Corporate social responsibility creates long-term value

SME Publications/ SME XPO 2024

By Ildiko Almasi Simsic, above, author of What Is A Social Impact?

The concept of corporate social responsibility has evolved over time with roots tracking back to various historical and philosophical developments. The earliest forms of corporate giving were often driven by philanthropy and charitable donations by business leaders. Just think of industry leaders in the late 19th and early 20th century such as Andrew Carnegie and Rockefeller who established foundations and supported serious causes through various philanthropic initiatives.

Since then, business leaders began to explore the idea that a business should be responsible not only to shareholders but also to a broader set of stakeholders including employees, customers and the community. As a response, international initiatives emerged to provide guidance and standards related to corporate behaviour, reporting on environmental, social and human rights impacts. While CSR is largely a voluntary initiative, India is the first country that introduced legislation requiring companies of a certain size to have a CSR initiative and a management board for the initiative. The law is not particularly prescriptive on what this initiative needs to look like, but it shows a very strong commitment to give back to communities through various means.

Now, before you scroll to the next article because you think SMEs can’t do CSR, let me assure you that with a bit of creativity, even the smallest company can find a way to be socially responsible. In this article I will talk about the long-term benefits of having a CSR program and I will give you some ideas on where to begin. As a small business owner myself, I am fully aware of the resource constraints that you all might face, so my advice will cover some low-budget, medium-budget and high-budget options. There is something here for everyone, regardless of the size of the company or the level of commitment.

Why SMEs should do CSR?

  • Building trust and reputation

One of the often overlooked benefits of having a CSR initiative is the fact that it adds to your corporate credibility. While it is indeed challenging to quantify this benefit, you want to be a company that is perceived to care about something other than profits. CSR can be various social, environmental or community initiative. As it is largely voluntary, you as a business owner can decide what values you and your business want to represent and define your CSR strategy accordingly. Following through on promises, going the extra mile and standing up for what you believe in, especially if it contributes to larger social and environmental benefits will definitely build trust with customers and enhance your reputation.

  • Improved employee satisfaction and retention

Several studies have shown that employees who work for social responsible employers have higher job satisfaction. On top of this, you might be more likely to retain good employees who work more productively knowing that their work makes a difference! Yes, CSR can lead to more satisfaction and higher productivity. Engaging employees in volunteer activities and initiatives that align with their values can book employee morale.

  • Attracting the right kind of investors

Let’s face it, at some point you will need a loan or an investor to grow the business. Access to funding and investment might depend on how well you’re doing in terms of your CSR and other sustainability initiatives. Many investors and financial institutions consider the company’s CSR and sustainability practices when making investment decisions, especially those that have a track record of prioritising social impact. Having a CSR initiative may attract the type of investors whose values align better with yours.

  • Enhancing relationships with stakeholders

The power of local communities can not be emphasised enough for a small business. Engaging in CSR activities strengthens your relationship with stakeholders including local communities, suppliers and potentially government entities. The positive interaction and investment in communities might lead to increased support and cooperation – you never know when you need the help of your local communities!

Now let’s look at some ideas of pragmatic CSR activities that your company can implement at different budgets.

Low-budget CSR ideas

As a small business owner myself, I imagine you also have a million things to worry about before you can start thinking outside your company. Let’s look at some easy things to start with:

  • Employee volunteer days

Whether you have employees or you are the only one working in your business, the easiest thing to do is to provide employees a set number of paid days they can use to volunteer with foundations, charities or other community initiatives. Here in the UK it is almost always included in employment contracts that you get 2-3 days to volunteer.

  • Start your in-house initiative

Whether it is recycling in your office, promoting energy efficiency or donating extra supplies, this low-cost idea provides you the opportunity to start taking baby steps and still make a difference. As we discussed, CSR can cover environmental or climate change initiatives too so optimising on waste management, energy use, single use plastic counts!

  • Donate your services

Think of pro-bono work you can offer: hairdressers that team up with charities to provide free haircuts to the homeless, small legal firms providing free legal aid to low-income people. I had a client one who was an international freight port so not exactly looking for low-budget ideas, but still we suggested that they provide their workshop, tools and expertise of engineers once a month to amateur fishermen to do repairs on their boats as a CSR initiative. It worked very well, because the fishermen didn’t have to invest in the tools and they had access to the knowledge of educated and experienced engineers.

  • Run for charity

If you have no money to spare, you can still do a charity run/walk/bike ride for an organisation that supports a cause close to your heart. It is a great team building exercise to work together for a common goal in a more informal setting outside the office.

If your company has a bit more to spend, here are some ideas that are guaranteed to make a difference:

  • Donate to existing charities

You could donate any amount you wish and you might even get a shout-out as a sponsor or donor. Social issues are -unfortunately – plenty, so you can decide what to prioritise. Whether you care about healthcare, education, nutrition, homelessness or disabilities, you can find credible organisations who have the in-house expertise to provide sustainable solutions for the given problem.

  • Scholarships

If education and skill-building is what you’re passionate about, you will like this idea. Providing scholarships for kids from low-income families is a noble cause. I would also add that if this is a scholarship to study skills you care about for your business, you might be funding your own talent pipeline. In addition to scholarships you might decide to select and support an educational facility directly. There are programs where you can ‘adopt a school’ or a library and contribute through resources and infrastructure support.

  • Technology access initiatives

Donate computer or technology equipment to local schools or community centres. You might also contribute to sponsoring digital literacy programs.

There are of course possibilities to scale up low-budget ideas and invest in energy efficiency measures, donate more to charities or provide more free work/tools and resources to the community. If you’re an SME with an even higher budget and drive, the following ideas are for you:

  • Community infrastructure projects

Invest in the development of local infrastructure such as parks, community centres, public libraries, places of worship – whatever matter to you. You might have a drive to enhance safe bike lanes in the area. If you have the resources, you can find the right partners to make your dream a reality. Sponsoring construction or renovation projects for community infrastructure such as hospitals or schools is also a great way to make a difference.

  • Join global initiatives

Once you have your in-house initiative under control, you can decide to branch out and join more global initiatives. Whether it is related to supply chains, environmental programs, climate chains, human rights, the possibilities are endless. You can sponsor advocacy groups, organise your own events and find other ways to contribute. There are certification programs for different industries where you pay external auditors to certify for instance that you buy fair trade, sustainable products for your production.

  • Scholarships 2.0

You can definitely scale up scholarship programs by offering more spaces fully funded. On top of that you might decide to participate in initiatives that offer summer placement for students, mentorship programs or internships.

  • Social sustainability certification scheme

For those thinking strategically with long-term perspectives, the International Standardisation Organisation (ISO) offers certification 26000 on Social Responsibility. If you’re already familiar with other ISO standards – such as 140001 or 9001 for instance – you might want to consider obtaining the one designed for social sustainability.

  • Social entrepreneurship

Social enterprises operate with a slightly different business model than traditional businesses, however, they can be for-profit companies. Social enterprises have different business models, where they might donate products or a percentage of the profits.

Remember that the effectiveness of your CSR initiatives – whatever the scale or scope – will depend on genuine engagement, long-term commitment and alignment with the values of both the company and the community. Additionally, involving employees in the CSR initiatives can enhance the overall impact.

Ildiko Almasi Simsic is a social development specialist and author of What Is A Social Impact?

SME Publications/ SME XPO 2024