CSR and the Role of Leadership

CSR, Corporate Social Responsibility, Leadership, Growth

What is Corporate Social Responsibility?

Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR may also be referred to as “corporate citizenship” and involves incurring short-term costs that do not provide an immediate financial benefit to the company but instead promote positive social and environmental change. A company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line-  Approach”), while at the same time addressing the expectations of shareholders and stakeholders through CSR initiatives.

Why is CSR important?

The different stakeholders of companies such as employees, customers, suppliers, government bodies and the society in general benefit when businesses are more open about their activities, maintain or enhance business standards and bring about behavioural changes thereby creating a positive societal impact.

CSR is essential for companies, nonprofits, and employees alike. For employers, CSR is as an important way to increase competitive advantage, protect and raise brand awareness and build trust with customers and employees.

How Organizations benefit from Corporate Social Responsibility:

Corporate Social Responsibility is about an organization taking responsibility for the impacts of its decisions and activities on all aspects of society, the community, and the environment. Corporate Social Responsibility is more than just donating money; it’s about contributing to the health and welfare of the society, operating transparently and ethically. Every business, small or big, needs to have a CSR program in place.  Some of the benefits of CSR are:

  • The ability to have a positive impact in the community
  • Supports public value outcomes
  • Enhances the relationship with the stakeholders
  • Changes behaviour and promotes individual philanthropy
  • Increased sales and customer loyalty due to the positive image of the company
  • Long-term future for business
  • Attract positive media attention

CSR and the role of leadership:

Effective governance and leadership are vital if companies are to integrate sustainability into their operations. Right leadership, which believes in sustainability is the principal contributor to business growth in the future.

  1. The strength of commitment and leadership qualities of the CEO determines the directional growth of an organization.

It is imperative for the CEO to be a person who believes that the right thing to do is good for his business. The rest of the team are likely to pursue a sustainable path if the proper guidance is provided to them by a leader with a sound moral conviction. Being part of a team, which is taking a sustainable path will be a source of great satisfaction to many. The CEO has a significant role to play in ensuring that the management structures and governance processes are in place and the leadership styles of the executive team are conducive to integrating sustainability in all their business activities.

  1. The impact of the Board’s understanding of the relevance of sustainability concerning strategy and risk

The Board sets the strategic direction of a company. If the Board doesn’t recognize the importance of staff, customers, communities or dangers associated with the limitations of natural resources and the impact of polluting the environment, change will be limited.  The understanding of the impact of the business model, its strategy and risk associated with its operations on the environment and society at large is crucial to the sustainable growth of the business in the long-term. Success Board diversity(not only gender diversity) becomes vital in ensuring that the Board is fit to drive change towards a sustainable business. Research has shown that women on boards increase the social and environmental sustainability focus along with profits. Similarly, a boardroom full of accountants brought up to think about financial returns above all else, with little or no sustainability expertise, is hardly likely to comprehend the relevance of sustainability performance to overall business performance.

  1. A strong leadership team with diverse skills is the key to attaining sustainable development:

Many challenges need to be overcome by a committed leader. Some of them are as follows:

  • Solving sustainability problems requires working across functions.  Sustainability can only happen if the senior team have collaborative leadership styles.  Organisations with clear functional boundaries and hierarchical structures may not have the desired degree of cross-functional and informal communication channels needed to make sustainability change work.
  • Developing stakeholder engagement processes to identify material issues and risk
  • Getting agreement on key performance indicators and targets and getting sustainability incorporated into plans.
  • Need to influence the decision makers to incorporate sustainability in the day to day operations of the business. Help will be required from the finance team to develop a business case for sustainability initiatives.
  • The encountering of inertia and resistance stemming from lack of know-how and already full workloads.  In this situation, people focus on what is in their job description and on their performance which is assessed.  Support and leadership from the Human Resources team will be needed to get sustainability incorporated into job descriptions and performance review practices.

CSR must be infused into everything and no longer be a stand-alone discipline. We need corporate leaders to show the kind of leadership that CSR embodies. Not only because it confers practical benefits, but because it’s the right thing to do. A properly implemented CSR concept can bring along a variety of competitive advantages, such as enhanced access to capital and markets, increased sales and profits, operational cost savings, improved productivity and quality, efficient human resource base, improved brand image and reputation, enhanced customer loyalty, better decision making, and risk management processes.

Businesses need to evolve such that sustainability becomes an integral part of their growth strategy. If not economies will crumble due to over utilization of resources.

 

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