Companies take different approaches to integrating CSR into their business practices. For example, companies in highly regulated industries such as pharmaceutical companies may focus their CSR efforts on following strict rules and regulations.
Product-driven companies may choose to integrate CSR at the brand or marketing level. Those with high CSR maturity may adopt the full integration approach by systematically embedding CSR into corporate strategies, day-to-day operations and culture.
The following are some of the key success factors which I believe are important for full CSR integration:
Leadership and corporate tone
Leadership values play a crucial role in institutionalising CSR. Top management should explicitly set a clear CSR vision for the entire company. If the right corporate tone and shared values are not rooted internally, the implementation of any CSR programmes may only generate short-term support, if any at all.
Line leadership and local support
As employees may have higher levels of trust in their line manager than in senior management, top management needs line managers that share the leader’s vision to guide CSR initiatives. It’s also important to establish a “CSR Liaison” to facilitate CSR integration, and sharing of best practice, especially for companies which operate in different locations. Fostering a CSR culture can be started from – but should not be confined to – the headquarters level.
Embed CSR into human resource management
Employee engagement is fundamental to CSR integration. A company should implement employee communication programmes to foster employees’ understanding of CSR’s importance and benefits.
It is crucial to incorporate CSR into the code of conduct, employee recruitment policy, training, and remuneration and performance appraisal systems. Employees should be involved in CSR strategy development, and engagement surveys should be conducted to measure and report on CSR integration performance.
Value-based stakeholder engagement and supply chain management
Stakeholder engagement is another vital tool in CSR integration. While employees are the key internal stakeholders of a company, suppliers are often one of the primary external stakeholders. While it is important to conduct supplier assessments, this may not be effective if suppliers window-dress to feign compliance with the law and codes of conduct.
Therefore, companies should emphasise value-based management, i.e. building long-term relationships with suppliers based on trust, shared values, and collaborative improvement. The same principle is of course applicable to engagement with other stakeholders, including customers, the community, NGOs and government.
Integrate CSR into marketing strategy
A responsible company should examine its key business processes to identify areas in which its products/services have most impact on the society and the environment. It should constantly find ways to innovate its products or services to better meet the needs of the society instead of simply identifying the social or environmental features of its current practices and claiming to be a responsible company.
Marketing strategies must be revised with more explicit social and environmental orientations that take long-term consumer welfare into account in addition to the conventional marketing objective of customer satisfaction. This includes educating consumers on responsible consumption.
CSR measurement and communication
Measuring CSR is challenging because its impact on the business and society can take a long time to manifest. Some results of CSR integration may be financial, but others – such as enhanced corporate reputation – are subjective and do not always carry a monetary value. This makes quantitative assessment difficult.
A company that intends to measure CSR integration needs to analyse the list of material issues (as defined by stakeholders, including the company’s strongest critics,) categorise them, and select meaningful key performance indicators (KPIs) to track progress.
CSR reporting is important as a monitoring mechanism, allowing a company to keep track of and publicly demonstrate its commitment to sustainable development and economic growth over time. CSR reporting aside, regular communication with both internal and external stakeholders should be conducted to obtain feedback and support, and to exchange ideas on CSR-related issues for future improvement and deeper integration.
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