Survey of the economic benefits and long-term effects of corporate social responsibility on business
The survey of the economic benefits and long term effects of the implementation of corporate social responsibility (hereinafter, CSR) in business entities is the first survey of this kind in Lithuania and the region.
The survey was carried out in connection with the implementation of the CSR programme of the Republic of Lithuania and the project of the United Nations Development Programme (hereinafter, UNDP) “GATES: Social and Environmental Business Innovations”. The project was aimed at creating the necessary conditions to develop CSR in Lithuania and encourage companies to operate based on its principles with a view of contributing to competitive, safe and ecologically clean environment, social cohesion, transparent and ethical business practice. The project was financed by the European Social Fund. The survey was carried out from May 2011 to December 2012.
The purpose of the survey was not only to evaluate the maturity level of the CSR practices of the companies participating in the project and identify the CSR factors generating economic benefit or indicate best practices (the primary scope – 1st phase of the survey – included around 50 different companies), but also to assess the benefits generated by the specific CSR initiatives and/or activities in the selected companies (10 companies) in a further detailed survey (2nd phase).
During this survey CSR was considered as an integral part of corporate operations, not a separate organisational function focused only on public relations, marketing or implementation of sponsorship projects. The survey was based on the CSR fields identified by the largest global CSR initiative – the UN Global Compact. These include implementation of the principles of human rights, labour standards, environment and anti-corruption in the operations of organisations and their interaction with the main stakeholders related to the operations of the organisation (communities, employees, consumers, shareholders, etc.).
The survey covered not only an analysis of the current situation at the companies (e.g. assessment of the existing policies, strategic documents, and procedures, an analysis of survey results, detailed meetings at the companies under survey in order to understand not only the documentation of CSR practices at the enterprise), but also the aspects of its implementation in daily operations.
The survey of economic benefits and impacts consisted of two basic stages:
1. During stage 1 the research methodology of the economic benefits and impacts of CSR implementation was prepared and a primary survey was carried out at 43 companies. The main objective of the primary assessment was to identify the main areas of CSR economic impact and to select 10-15 companies for a detailed active monitoring and assessment of the impact of CSR on business. The secondary objective was to identify and describe best CSR practices in companies under survey that prove the value of CSR for business.
2. During stage 2 a detailed survey of 10 companies was carried out and the developed methodology for the assessment of CSR economic benefits was tested. The detailed survey included the analysis of the CSR related activities and documents of companies and identification of the connection between CSR activities and specific trends/areas of business activities of the companies, identification of the areas of CSR impact, monitoring of CSR activities and the areas of its impact in order to identify changes in the period of the survey, expression of direct and indirect economical impact of CSR, and other factors related to CSR impact on company’s performance.
3. The objective of the detailed survey was to perform an assessment of the CSR activities selected by companies participating in the project, identify the areas of CSR impact and the expression of the direct and indirect CSR impact. This assessment was focused on active monitoring of the company’s operating processes, performance of an analysis of the respective CSR areas and operating processes, their impact and interconnections, and discussions with the company’s management and personnel.
The survey revealed practical examples and evidence how:
► implementation of CSR activities in an organization could and/or should be monitored and analyzed;
► direct and indirect economical value for business is created by CSR activities;
► implementation of CSR principles changes the working environment at the company, its cost allocation, public image, sales flows, investor attraction and new market opportunities, as well as financial results.
As a summary of the results of CSR economic benefits analysis, the following conclusions can be made:
► Most of the corporate CSR initiatives assessed in the survey pay off, i.e. generate a positive return on investment (45% on average);
► At the assessment of the economic return on SCR initiatives by separate CSR areas, it was calculated that the highest economic return was generated by the initiatives in the area of personnel – 133% on average. The lowest economic return is produced by environmental initiatives – 33% on average;
► The highest return on CSR activities was identified in the companies where the corporate social responsibility activities were mostly interconnected with the overall strategy and business model of the company;
► The highest economic return is generated by the CSR initiatives, the implementation of which is result-oriented, i.e. no surplus activities without added value are carried out.
The survey results also revealed that in order to increase the significance of CSR activities in organisations, it is necessary to change the attitude towards CSR and start looking at it not just as an area of philanthropic activities, but as an area that can and should generate economic benefits for the company. In order to gain economic benefits, the companies are also encouraged to clearly define their CSR priorities, objectives and connection with the overall corporate strategic goals, as well as to perform continuous assessment of CSR impact and effectiveness by identifying the main sources of SCR costs and factors limiting productivity.
It is expected that the specific samples illustrating CSR value collected as a result of the survey will become a practical tool that will encourage companies operating in Lithuania to implement CSR principles and make strategic plans for CSR activities in business. Besides, the strategic sessions with the management, training of the representatives of the companies conducted during the survey, the prepared CSR management and impact assessment instruments (e.g. indicator systems) and recommendations for the improvement of CSR activities at companies provided the opportunity for the companies to improve their current CSR activities, make them more efficient, with higher added value for the company and for the community. The examples presented during the study are also expected to be used in methodological publications and CSR training programmes at the Lithuanian higher education institutions.