Picture Credit: Gagmay’ng Mananagat sa Wangke (Gamawa) led by its president, Felix Saranza, harvested around 3,000 kilos of Bangus or milkfish in their fish cage. Gamawa is a supported aquaculture livelihood project of Taganito Mining Corporation (TMC) under its Social Development and Management Program. CONTRIBUTED PHOTO
What is corporate responsibility? Corporate social responsibility, also known as CSR, is the concept that a business has a responsibility to do good. CSR means that a company should self-regulate its actions and be socially accountable to its customers, stakeholders, and the world at large. But what does this really mean in practice?
According to the European Union, Corporate Social Responsibility (CSR) is the voluntary integration of companies’ social and ecological concerns into their business activities and their relationships with their stakeholders. Being socially responsible means not only fully satisfying the applicable legal obligations but also going beyond and investing “more” in human capital, the environment and stakeholder relations. This was published in 2001 by the European Union on a Green Paper on Corporate Social Responsibility.
Meanwhile, the International Organization for Standardization (ISO), an international standard-setting body that also addressed the definition of CSR through its ISO 26000 standards on Corporate Social Responsibility, defines CSR as “the responsibility of an organization for the impacts of its decision and activities on society and the environment, resulting in ethical behavior and transparency which contributes to sustainable development, including the health and well-being of society; takes into account the expectations of stakeholders; complies with current law and is consistent with international standards of behavior and is integrated throughout the organization and implemented in its relations.”
In the Philippines, CSR has always been voluntary. Donations may qualify as CSR. Although there are no requirement to report CSR, the Philippine Securities and Exchange Commission (SEC) has launched in 2019 the regular submission of sustainability reports for publicly listed companies, informed by consultations with stakeholders. Sustainability reporting, according to SEC, assumes that businesses conduct their operations in an ethical manner; that they manage key impacts (whether economic, environmental or social); and that their products and services create value to society. These are also embodied in the SEC’s Codes of Corporate Governance.
These local guidelines reflect globally accepted frameworks for reporting non-financial information, susch as the Global Reporting Initiative (GRI) Sustainability Reporting Standards, which is aligned with the UN Global Compact — a voluntary agreement by businesses to uphold sustainability principles.
Four types of CSR
There are four types of CSR according to the study done by Pacific Oaks Colleges of B.S. Administration: environmental responsibility, ethical responsibility, philanthropic responsibility and economic responsibility.
Environmental responsibility. For companies committed to CSR, it’s important for businesses to engage in environmentally friendly practices. Corporations can be significant contributors to greenhouse gas emissions, pollution, waste and natural resource depletion — but by committing to environmental responsibility, a business takes ownership over its impact on the environment.
Depending on a business size and industry, environmental responsibility can take many different forms. For some companies, it means using alternative energy sources and sustainable materials. For others, it means enacting a company-wide recycling program or donating to and volunteering for local environment-focused organizations.
Ethical responsibility. Being ethically responsible means ensuring a business engages in fair business practices across the board—including treating all employees, stakeholders, and customers ethically and with respect.
This type of CSR can also take a lot of different forms. Some common examples of ethical responsibility include setting a higher minimum wage, guaranteeing all materials are ethically sourced, and ensuring that all employees receive competitive pay and comprehensive benefits as well as treated with respect.
Philanthropic responsibility. In today’s world, it’s almost expected for businesses to give back to the communities they exist in and donate to causes that align with their company mission. When businesses do this, they’re following through with their philanthropic responsibility.
This philanthropic responsibility can be as small scale as sponsoring a local nonprofit’s annual fundraiser or as large-scale as donating a percentage of a business annual earnings to a prominent cause.
Economic responsibility. When a business is acting with economic responsibility in mind, it is making financial decisions that prioritize doing good, not just making more money. This means that this type of CSR is intertwined with the other types above.
For example, this could mean that a business signs a contract with a supplier that uses sustainable materials — even if it costs more. Another example of economic responsibility is when a company commits to a transparent salary system that fairly compensates all employees and makes up for past gender and race pay gaps.
CSR trends in 2021
In a study done in early part of 2021, there are four CSR trends that surface in the survey. Here are the details.
