CSR is about how businesses take account of their economic, social and environmental impact– maximising the benefits and minimising the downsides of the way they operate. CSR is defined by the CBI as the acknowledgement by companies that they should be accountable for the impact of their activities on society and/or the environment.

Minimum legal requirements

The minimum level of behaviour for any organisation is to meet the legal requirements and ensure compliance in areas such as environmental protection, health & safety and employment rights.

The 2006 Companies Act introduced a requirement for public companies to report on social and environmental matters while the government had previously made changes to the 1995 Pensions Act requiring pension funds to disclose the extent to which they take social, environmental and ethical issues into account when investing money.

The Government approach is to encourage and incentivise the adoption of CSR, through providing guidance best practice, and, where appropriate, through regulation and incentives.

Going beyond these bare minimums

CSR is about the voluntary actions that business can take, over and above compliance with minimum legal requirements, to address both its own competitive interests and the interests of the wider society. This may include philanthropy and engagement with the community through activities such as employee volunteering or other gifts in kind, as well as the company's stance on the environment and ethical conduct both within and outside the organisation.

The recognised benefits of implementing CSR policies is that it makes companies more attractive to potential and existing employees, giving them a better brand and reputation, and assisting in making decisions that are better for the business in the long term. The obvious benefits of this make successful CSR a desirable achievement, although confusion can leave many companies with a non-cohesive programme.

Why have a clear CSR policy?

The benefit of having a clear policy is to provide cohesion while it is recognised that the best and most successful companies have been the socially responsible ones.

Studies have shown that workers who are satisfied with a CSR are more engaged and positive while those who are satisfied with their company’s commitment to social responsibility have positive views about their employer. They are far more likely to rate senior management as having high integrity believing them to be more likely to follow through on what they say and provide a strong sense of direction.

It also affects employees’ views of the business in several other key areas – including its sense of direction, competitiveness, integrity, interest in their well-being, and employee engagement.

Businesses that recognize the value of social responsibility often have employees who tend to be more satisfied with their jobs, adopt similar values, and become more committed to achieving success within the industry.

Employees also have higher levels of engagement which drives both morale and business results, because people want to be associated with a successful organisation that has a positive image and making it easier to attract the best graduates.

There is clearly the potential for CSR to play an important role in attracting, retaining and motivating staff and is being increasingly recognised as being such a tool.

Growing trends

The fact that employees are beginning to care more about CSR reflects a shift in wider social attitudes to the relationships between businesses and the societies they operate in with people wishing to be associated with organisations that are representative of their personal values.

CSR, therefore, presents a wealth of opportunities for companies to involve their employees in ways that make them feel closer to the companies they work for and the communities they live in.
 
Role for HR

While large multinationals will have a dedicated CSR department, smaller businesses are more likely to have their CSR organised by their HR people.

HR therefore plays a crucial role in CSR and the role that CSR plays in recruiting and retaining the best people. CSR is good for both an individual’s personal development and good for generating new business ideas. Those in HR teams are well positioned to ensure that it becomes part of their organisation's core culture. Building CSR into important activities like appraisals, rewards and training is likely to assist in this.  
 
In terms of a global challenge CSR is seen by many as being pivotal to tackling major challenges such as poverty in the developing world; sustainable development and climate change; and unemployment and disadvantage in Britain. By showing leadership in these areas businesses earn the trust of their customers, their stakeholders, employees and the wider community.

Future trends and economic downturn

The long term trend would appear therefore to be for an increasing emphasis in this area although in the short term will the commitment to CSR activities be adversely affected by an economic recession. Will necessity mean CSR is pushed down the agenda?