14 July 2020
What is CSR all about?
One potentially positive outcome of the COVID-19 pandemic? It motivated many companies to show their best selves. For example, Engie reduced managers' pay by 15% and put that money towards aid initiatives. Not all companies followed suit, of course; others showed a worse side of themselves. Amazon notably received heavy criticism for seemingly prioritizing profits over worker safety during the pandemic. Facebook is losing sponsors due to their alleged inaction against fake news.
For the July 2020 edition of Beyond Digital HR, we focused on Corporate Social Responsibility. During challenging times, CSR becomes more important and more visible. We brought together a group of HR leaders and experts from companies such as Belfius, Engie, National Lottery, LeadFabric, Goed and AMEX. The discussion was initiated by Jo Wuytack, COO at Goed
Jo is a proponent of CSR, having seen the multi-faceted benefits of social responsibility over the years The HR professionals mainly shared the sentiment and are optimistic about implementing strong CSR practices into the future. Important takeaways shared by these leaders are compiled below.
Why companies should invest in Corporate Social Responsibility (CSR)
According to the European commission, Corporate Social Responsibility (CSR) is about integrating social, environmental, ethical, consumer, and human rights concerns into their business strategy and operations. Doing this means looking at all stakeholders involved, which reaches much further than your employees and customers. The guiding principles for good CSR have been defined in the SDG17 by the UN.
It’s fair to say that CSR matters aren’t the top priority of many organizations, at least not all the time. In fact, accepting CSR can entail a lot of work, and often the use of additional resources. So why do so many leaders at top Belgian brands believe it’s a must-have?
Employee engagement and employer branding
Studies show that there is a strong relationship between CSR and employee engagement. This comes as no surprise, as ensuring employee health, education, diversity and fair compensation are commonly the central pillars of many CSR strategies. While these things might become the standard in the future, those who move first will profit the most from positive employer branding--and important value in a tight hiring market, or during uncertain times.
Regulations are becoming more strict. Since 2018, large companies are required to include non-financial information, such as social responsibility and treatment of employees, in their annual statements. This public process becomes increasingly standardized and independent firms are auditing this in the same way as the financial reports, evaluating and comparing companies based on these values.
Despite the negative effect of the corona pandemic on the overall economy, the investment in companies adhering to the “ESG-principles” keeps growing. Just as financial reports are causing stocks to change, CSR reports are moving customers in buying more/less of their products. The global events of 2020, namely the COVID-19 pandemic, have caused a surge in customer expectation of CSR as well as consideration in purchasing. Big firms such as BNP Paribas, Lidl and ABN AMRO realized that good CSR can be profitable and it became an integral part of their strategy.
It’s the future
Employees, customers and investors attach increasingly greater importance to sustainable, responsible and ethical businesses. Legislation is becoming stricter and more companies are understanding the value of CSR. These upward trends have been steady, and will almost certainly continue to rise. If companies hope to see a positive ROI from CSR, the time to act is now. Investing in CSR today can be profitable and put you ahead of the curve--while inaction puts you at risk of falling behind.
The role of HR in CSR
Employee well-being, compensation and other company policies like creating a comprehensive training policy are all part of the traditional scope of HR. They play a big role in the lives of all employees and can help the company on their way to becoming more inclusive, ethical and sustainable.
It’s clear however, that many initiatives require the involvement of stakeholders across the entire organisation. Getting the personal engagement of top management is crucial to both the long-term and short-term success of an activity. Excellent stakeholder management and a clear strategy is required to get everyone on board.
Additionally, it’s important to create a framework of accountability. Organizations such as the UN Global Compact (letting CEOs commit to implementing universal sustainability principles), the ISO 26000 norms and the Global Reporting Initiative (offering global standards for sustainability reporting) help to ensure that CSR becomes more than just an empty claim.
The next conversation
The takeaway: HR leaders can play a central role in CSR but need the buy-in from upper management. By managing stakeholders and relying on key external organisations, they can be the driving force that leads their company to become a top example in CSR. There is a lot of compelling evidence that CSR has a positive impact on the attractiveness of an organization and can even be a profitable investment.
This article was the discussion developed during a recent session of Beyond Digital HR. Want to join in on the next one? Ariad’s HR professional knowledge sharing club Beyond Digital HR brings together future-forward individuals working across industries in the largest brands in Belgium. No member fees, just a community of ambitious minds! Apply here for more information about this monthly event and be part of the next peer discussion.