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S&O Institute Executive Factsheets

What you need to know about CSR

In line with its objective of disseminating knowledge and information about CSR, the Society and Organizations Institute has produced a series of 19 “executives factsheets”. These factsheets can be easily downloaded in pdf format. They summarize, on a single page and in a simple and easily understandable language, academic and practical knowledge on various CSR-related topics: the Sustainable Development Goals, the triple bottom line, inclusive business, social business, CEO activism, and many more. 

so institute executive factsheet main page photo

Definitions


Meeting “the needs of the present without compromising the ability of future generations to meet their own needs” captures the essence of “sustainability” - the natural constraints that present and future generations are facing.

What is sustainability?

Corporate Social Responsibility (CSR) is commonly defined as a business model in which companies integrate social and environmental concerns in their business operations and interactions with their stakeholders instead of only considering economic profits. CSR became mainstream in the 2000s. The UN Global Compact and the Global Reporting Initiative cover the main international standards of CSR.

What is CSR?

Adopted by the General Assembly of the United Nations in 2015, the 17 “Sustainable Development Goals” (SDGs) are the layout to achieve a better and more sustainable world for all by 2030. These goals are a call for action to address a series of global challenges, such as: poverty, inequality, climate, environmental degradation, and justice. A growing number of corporations use SDGs to orient, prioritize, and report on their CSR activities.

What are the SDGs?

 

The “triple bottom line” stands for the idea that firms’ performance should not be assessed in merely economic terms, but along three dimensions: social, environmental, and economic (the “three Ps”, for People, Planet, and Profit). Since its inception 25 years ago, this idea has permeated into business practice. Yet, it has not been spared from criticism – most recently even expressed by its very inventor John Elkington. 

What is the Triple Bottom Line?

There is currently no single definition of “social business”, but the most prominent one is that offered by Nobel Peace Prize laureate Muhammad Yunus. He defines social business as a business » which objective is to solve social, economic and environmental issues affecting humanity: hunger, homelessness, illness, pollution, ignorance,…”. 

Social businesses can provide the poorer populations with access to funds, goods, and services they could not otherwise afford, as well as facilitate their access to work. Multinational companies' engagement in social business has become a noticeable trend in recent years. 

What is Social Business?

Inclusive business is a form of business that aims at facilitating and fostering economically vulnerable people’s participation in economic life – by easing access to a stable and sufficient source of income, to essential goods and services, or to valuable credits and loans. 

To achieve this aim, inclusive business balances social considerations with profitability objectives. 

What is Inclusive Business?

Individuals increasingly pursue social entrepreneurship and combine entrepreneurial activities with a social mission.

What is a Social Entrepreneur?


Impact


Yes, on average, Corporate Social Responsibility (CSR) pays off. 
There is a clear scientific evidence that even though CSR policies often entail higher costs, overall it does not destroy firm value but instead, CSR tends to increase it, at least modestly.

Does CSR really pay off?

Firm reputation, i.e. the way a firm is perceived by its stakeholders, is an asset of central importance to a company. CSR can serve as an insurance against reputational risks, meaning that the firm will suffer a less severe loss of its market value after a negative event if it engages in CSR activities. Research indicates that there are three essential preconditions for this mechanism to work: (1) the firm engages in CSR on the long term; (2) the corporation’s behavior is consistent, i.e., the firm does not only attempt to “do good” but also tries to “avoid harm”; (3) the negative event is not followed by a subsequent one. 

Does CSR protect a firm against reputation losses?

Even though investments in corporate social responsibility (CSR) can be costly, they offer a form of insurance and social capital protecting companies from negative corporate events and market shocks. 

Does CSR protect shareholder value?

Changes in sustainability index inclusion (i.e., becoming incorporated in high visibility sustainability indices such as the Dow Jones Sustainability Index or, on the contrary, leaving them) generate only limited stock market reactions. However, this does not mean that companies do not  benefit from to sustainability index inclusion. In fact, becoming listed in such indices attracts more attention from financial analysts. Furthermore, remaining listed in them increases the percentage of equity held by long-term investors over time. This suggests that investors value activities related to Corporate Social Responsibility. 

Do investors value sustainability index inclusion?

In times of fierce competition for skilled labor, it has become increasingly difficult for corporations to attract, motivate and retain qualified employees. Organization researchers concur that CSR can give a company a crucial edge in this “war for talent”.
The prerequisite, however, is that it is done adequately: Employees need to be convinced that their organization is serious about CSR.

Does CSR improve employee's perception of their workplace?

When CEOs take a stand on issues of public concern, this has repercussions on the image of the company they are leading. Whether CEO activism is rather valued or disapproved depends, inter alia, on the age of the audience, and on the degree to which the issue is related to the firm’s activity.

Does CEO Activism affect firms?

Today it has become common practice for larger corporations to publicly report on their Corporate Social Responsibility (CSR) activities. The quality of a CSR report decisively influences a firm’s CSR rating: In their evaluations, CSR rating agencies consider whether these reports are sufficiently comprehensive, balanced, and quantified. In the future, it is expected that corporations report on their financial and CSR-related performance in an increasingly integrated manner. 

How to report on CSR?


How to


A stakeholder is a party that has an interest, claim, right, ownership or “stake” in an organization. Different tools can help to establish stakeholder salience and map their priorities.

How to manage stakeholder relationships?

Creating shared value is a popular business concept that companies may use to generate simultaneously benefits for business and society. Despite criticisms, it adds value to the debate about how firms can improve their understanding about markets, competition, and business management. 

How to create shared value?

Even though addressing the Sustainable Development Goals (SDGs) is considered vital to counter the adverse effects of societal challenges, corporate progress towards advancing them is slow. Several basic steps can help companies to rethink their business conduct. 

How to address the SDGs?

Recent studies indicate that firms improve their performance when their employees, in particular mid-level managers, believe in the purpose of their organization.

How to create a purpose-driven organization?

In recent years, there has been a growing recognition of the need to assess the outcomes of social impact initiatives. Even though companies have increased their efforts, many still struggle to find a suitable approach to social impact assessment.

How to assess social impact?