All citizens and companies in the UK have certain rights and responsibilities. The government expects companies, primarily, to operate as good corporate citizens, and they should not shirk their responsibilities. Today, corporate social responsibility (CSR) is viewed as a crucial element to a company’s success.
These CSR activities have a tri-dimensional impact on the larger society, including social, economic, and environmental aspects.
The Birth of Responsible Organisations
The concept of corporate social responsibility first gained momentum in Western countries. Moreover, its roots have a long history that shows how business people have increasingly paid attention to the concerns of society.
The belief that establishments have a responsibility towards the community is not new. It is possible to trace this concern for businesses’ responsibilities to several centuries back. Practices for CSR originated during the Industrial Revolution when a growing concern for worker wellbeing and industrial productivity started to take shape.
Growing criticism of the emerging factory system, the employment of women and children, and working conditions came to light. Most reformers agreed that the existing employment practices played a hand in several social problems, including labour unrest and poverty.
Even then, welfare movements and industrial betterment came across as a combination of business acumen and humanitarianism.
The Great Depression in 1929 is partly responsible for strengthening the trend. It saw the introduction of public trusteeship management. The development was in addition to the traditional management strategy of maximising profits.
Business philanthropy during this period spearheaded the development of CSR into the concept it is today. While it was initially a form of philanthropy by corporates, the idea underwent a sea change, especially after the 1950s.
The B Corp Movement also influenced the development of CSR. During the 17th century, the government was responsible for forming corporations in England through Royal Charters. Corporations became a means for power and wealth attainment beyond the individual.
Many decades later, the corporate in the United States emerged, and corporations evolved from small privately and closely controlled organizations to powerful institutions with significant influence over government and society institutions.
Today, there are over 3,500 B Corporations globally, and they are certified by a non-profit B Lab. Their commitment is in pledging and concretely showing socially and environmentally beneficial business practices and transparency.
They have a legal accountability to balance profit and purpose.
Links Between Corporate Social Responsibility and Financial Performance
Research investigations show a positive correlation between CSR and a company’s financial performance. One shareholder value theory holds that a company must actively engage in corporate social responsibility to maximise financial performance.
There is now a common understanding that a firm’s long-term financial success goes hand in hand with its corporate ethics and record on social responsibility. What started as an ad-hoc damage-control response by companies to accusations of child labour and corruption scandals evolved into a proactive, understandable, and acceptable global movement.
In recent decades, businesses in the UK have gone global, facilitated by liberal trade, investment, and technology. The idea and practice of corporate social responsibility have also followed the same path.
The benefits of getting the idea right, and the obvious costs to businesses that get it wrong, are evident. However, one obvious question is whether it is a passing trend or will continue to reshape business profiles.
Trends that show that CSR is here to stay include, among others:
- Communication participation: Society expects businesses to do more in areas that are primarily in the public service domain, ranging from education and health to community investment and environmental stewardship.
- Transparency: Transparency has become an irreversible force that calls for reporting and disclosure driven by lower barriers to information access. There is now a higher public interest and regulatory changes that require corporations to disclose their ESG performance, and the trend will continue long into the future.
- Initiatives to engage corporates: Consultancies, initiatives, and standards that aim to engage companies in corporate sustainability are increasing. For example, the UN Global Compact currently engages 8,000 companies in several countries regarding critical areas like labour standards, human rights, and anti-corruption.
Corporate social responsibility is no longer a voluntary add-on for businesses but a crucial element to their success. If your company is yet to commit to this trajectory, the solid upward growth curve for involved companies is a reason for you to get started. Views For Change platform can help you effectively create a CSR strategy through charitable donations as rewards for advertising engagements. Book a demo to find out how it works.