You can't avoid the abbreviation CSR when you want to include sustainability and one or more of the UN's 17 Global Goals in your corporate strategy. In this post, you can get an overview of how you can implement CSR in your strategy and what it entails.
Your active work with CSR has several advantages, and the effort gives you optimal prerequisites for future-proofing your business. This applies partly to reducing your costs in the long run in several parts of the supply chain and in various areas. Partly, your active work with CSR can increase your brand value and trust in your mission and vision.
What does CSR mean?
CSR stands for Corporate Social Responsibility and in recent decades has stood as a central buzzword when it comes to understanding companies and their role in society, as well as the expectations that society has of companies. Therefore, CSR is also typically referred to in Danish as social responsibility or sustainability.
The expectations for companies develop over time and across national borders, the expectations depend on parameters that you cannot control (legal requirements and changes, climate change, changed consumer behaviour, etc.). Therefore, corporate social responsibility becomes a process where your company must continuously adapt to society's (changed) expectations.
In continuation of the above, CSR is understood from the so-called triple bottom line. This means that the interaction between the economic, social and environmental bottom line is the prerequisite for a sustainable company. This is illustrated in the figure below.
CSR and the four forms of responsibility
To create a deeper understanding of CSR and the triple bottom line, consider the following four types of responsibility. Based on the forms of responsibility, CSR implies that you act responsibly and make (strategic) decisions that are responsible in relation to society's actors and the Earth's resources.
- Financial responsibility is the foundation for you to be able to act within the other three areas of responsibility. The goal is not profit maximization per se, but profitability is the prerequisite for positively influencing the environment, society as a whole and people/stakeholders (employees, customers, business partners, etc.)
- Philanthropic responsibility refers to the company's goal to actively make the world a better place to live. Philanthropy is seen, among other things, when a company dedicates (parts of) their earnings to charity or other, external projects and initiatives
- Ethical responsibility means that the company acts and makes decisions on a fair and ethical basis. That is, decisions which concern both managers, investors, customers, employees and the other links in the supply chain. This may, for example, be requirements for minimum wages and compliance with standards in production and selection of raw materials
- Environmental responsibility is seen in practice when companies act environmentally friendly by complying with requirements to reduce pollution and general waste of raw materials (water, plastic etc.). It can also be if the company relies on green energy and recyclable materials (recycling and upcycling). Furthermore, offsetting negative environmental impact in connection with the production of goods and services is a way in which companies can take responsibility
Benefits of working with CSR
The overall goal of incorporating CSR and the four areas of responsibility is that you and your company create the highest possible value for the (social) economy, people and the environment. In part, negative impacts are reduced as much as possible. The four areas of responsibility can be used as a tool to involve and motivate all links in the supply chain, and the connection between the economy, social conditions and the environment becomes obvious. It is essential to consider that connection in the core business and the strategy when the goal is long-term and long-lasting results.
As mentioned at the outset, CSR initiatives form a basis for cost reductions. At the same time, it is worth bearing in mind that awareness of the four areas of responsibility can stimulate the ability to think innovatively, uncover new needs and investigate new markets (both at product, geographic and target group level).
The interaction between innovation and sustainability can, for example, be a goal of maximum utilization of resources, other things being equal. The goal means that the company contributes to the reduction of pollution, but it may also imply a need for more employees and upskilling of the current staff. Through this, economic growth is created for both individuals and society.
Is CSR voluntary to undertake?
As a business operator in Denmark, it is voluntary whether you actively integrate CSR and the concept's areas of responsibility in your core business. This means that CSR can be understood as voluntary initiatives that go beyond compliance (legal obligations).
However, since 2009, the largest companies in Denmark have been obliged to supplement management reports with a so-called non-financial statement. Including environmental, social and personnel matters and matters relating to human rights as well as the fight against corruption and bribery (cf. §99a of the Annual Accounts Act).
As mentioned, expectations for companies evolve continuously and depend on several parameters outside of your control. As a startup or SME, your implementation of CSR will therefore typically include a combination of taking a stand on national legislation and your voluntary initiatives, where you implement social responsibility in your core business and strategy.
This blog has been translated by Startup Central.