CSR offers multiple benefits but only a minority of companies integrate this strategy into their DNA. And yet, it has proven to be a tool for success in many companies that have taken the plunge. We’re talking about success in a company’s overall performance here, covering all social, environmental and economic aspects. So, what link can be made between integrating CSR and a company’s resulting overall performance? We aim to explain all in this article.
To recap, Corporate Social Responsibility (CSR) encompasses all practices implemented by companies to comply with sustainable development objectives.
In a previous article, we talked about the three pillars of CSR: social, environmental and economic. These are the three main areas in which a company takes action to build and maintain its sustainable strategy.
CSR is a voluntary initiative, but increasingly necessary. CSR strategy and the associated frameworks give a company the opportunity to transform in a sustainable way and build more resilience to the many challenges we face today.
We’ve also previously talked about the importance of stakeholders – how they are more knowledgeable about sustainable development issues and now have new demands. A CSR strategy is also a guarantee of transparency and responsibility in today’s challenging world.
What is performance?
What do we mean by company performance?
One common business definition is, “the results achieved in relation to the efforts made and the resources consumed, largely based on the notions of effectiveness and efficiency.”
When we think of performance in our daily lives, and especially in the business world, we think of costs, productivity, quality and deadlines.
But company performance goes beyond these concepts. In the broadest sense, we use the term “overall performance”. This includes, but is not limited to, a company’s economic performance. A company that has implemented a CSR strategy also measures its environmental and social performance, plus other important factors. Overall performance also includes transparency towards stakeholders and meeting their expectations.
As you might have guessed, today’s companies are no longer solely concerned with performance based on the usual indicators of turnover and growth rate (to name just two). Their approach is more comprehensive and takes into consideration performance in all areas where it makes an impact.
How does CSR improve the overall performance of a company?
In recent years, several studies have attempted to determine the impact of CSR on company performance. The results are similar for all companies that have integrated a CSR strategy: they perform better than others.
For reference, take a look at the studies by France Stratégie or the Boston Consulting Group (see links below).
So how is CSR actually linked to increasing different types of performance?
Unsurprisingly, several factors are decisive in the matter, since it is the transversal nature of the CSR strategy (among other things) that enables companies to create value in each department.
We talk about this in more depth in another article – how integrating a sustainable approach in your company means creating a strong corporate culture. It has been proven that when leadership supports sustainable transition, employees feel more engaged and motivated by their example. A CSR approach also takes into account employee well-being, which helps create a positive working environment. Engaged employees are employees who demonstrate better productivity and, by extension, generate better performance. In addition, the company also retains satisfied employees for longer and appeals to new recruits who are attracted by the corporate culture on offer.
We have all heard about the ever-growing climate and social issues of our time. We have all also heard about the sustainable transition and the urgency of making it part of everyday life. A CSR culture creates a better image for a company that fully embraces the concept. It helps to gain stakeholders’ trust while meeting their expectations. This image and this trust are obtained and maintained through continuous action but also – and above all – by a company being fully transparent about its impacts and the actions implemented.
A company can become more resilient. One undeniably important focus of a sustainable approach is to learn to identify a company’s risks and opportunities, and thus find the levers of action to create added value and a more positive impact. Through the company’s ability to identify and adapt, it also builds resilience against unforeseen events.
Although it requires investment at the beginning of the process, implementing a sustainable strategy also helps to reduces several operational costs within the company. For example, unhappy employees will lead to greater employee turnover, that in turn will end up costing the company more than if it creates a welcoming workspace. Energy costs are also offset in the long run through investment in efficient infrastructure.
The several examples given above demonstrate the direct and indirect link between CSR and a company’s overall performance. Both CSR and performance affect various aspects of a company and all these points come together and contribute to increasing a company’s overall performance.
As we will see in the next section, once a company has excelled in managing its CSR strategy across the board, it will have the tools at hand to go further… to create innovation and thus be more competitive.
Assessing CSR integration
How well a CSR strategy is integrated reflects how much this strategy has improved, and therefore how much its overall performance has improved. Obviously, improvement is correlated to the actions implemented. Several levels help us see the progress a company is making in its sustainable policy:
- Level 1: leadership has recognised the importance of a CSR strategy but has not yet given the green light to put an action plan in place.
- Level 2: a preliminary audit of the company’s sustainable behaviour has been conducted and KPIs (indicators) are being collected.
- Level 3: thanks to the audit and the collection of indicators, the company has put an action plan in place. The company has entered the improvement phase.
- Level 4: the company gains perspective on the results of its action plan; it has a command of its impacts and can now anticipate.
- Level 5: innovation. The company has succeeded in integrating sustainable practices, anticipating its impacts and is now seeking to innovate to go beyond expectations.
How to launch a CSR initiative
CSR can seem both time-consuming and energy-consuming for companies that have not integrated this culture into their DNA. Nevertheless, as we have just seen, in addition to the obvious importance that social responsibility has in our time, the facts show that it positively influences a company’s overall performance.
If you’re curious and want to launch your own responsible initiative, take a look at this article in which we explain how to get started or go check our services page to see how we can help you.
Does the article resonate with you? Do you want to improve your overall performance through CSR? Contact us and we can discuss your project.
France Stratégie study: https: //www.strategie.gouv.fr/publications/responsabilite-sociale-entreprises-competitivite
Boston Consulting Group study: https: //media-publications.bcg.com/BCG-Total-Societal-Impact-Oct-2017.pdf