A company’s annual balance sheet is no longer the most important document of the year. Or at least, it’s not the only one.
The social change that has taken place has brought more awareness to the need for a better world in both environmental and economic terms and has led companies to focus on the presentation of a sustainability report, which is the real passport needed to enter today’s business world.
It is precisely for this reason that the concept of corporate social responsibility (CSR) has gained progressively more ground recently. The concept itself is not new, but it had never been considered crucially important until the new millennium.
Public Consent As A Business Strategy
It was in 1971, in the United States, that the concept of a “social contract” between business and society was reportedly first introduced by the Committee for Economic Development. The concept means that companies function and exist thanks to public consent and, therefore, the first objective must be to contribute to society’s needs. The slow emergence of CSR as an important element of business soared further during the 1980s. However, in the 2000s, it became an essential strategy of large corporations that made this concept a part of their business processes.
Today, the importance of CSR does not only belong to large companies but also to any kind of organization.
True Profit Is Common Welfare
But what is corporate social responsibility? And more importantly, why has it become the main way for companies to do business?
The answer comes from the European Union’s Communication No. 681 of 2011: socially responsible entrepreneurship means meeting the customer’s needs while managing the expectations of other stakeholders, such as staff, suppliers and the local community.
It is no longer the time of the “bosses” born from the industrial revolution, but rather, it requires knowing how to run a business while keeping in mind that all players determine its success. Any business must aim not only for profit, but also for the well-being of its people and the environment. This has been defined in the idea of Economy 0.0, doing good and doing it well: making our life a product and making this product something meaningful for the whole.
In other words, a new sustainable economy expresses the ability to exist together, in relation to the whole and not just as a separate part, based on cultural creative capital, capable of recognizing love as the economic act par excellence.
It is not a question of globalizing the idea of “gross domestic happiness,” which has become a key parameter of measurement in a small country like Bhutan, but rather it is about acquiring a different concept of economics, even from a regulatory point of view. According to the World Happiness Report 2020, the happiest country in the world is Finland, followed by Denmark, Switzerland, Iceland, Norway, the Netherlands, Sweden, New Zealand, Austria and Luxembourg. Italy, my home, is in 30th place, which means that there is still a lot to improve.
The Attraction Of Business
CSR can be considered as a reversal of the concept of “market,” according to which a company would choose their employees in accordance with the needs of their own business and impose on collaborators, partners and suppliers their own way of working.
As a matter of fact, corporate social responsibility has entered a new working world in which companies are chasing talents and offering them a fairer and more personalized way of working, including incentives that are not only economic but also values-based. In this context, stakeholders can only be attracted if the pursuit of business is also matched by the goal of a modern society and if equity in diversity is given as a founding principle. The CSR of a company is worth more than the salary the company can offer, and this continues to be a factor that influences growth.
For instance, we can think about large technology corporations that in recent years have been able to increase their prestige, and their billion-dollar budgets, by pursuing economic policies that envisage products made from recycled materials and consequent reduction of CO2 production.
In order to achieve and expand this goal, work must begin, as a community, in the age of education. We need to acquire a shared responsibility among governments, businesses, educational institutions and families to participate in a new education model that builds a new generation of people attentive to the needs of others from childhood onward.
The Importance Of Reputation
All of this eventually turns into economic success.
And the main value of CSR is reputation, a keyword in any business striving for success. Literally, reputation is the consideration in which you are held by others. It can be good or bad, and the indicator that directs judgments is the quality with which you do business today.
It has been ascertained that stakeholders’ choice of companies to work with generally depends on their reputation. It is therefore agreed that the success of a company depends on its financial results, but this can no longer be separated from the internal and external esteem of the company. Some research on performance even concludes that there is a significantly negative impact in terms of productivity and return on capital when a company abandons its social responsibility policy.
Conclusion
Over time, CSR has gone from being a cost center to a revenue center. There are companies that have eventually seen their efforts multiply into positive balance-sheet items by making their headquarters greener, by providing adequate workspaces for their employees, by leaving productivity freer and not tying it to the stamp of a timecard, by bringing people into the company in which gender, race and orientation become irrelevant characteristics compared to quality. These companies become, in the eyes of the world, reliable and more appealing — and consequently, more successful.
Article Credit: forbes