Three reasons why CSR should move up your business agenda

Consumers are loudest when external pressures mean that they have to re-consider where to invest their money and attention, and this alone has tipped the balance towards corporate social responsibility (CSR) over the course of the past year. From the United States’ withdrawal from the Paris Climate Accord, to multiple countries falling short when it comes to dealing with an emerging mental health crisis, the private sector is doing more to support governments and wider society than ever before. Indeed, pursuing purpose over profits has become a key driver in boardrooms around the world as we emerge from the pandemic, and consumers are voting with their wallets.

According to the Millennial Impact Report by The Case Foundation¹, around 70% of under 40s are more likely to purchase from companies that support causes aligned with their own beliefs. And according to research by Forrester entitled Greener Consumers Demand Sustainable Brands², there also seems to be rising consumer awareness around climate change in Europe, with so-called ‘green consumers’ frustrated that the brands they do support aren’t going far enough. This complex fusion of consumer awareness and corporate conscience is a perfect recipe for societal change, and squarely positions CSR as the catalyst.

Reason one: To attract and retain talent

Philosopher Henry David Thoreau said that “Goodness is the only investment that never fails.” The Conference Board Environmental, Social & Governance (ESG) Centre found that almost two-thirds of businesses spent more on philanthropy in 2020 than they initially budgeted for³. The fact that there was even a budget for philanthropy in the first place is a clear sign of change, with entrepreneurs around the world now factoring CSR into their overall strategy for growth.

Far from being an attention grab or a play for profit, these social justice mindsets are often woven into the fabric of a business at the time of its inception, thanks to the empathy and real-world experiences of its leaders. When analysing the reasons behind corporations behaving in a socially responsible way, a 2017 peer-reviewed paper from IntechOpen⁴ found that the internal conviction of those in charge is cited as the biggest driving factor (50%), with better customer relations a distant second (8%). It seems this conviction is contagious, or at least attractive, with research by EY revealing that 55% of employees would opt to work for a socially responsible company, even if it meant taking a salary cut.

Reason two: To enact change

CSR isn’t borne from the pursuit of profit or acceptance, but from a willingness to incite change. Take next-generation utility company and EY Entrepreneur Of The Year™ alumni Bboxx, Christopher Baker-Brian, Mansoor Hamayun and Laurent Van Houcke. When the company was co-founded more than a decade ago by three entrepreneurs, their goal was simple, provide electricity and other utilities to those that lacked it. However, when they discovered that giving the world access to reliable electricity was one of the primary solutions to ending poverty as a whole, they made that their key driver. While Bboxx found their CSR initiative along the way, many modern entrepreneurs actually start their business because of a CSR initiative. Take plant-based lifestyle brand and Entrepreneur Of The Year 2017 Rising Star alumni, Deliciously Ella, Ella and Matthew Mils, for instance. It was founded as a personal blog project following a medical diagnosis which prompted her to pursue a plant-based diet. It gained traction in the community, and has since achieved global recognition with six best-selling books, several lines of food products in 7,000 stores and a wellness app with millions of registered global users.

Whether CSR is a founding principle or is discovered along the way, it’s clear that connecting with consumers over a concept, idea or social issue is capable of making businesses an unstoppable force.

Reason three: To better engage with customers

The socio-economic turbulence of the past year has created the perfect climate for businesses to self-reflect and re-evaluate how they connect with consumers. Consumers think more of companies that actively support Environment Social Governance (ESG) concerns, and now that every consumer has a voice in the form of the internet and social media, those opinions are more likely to spread far and wide.

Let’s also not forget the toll the past year has taken on businesses themselves, with many having to speed up digital transformation in a matter of weeks as work and living turned virtual. It’s time like these when businesses rely on the goodwill of their customers to stick by them while they weather the storm.

The term ‘unprecedented’ may have been overused over this past year, but there are few other words that can accurately describe the difficulties faced by businesses and consumers. It’s notable that entrepreneurial-driven companies with a strong CSR culture tend to be the ones that have fared well. Take Alejandro Larosa, World Entrepreneur Of The Year class of 2020 and co-founder of leading agribusiness, fyo. Alejandro created fyo when he spotted an opportunity to provide local agricultural growers with better access to online data to improve their businesses, including trading, marketing, logistics, supplies and financial services. Today, fyo has strong links to the community and is one of the main grain brokers in Argentina, enjoying growth of 4,000% in the last decade.

How to move CSR up the corporate agenda

There is a myth that taking a CSR-driven approach to business pits corporate goals against social goals, but the two don’t have to be mutually exclusive. Indeed, the financial cost of ignoring CSR and ESG in 2021 is arguably much higher than it has ever been, with social justice and environmental issues held in high regard by the public. So what can entrepreneurs do to explore CSR and push those issues up the agenda?

• First, establish why the business was founded in the first place. Looks at its values and reason for being - what value does it bring to customers and how could that be increased.
• Next, consider what customers and employees of the business actively care about. Run surveys to establish what they support or dislike about the business.
• Integrate CSR into corporate goals and demonstrate their viability and profitability, both financial and reputational. Alejandro Larosa achieved this with fyo.
• Create a CSR project manager role to identify potential social risks and opportunities as an established organisation expands.
• Establish and use a CSR framework to facilitate gradual change instead of simply reacting to the ‘issue of the day’, which could harm business prospects.

CSR is about more than paying lip service to trending topics; it’s about systemic, sustained, and often, disruptive change that has a material positive impact on communities and society at large. Entrepreneurialism itself is ideally suited to innovation through sustained disruption. As we emerge from the current crisis into the unknown, entrepreneurs and business pioneers can only serve us - and their own companies - well.