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.
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.
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.
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.
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.
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.
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.
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.
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.
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.