ECONOMIST Milton Friedman once said that the social responsibility of business is to increase its profits. While that may have been true in the past, companies today cannot afford to focus solely on profit generation.
Their customers, suppliers, employees and shareholders have become increasingly aware of, and have invested in, important social issues, and they expect businesses to help alleviate some of these in the societies in which they operate.
Businesses committed to doing so and which epitomise the values and beliefs of these stakeholders can benefit from the latter’s business and support.
Figures from Singapore Compact, a national society promoting corporate social responsibility (CSR) in Singapore, show that more companies are aware of it and have adopted it in the past few years. Even small and medium-sized enterprises (SMEs) in Singapore have recorded approximately 13 per cent growth since 2011.
However, successfully implementing a CSR strategy that benefits both the community and the business can be challenging, at times becoming a stumbling block for businesses.
Value of CSR
HarvardKennedySchool defines CSR as a strategic alignment, encompassing “not only what companies do with their profits, but also how they make them”.
In other words, good corporate citizens go beyond the motions of doing good, but consider also the impact of their business on the world they operate in, and take active steps to manage this impact within their sphere of influence while leveraging on their core competencies and the resources available to them.
What will it cost?
This leads us to the next question many business leaders ask: How much will CSR cost? Can the benefits businesses reap from CSR outweigh its cost?
From a business perspective, CSR may affect a company’s bottom-line in the short-term, but in the bigger picture, CSR helps companies garner support from various stakeholders, helping them to reap long-term benefits that can grow the bottom line.
A Nielsen Global Survey on Corporate Social Responsibility conducted last year revealed that 50 per cent of global consumers were willing to pay more for goods and services from socially responsible companies, an increase of 5 per cent from the year before.
The research adds that consumers in the Asia-Pacific were most likely to spend more on products and services from companies who invest in corporate citizenship initiatives, further emphasising the importance of CSR to consumers not just globally, but in the Asia-Pacific market as well.
Outside of the business perspective, CSR initiatives open up the business and its employees to experiencing different situations and meeting with people they would not generally interact with in the course of their work.
CSR presents an opportunity for businesses to invest in growing their employees’ talents and contributing to their personal development, through activities that encourage employees to think outside the box and utilise skills they do not generally apply in their day-to-day business.
Businesses will also be emphasising critical values like integrity and responsibility, which go a long way in ensuring smooth business operations.
To reap the benefits of CSR, businesses need to select initiatives that match their expectations, and ensure the successful implementation of their CSR strategy. To do this, an organisation must take three important steps:
• The crucial first step is to get the support of top management. The business leaders themselves need to fully understand and support the programme from the start, and engage employees at all levels to contribute their ideas and opinions.
• Communicate the CSR strategy to the rest of the company’s stakeholders, starting with the employees. Companies need to be aligned on their CSR stance and goals from the inside out, and leaders need to be able to successfully share their vision for CSR with their employees through channels like company-wide meetings, an internal website or internal newsletters.
• Decide on the overall objectives of the business, its values and culture. CSR should lie at the heart of an organisation’s business, and CSR strategies should be closely aligned to its goals in both the short and long term, reflecting the company’s character, belief system and workplace culture.
Through this process, the company can decide on the appropriate course of action, communicate their CSR strategy and goals to employees, and take this forward to their community.
Corporate citizenship has become an important consideration for businesses today, and those that can successfully align their core business with genuine CSR efforts that reflect the company’s beliefs can benefit from additional support within their community, and build up social equity for the future.
Article by Julie Tay, the vice-president (Asia-Pacific) of Align Technology, a global medical device company. For more information, visit www.aligntech.com