Increasing numbers of consumers expect businesses to exercise corporate social responsibility (CSR), and corporations worldwide are taking note. With so many options to practice corporate social responsibility, businesses of all sizes from all industries can make their own unique contribution to their communities and lift their profile simultaneously. Here’s everything you need to know about CSR for small businesses.
From improving supply chains to diverse hiring practices, CSR has proven profitable for the community and boosts the business bottom line. According to one study of small businesses in Malaysia, investing in CSR not only enhances the business’s reputation it can also lead to financial rewards. Corporate social responsibility has come a long way since its inception in 1953 by American economist Howard Bowen. More businesses of today are finding mutually beneficial ways to include CSR in their overall business strategy.
CSR is far from irrelevant to smaller operations. It doesn’t have to match the costly big-ticket activities of multinational corporations to be effective either. With small and medium businesses making up 98.45% of all Australian businesses, smaller operations’ aggregate social and environmental impact on society and the environment is considerable.
There are four types of CSR:
- Environmental sustainability initiatives
- Direct philanthropic giving
- Ethical business practices
- Focus on economic responsibility
One of the core functions of PR is to help businesses understand the environment it exists in and identify what issues and opportunities there are to enhance the business’ reputation. As a strategic PR tool, CSR can be aligned with the business’ goals and core values and is a point of differentiation for brand building.
While it’s not as easy for small businesses to engage in CSR in the same way larger corporations do, small business has the advantage of being closer to community roots (72% of people believed locally-owned businesses were more likely to be involved in improving their communities than large companies). It can adapt CSR in line with local community issues and strategic priorities. Research shows that CSR creates trust in stakeholders, facilitates business growth and is crucial to long-term competitiveness. Socially responsible businesses also have the added upside of attracting more investment dollars and increasing employee morale and productivity. With so many advantages, the case for including CSR is a given in today’s competitive business environment.
So how should businesses engage in CSR without a huge budget?
Before businesses even begin to contemplate a foray into CSR, Forbes business expert Beth Monaghan recommends they ask themselves the following questions:
- Who are my stakeholders and what do they care about? Is it aligned with our initiatives?
- What are my guiding principles and values and how are they reflected in these programs?
- What is the change we are trying to effect?
- Who are the naysayers and how will we handle their dissonance?
- What is the impact on my bottom line?
- How will we measure and report on success?
This will help determine the direction and scope of the CSR activity you intend to undertake. Small businesses have the advantage of being able to build strong relationships with their local community. Your business can undertake several community-friendly initiatives including fundraisers or donate your time and expertise to a local community project. Sharing skills or mentoring is another easy way to give back.
Other popular ways to incorporate CSR include sourcing sustainable or environmentally friendly materials, reducing single-use materials, recycling, shopping locally, sponsoring local school and sporting groups and supporting diversity when deciding to hire new staff.
Last of all being open and communicative with your local community and customers is fundamental to building trust. CSR is a way to demonstrate that your business is a community leader and that part of your business’s value proposition is ensuring the welfare of the community. By using every opportunity to be upfront with all stakeholders including employees, suppliers, distributors and customers your business can enjoy an upstanding reputation and community support that will get you through good times and bad.
CSR is often talked about as though it were a new concept, but the reality is what’s good for the community has always been good for business. As marketing professor Philip Kotler noted in 2004: “A good company offers excellent products and services. A great company also offers excellent products and services but also strives to make the world a better place.” Evidence shows that more than ever consumers want to believe that businesses big and small care about doing right by society and are willing to lend support to the ones that do.