3 Elements of Strategic CSR and Why It is Important

Societies as a whole, including employees of corporations and consumers, demand holistic value from corporations, whether it is at the level of product or service delivery or at the sourcing level of their supply chain. 

Corporations can no longer serve the society in only the economical aspect. It is more important than ever to move away from a sole focus of profit maximisation and look beyond short-term profits.

An article in Forbes revealed that:

Additionally, the 2017 Cone Communications CSR Study revealed that:

Other than instilling sustainable business practices within the organisation, another way for businesses to respond is through corporate philanthropy or Corporate Social Responsibility (CSR) initiatives. 

Back in 2005, a survey showed a total of 9.8 billion US dollars contributed by corporations for philanthropic reasons. One year later, the number increased by 4% to 10.2 billion US dollars. In 2017, another survey found that the figure has increased to 20.77 billion US dollars, doubling the amount recorded in 2006. 

Other than giving back to society in the financial sense, corporations also donated their employees' time. They did this by encouraging and allowing employees to volunteer during working hours either in corporate charitable events or in partnerships with NGOs. 

On top of creating PR value, businesses are able to meaningfully engage employees and create positive internal branding as well.

Since businesses have the opportunity to create PR value and improve corporate image through CSR initiatives, there is heightened interest to seek more media coverage and public spotlight in order to broadcast their CSR efforts. However, in many companies, this resulted with CSR initiatives being treated and planned as event-based activities in order to achieve the company’s objective - PR value. 

Stand-alone and short-term CSR initiatives undoubtedly still serve and benefit the society. However, they may not be strategic or sustainable enough to satisfy corporations or their stakeholders. Consumers have become more aware of whitewashing attempts through charity and CSR initiatives. They are also increasingly demanding corporate sincerity in corporate responsibility initiatives.

In short, event-based CSR initiatives are no longer enough to create lasting impact, win long-term public recognition and secure brand differentiation. There needs to be a cohesive, enduring and compelling CSR approach that resonates with the public, while bringing meaningful impact to the society, environment and the business. CSR must be made to be strategic!

Find out how strategic your current CSR efforts are HERE.

Elements of Strategic CSR 

Businesses need to strategise their CSR in order to have long-term and significant influence and also to gain leverage for sustainable business growth.

Ideally, Strategic CSR has three key elements. 

1. Alignment towards business’ strategic objectives
2. Inclusion of impact measurements
3. Sustainability for beneficiaries and business

If you want to skip the reading, here's a video summary for you! 

Element 1: Alignment towards Business’ Strategic Objectives

By strategically aligning CSR efforts towards business strategy and operations, companies may have the opportunity to save cost, penetrate new target markets and increase the sustainability of their operations.

For example, soup kitchens for the homeless and needy have been a popular social cause even until today. It would make strategic sense for corporations involved in the food industry to participate in them. They have access to the supply chain at the scale of economy that would reduce the cost needed to operate the soup kitchens. Additionally, instead of letting food go to waste due to lack of consumption, they can be channeled towards soup kitchens for immediate use. For the corporation, doing so would reduce food waste and limit the cost needed to dispose of such waste. 

Element 2: Inclusion of Impact Measurements

Strategic CSR calls for more impact-based measurements in their reporting in order to truly assess their effectiveness. As in the example of the soup kitchen, common measures used include the number of homeless people impacted by the soup kitchen and number of meals provided. However, corporations should review the true intended impact of the CSR effort and include measures that would indicate its success. 

For example, if the company believes that the provision of basic necessity such as food would enable the homeless to gain employment in order to get off the streets, it would be crucial to measure the reduction in number of homeless people in the area. If the company seeks to provide nutritional food to its consumers in order to improve their health, relevant health data and statistics of the homeless people should be included as measurements as well.

Element 3: Sustainability for Beneficiaries & Business

As with the concept of living in a finite world, CSR assistance should not aim to provide aid indefinitely. Strategic CSR must involve a game plan for the current group of target beneficiaries to be empowered to a point where they are able to become independent and no longer rely on continuous aid from the business. 

An ideal, additional step would be to close of the CSR loop back into towards business activities and interest. This means to link CSR activities back to the financial bottom line of the company.

It is clear that the three elements of Strategic CSR can help to bring more impact for both the business and the CSR beneficiaries. More importantly, doing so will align the business more towards sustainability and the impact-focused agenda of the United Nations’ Sustainable Development Goals.

If you're interested in strategising CSR efforts and achieving the below, do reach out to us for a chat!

Article written by Fu Jia Lik, with excerpts from her book, 

"Beyond Profits: Strategic CSR for Meaning, Value and Sustainability in Your Business"

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