Corporate Responsibility is now a global movement and is a part of sustainability. That means that, while a company focuses on financial success, it has to pay more than lip service to ethics, and the social impact of its activities.
An example of corporate responsibility would be a company prior to the passing of The Modern Slavery Act 2015 making sure that its supply chain is clean. That is now a legislative requirement under the Act and the Supply Chain Regulations under that Act which applies to all companies with turnovers of £36m+.
Corporate responsibility is not a short term development, it is about the development of the company in the context of corporate responsibility, sustainability and stewardship.
A working definition by The World Business Council for Sustainable Development in its publication Making Good Business Sense, states:
Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.
CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunity in building the skills of employees in the context of the community of which it is part. It is more likely than not that CSR is now simply known as Corporate Responsibility.
Corporate Responsibility and Transparency
Companies are subject to increasing demands to be transparent about their activities and approach to Corporate Responsibility. That has to be dealt with in their accounts if they are a listed company or if the private company has a turnover of £36m+. In fact it is good practice for private limited liability companies to address Corporate Responsibility in their Annual Report.
This process of transparency means that people are better informed about companies and their behaviour and that impacts upon the issue of investment. Lack of regard to corporate responsibility and corporate behaviour puts a company at reputational risk.
Consumers need to trust companies and that means that companies need to be proactive, keep the public regularly informed about their activities, show how they manage operations and the impact they have on the communities in which they operate.
Put simply, companies need to move away from taking resources and exploiting their workforce. Markets need to be built using sustainable energy resources and, while creating value, need to benefit employees and stakeholders.
Corporate Responsibility and Growth
CSR is not an optional add on, it’s an integral part of companies taking serious steps to build their corporate reputation and create a strong base for engaging employees, shareholders and all stakeholders in the segment of society in which a company operates.
In addition to corporate governance and policies, Corporate Responsibility can be discharged by a company contributing to, for example, a sponsorship programme for educating street children in a country that has that need and for those children to be given the opportunity to compete on an equal playing field. Or supporting a charity that drills wells relatively inexpensively to provide fresh water to enhance the life and environment of an entire village and its present and ensuing generations.
Corporate Responsibility is a necessary part of any company and its growth. It is essential that management addresses the issue of Corporate Responsibility as a question of, not only complying with legislation like The Bribery Act 2010, but also embedding it as part of its policies, governance, values and beliefs that find practical expression in how a company conducts its business.
We deal with the issue of Corporate Responsibility and Social Impact on our CSR-dedicated page.