perceived as authentic by you key audiences.
Here’s what we know: CEOs, CMO’s and Chief Communications Officers who support corporate social responsibility lead their companies to greater success in comparison to those who do not. Society is demanding companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show it makes a positive contribution to society. With this, reputation, talent and incentives are the 3 key areas we feel need to be nurtured when undertaking a CSR initiative.
The benefits of corporate social responsibility are not limited to dollars and cents. Such policies confer other benefits as well, such as a better company reputation. Some companies enhance their reputation through philanthropic actions, supporting charitable causes, arts organisations, education programs and other initiatives in the communities where they conduct business. However, socially responsible policies related to health, safety and the environment also improve companies' public images which also assists with protecting companies’ brands and intellectual property. A lack of such policies can result in negative media attention, harming a company's reputation.
Companies operate in a market of opinion. How companies are judged by customers, suppliers and the broader community will have an impact on profitability and success. Corporate social responsibility offers a means by which companies can manage and influence the attitudes and perceptions of their stakeholders, building trust and enabling benefits of positive relationships to deliver business advantage.
A meaningful and well-executed CSR strategy can help attract and retain top talent in an increasingly competitive human capital market, especially in industries with a large number of customer-facing employees.
With exponentially more choices, candidates judge potential employers on more than just the standard set of benefits. Millennials in particular look to be part of something ‘bigger.’ They want to be inspired, to feel good about their employment choice and to join an organization that fits with their values. This often means seeking potential employers that support causes they are passionate about, or more broadly, that share their views on the importance of giving back. Working at a company where employees view their CSR efforts as positive, has a significant and favourable impact on how they rate their pride in the organisation, their overall satisfaction, their willingness to recommend it as a place to work and their intention to stay.
How far do the effects of CSR reach? Can it impact the way customers perceive a company and their products? Companies can incentivise their customers with CSR initiatives to enable a stronger and more passionate and loyal customer base.
Knowing a company has behaved ethically can cause customers to perceive a company’s product as performing better, known as the “benevolent halo.” Moreover, consumers must believe the company’s motives to be authentically benevolent, rather than merely self-beneficial for the company, and the halo effect is strongest for consumers who believe companies have a desire to act charitably.
In case there is no CSR strategy currently implemented in your workplace, you can start with some small changes that can have a larger impact on the wider environment. Start with recycling old tech products, such as old computer parts, old mobile phones, cords and cables and all manner of e-waste that is no longer needed. Recycling paper and printer cartridges are also easy and effective ways to implement positive change around the workplace and is a step in the right direction to making a positive difference.
Thankfully, whatever the outcome it looks like the future may be a bit greener.