Since the start of Covid-19, physical distancing in March 2020, there was a change in consumer attitudes immediately shaped by the pandemic and their new environments. This also shifted consumers’ attention where much of their focus was (and still currently is) on all current events. The global health crisis created physical, emotional, social and financial challenges all at once; causing many to reconsider what is most important in life.
This focus grew and amplified a business trend across the globe — consumers not only want to know what corporations are doing for their communities but expect some sort of action.
Although 2020 presented extraordinary challenges, there are plenty of hits, along with plenty of missed opportunities, that have shaped the way organizations will implement new CSR initiatives.
Here are the top four CSR Trends in 2021: Virtual community engagement; Initiatives closely aligned with current events; Closer integration with the internal community (with employees) and externally (surrounding communities); and stakeholders are the target audience, not just shareholders.
Virtual community engagement
Working from home has become the new normal for many. Employees have had to assess and adjust to a new social norm. Before, they had the opportunity to create in-person connections with community members. While in the interest of public health, this privilege has had to change, the need for community engagement remains consistent.
Even if the infection rates begin to decline, online events or engagements are more accessible, more scalable and more cost-effective than physical counterparts. Corporations will look at the numbers and decide virtual community engagement is better for the company long-term in this year and beyond.
Initiatives closely aligned with current events
Just being a profitable business is no longer a viable option. 85 percent of U.S. Gen. Z consumers believe brands should be about something more than profit, according to a recent Wunderman Thompson survey and 80 percent believe brands should help make people’s lives better.
It is also noticed that current events are huge driving factors for what consumers expect from organizations. For example, after increased environmental concern occurred over the number of face masks already appearing in the ocean, consumers expressed a desire to do business with companies that value the environment so there’s an uptick in eco-friendly initiatives. Also, in the 2021 trends report released by Ketchum, 74 percent of respondents cited Black Lives Matter protests as a reason why they’re supporting businesses that improve diversity and inclusion. 88 percent of those surveyed believe it’s now more important that companies behave ethically.
Based on these 2020 numbers and responses, it can be expected that corporate engagements are more closely aligned than ever to current events in 2021 and beyond. Consumers want to see corporations prove the common 2020 quote echoed on commercials and advertisements year-round that “we’re all in this together.”
Closer integration with the internal and external communities
Along with increased virtual engagement and implementing initiatives that are closely aligned with current events, there are companies participating in closer integration with employees and their surrounding communities this year.
GlobalWebIndex found that over four in 10 say brands should place more focus on social causes and the wellbeing of their employees. The same report also found that the portion of consumers in North America that want brands to support local suppliers has grown from 31 percent in Q1 to 37 percent in Q2. A recent survey released by Deloitte saw that when brands demonstrate humanity, employees are 2.6 times more likely to feel motivated at work.
Keeping all of these numbers and findings in mind, we can expect the “people first” mentality will become more prevalent than ever. Companies will look to take care of and invest in their own people and local community first, before pitching in to help others on a broader scale. Corporations are beginning to accelerate change that has long needed to happen in their communities — it just took a pandemic to reveal these issues and put them into the limelight.
Stakeholders are the target audience, not just shareholders
In the past, there are companies that placed high value solely on making money for their shareholders. This started to change in 2020 when investors, workers and consumers started to put increased pressure on companies to make meaningful input to the greater social good. According to a report by Aflac on corporate social responsibility, 77 percent of consumers say they would be more willing to purchase a company’s products or services if the company demonstrates a commitment to addressing social, economic, and environmental issues. In comparison to that 77 percent of consumers, 73 percent of investors agreed.
In 2021, there are focus and efforts being placed towards stakeholders as well as shareholders. In that same Aflac report, almost half of the respondents said that companies need to make the world a better place. Only 37 percent of the respondents in comparison claimed that it was more important for companies to make money for shareholders. Regarding CSR governance, the general public can be expected to be considered an external stakeholder in 2021. For example, companies may weigh the impact of a decision on the environment versus solely making the decision on the money it will make shareholders. Instead of being the ethical thing to do, corporate responsibility becomes the expected thing to do for stakeholders.
Article Credit: manilatimes
