The Role of CSR in Business

The fundamental role that Corporate Social Responsibility (CSR) will play within leading businesses in the future is undeniable.

D&G Consulting explains that you need to think about Total Societal Impact (TSI) as well as Total Shareholder Return (TSR). As a leader, if you haven’t embedded CSR strategy into your business, you need to – ASAP.

Historically, a company’s CSR activities have related to charitable giving, helping communities (especially local) and staff fundraising. However, the definition of CSR and the role it plays in a business has shifted, neatly summarised by Rose Beale, a thematic analyst on the responsible investment team at Columbia Threadneedle Investments:

“For us, CSR reflects the programme of activities undertaken by a company to demonstrate awareness of and improve the situation for those affected by any of a number of social and environmental issues. Today, CSR is becoming an integrated part of how a company operates, as they need to demonstrate what they are doing as part of their business for customers, employees and society at large.”

We have seen consumers move towards a more socially-conscious mindset, actively choosing products and services over others – not only for the usual problem-solving, cost-saving or convenience benefits, but also because they want to know that the materials going into those products have been sourced ethically and that the production process and consumption isn’t going to create a negative impact on society in the future.

The issue of single-use plastic is a good example, with many corporates (for example, Sky with their fantastic Ocean Rescue campaign) currently raising the issue of plastic waste. Once this issue hit the headlines, consumers started to join the movement and push for companies to reconsider their use of plastic.

In the UK, the likes of McDonald’s and Starbucks reacted quickly. The former said it will end the use of plastic straws by 2019 (1.8 million are being used in their UK restaurants every day) after nearly half a million people called on the company to ditch them. The latter confirmed it will eliminate plastic straws from its stores globally by 2020.

Others that have made commitments towards using 100% reusable, recyclable or compostable packaging by 2025 or earlier include Unilever, Ecover, Evian, L’Oreal, Mars, Marks & Spencer, Pepsi, Coca-Cola, Walmart and Amcor.

Also, back in January, our client Iceland was the first major retailer to commit to drastically reducing the plastic packaging used for its own-label products by the end of 2023. The first line of the corporate responsibility section on the website of another of our clients, ASOS, lists packaging and waste at the top of its environmental policy, demonstrating how important it is to the company to keep customers aware of its activities.

Companies can no longer be built for the sole purpose of profit maximisation. Now, organisations have to be more aware of the impact they have on their stakeholders and the economic, social, environmental and cultural implications of their core business practices.

Lego, best known for selling interlocking plastic bricks, knows the writing is on the wall if they don’t prioritise plant-based materials and recycled sources. The company plans to roll out new, sustainable bricks made from sugar cane across most of its products by 2030. To facilitate this, the company has had to overhaul its manufacturing process.

This is a great example of having to consider TSI, as well as TSR. Business models must now be designed to incorporate CSR at heart, leading to a shift from pure TSR to the consideration of TSI as well. As Sir Martin Sorrell, a friend of D&G, best put it:

“Today’s business leaders understand that social responsibility goes hand-in-hand with sustained growth and profitability. Doing good is good business”.

We specialise in CSR & corporate charity strategy. If you’ve been inspired by the impact of CSR, get in touch — we’d be happy to help.