With great power comes great responsibility, said French philosopher Voltaire. The growth of corporate social responsibility (CSR) is testament to the truth behind the idea that if you are in a position of power there is a duty to use that power in the right way. Companies which have amassed great wealth have a moral responsibility to not only conduct their business in an ethical manner, but also to ensure that they make a positive impact on their staff and environment. Such a mindset need not be the preserve of huge conglomerates however; even small businesses can have a meaningful impact on their surroundings.
The term CSR has been around since the 60s, but it really took off in the last 20 years when stories about terrible working conditions in factories around the world emerged in the press. It greatly contributed to companies understanding the need to operate ethically and the harm that a failure to do so could have on revenue. A good reputation built up over decades could be swiftly destroyed. When allegations emerged of Nike’s use of foreign sweatshops, its consumers deserted the brand, stock plummeted US$20 a share and Nike faced a long struggle to get its reputation back. It implemented a robust CSR programme and made its CSR commitments, standards and audit data public for the last ten years.
As the UK economy shows increasing signs of life, businesses have renewed confidence and optimism about their budgets and forecasts. It’s an ideal context for businesses to develop and expand their CSR activity. Many companies now publish documents on their websites with extensive information on their CSR activity. Unilever has developed a CSR microsite that includes a breakdown of its greenhouse gas footprint and how it intends to lower it through investment in product innovation, for example. Yet CSR isn’t just about rectifying mistakes (Nike) and lowering impact (Unilever), it’s also about making a tangible and positive contribution. For example, Barclays Group CEO Antony Jenkins is soon to become the new chairman of Business in the Community, an organisation which strives to create a fairer and more sustainable world. Large companies are now realising the value CSR adds to their image, and are working to drive positive change around the world.
However small to medium-sized businesses (SMEs) can make a difference too. SMEs may struggle to match large corporations’ global impact yet they can make a difference to their local community. Local charities can benefit from relationships with local business. They certainly need the help. Research shows that although micro charities (charities with income below £10,000) make up 51% of all charities, they receive just 0.6% of charitable income.
A local business that supports local charities can form valuable relationships, gain otherwise unobtainable branding opportunities through sponsorship, and be seen as a native, positive part of the local community. For example a local business might help fundraise for a youth charity which works to to maximise opportunities for young people to make a positive contribution to their local community. This involvement might lead to more direct involvement such as the development of a work experience programme. Such outreach can also be a strong morale booster to employees when they can see that their work is directly contributing to improving their local area. Crucially, seeing the tangible benefits a business is making in the community can also stimulate loyalty in a businesses’ customer base. Companies with a meaningful local CSR policy can help stimulate local growth, form lasting ties in the area, and essentially contribute to building a fairer society from the bottom up. To slightly adapt Voltaire’s quote, with any power – and the consequential ability to make a difference – comes a great responsibility to improve the lot of those most in need. Locally, this might manifest itself as helping raise funds to repair the roof of the old library or supporting local arts groups aimed at older people. Such support can prove invaluable to the wellbeing of a local community. If your business hasn’t yet formed ties with a local charitable organisation or community group then the only question worth asking is – why not?
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
