How Companies Can Modernize Their Approach to CSR: Strategies for a Successful Company, Workforce, and Society

Corporate social responsibility (CSR) is a self-regulated business model by which companies demonstrate their commitment to improving society. In recent years, the perception of the CSR business model has evolved significantly, driven by increased social media attention to pressing societal issues. Originally centered on minimizing environmental impact, CSR is now confronted with new demands arising from the COVID pandemic's exacerbation of challenges faced by marginalized communities. Consumers expect companies to address disparities they may contribute to, such as gentrification and occupational segregation. However, CSR efforts may fall short of stakeholders’ expectations in three critical ways.

Three Problems with Traditional CSR Practices

1. Overreliance on Other Agencies
   Many companies overly emphasize environmental sustainability, volunteering, and philanthropy as the core of their CSR initiatives while failing to consider how their business practices impact the very problems they allocate time and money to address through partnerships with other agencies.
2. Lack of Institutional Commitment to CSR Initiatives
   CSR is frequently perceived as an external add-on rather than being aligned with the companies’ core business strategies or integrated into their daily operations. This perception is less compelling to stakeholders who increasingly value the CSR business model and may scrutinize its integration within a company's core operations.
3. Limited Data Disclosure
   CSR is often qualitative, serving to build awareness of a company's initiatives, while reporting tends to be more aligned with public relations and advertising. In contrast, environmental, social, and governance (ESG) practices quantify those respective areas, primarily for investors, and are often buried within reports. Both lack standardized reporting and may not offer transparent data for reporting CSR goals, restricting disclosure of information that could be perceived as unfavorable.

73 percent of investors indicated that efforts to enhance environmental and societal impact influence their investment decisions

Source: 2019 Aflac CSR survey

94 percent of consumers and 87 percent of investors consider it somewhat or very important for large companies to address the responsibility of treating employees fairly

Source: 2019 Aflac CSR survey

Three Solutions to Modernize CSR Practices

There are many ways for companies to avoid these pitfalls and take steps in the right direction. The best solutions for any company will draw on the following examples to craft a genuine and impactful CSR initiative.

1. Enact Employee Initiatives

A robust CSR strategy that prioritizes employee well-being can yield significant benefits for both workers and companies. High employee turnover, costing companies an average of $4,700 per new hire, can be mitigated by fostering loyalty through strong CSR commitments. In response to the rising importance of workers' rights, especially among younger generations, CSR initiatives should adapt to meet labor market expectations.

Foster Employee Well-Being

One strategy to support the workforce involves diversifying hiring practices, such as removing obsolete degree requirements to promote inclusivity. Fair Chance hiring initiatives aim to remove stigma for formerly incarcerated applicants, fostering a fair-chance employment environment.

Recognizing the growing influence of worker power, companies are encouraged to support union organizing and be more labor-savvy. Initiatives that support employees domestically and abroad align with market expectations, especially in areas such as diversifying hiring practices, implementing fair chance hiring policies, and prioritizing job quality. With 94 percent of consumers and 87 percent of investors emphasizing the importance of fair treatment for employees, making strides in job quality within the organization can be perceived as promoting CSR.

Some companies invest in education and trainingto enhance job quality, benefiting both workers and local economies. While many US companies cite challenges in hiring skilled workers, they often underinvest in workforce education and training.

Advance Racial Equity Initiatives

Diversity, equity, and inclusion (DEI) initiatives play a pivotal role in the broader spectrum of CSR goals. Yet, as of 2023, only 6 percent of HR professionals deem their company's DEI efforts effective. Successful execution of DEI strategies ensures that all employees are afforded equal opportunities for professional development and advancement. As state and federal policies set standards for the consideration of race in decision-making, DEI's adoption into CSR practices may prove critical for achieving the equitable outcomes for all workers. Yet companies report their biggest challenge to improving diversity includes finding underrepresented talent and navigating them through hiring processes.

Companies can also source more diverse talent by partnering with historically Black colleges and universities and designing customized interventions to invest in a broader array of students and workers. Efforts such as these promote equity in the workforce, providing value to the company and broader community.

2. Integrate CSR into Core Business Strategies

It's crucial to avoid treating CSR opportunities as mere marketing tactics. Running a CSR campaign solely for short-term marketing gains can lead to negative consequences if not followed through or implemented poorly. Instead, socially responsible practices should be carefully considered with genuine intentions and embedded into the long-term business strategy.

Align Company Goals with Stakeholders to Generate Buy-In and Create Partnerships

Aligning CSR strategies with company values involves forming a diverse team and dedicating a CSR manager, proven to be more effective than CEO-led efforts at involving staff from all levels. Gaining executive support is crucial for successful CSR implementation, ensuring alignment with company priorities and effective communication to stakeholders. Ongoing dialogue with employees fosters commitment and competitiveness in talent acquisition.

Engaging employees in CSR activities is a multifaceted approach with several key strategies. First and foremost, leaders should be visible role models, actively participating in volunteer opportunities, donations, and social activities. Transparency from senior management helps drive ­­employee engagement, and they should use these opportunities to ask for employee input on CSR activities of interest to them.

CSR integration across departments involves investing in training, mentorship, and certifications for various roles, especially HR management, to empower employees as stakeholders and ambassadors. Encouraging employee leadership in CSR can boost job satisfaction and productivity, inviting external participation for wider impact.

A rising focus on local initiatives and collaborative models is transforming CSR practices. Corporations now acknowledge a broader responsibility to stakeholders, particularly the communities in which they operate. Private companies are discovering ways to align their core business activities with community needs, giving rise to new business opportunities.

Building community engagement demands a human-centric approach, emphasizing face-to-face interactions alongside digital efforts. Leveraging a proven community engagement model is essential, incorporating elements such as outreach, consultation, involvement, collaboration, and empowerment typically used by civic leaders to foster meaningful connections with the community.

Transparency and timely communication build trust and community support, as individuals feel informed and included in the decision-making process. CSR is a continuous journey, shaping a sustainable corporate culture for mutual benefit. Regularly collecting partner feedback and transparently reporting CSR efforts ensures responsiveness to evolving organizational and stakeholder needs.

Integrate CSR Goals into Business Strategies

Companies should establish a clear framework for organizing and communicating CSR goals, ensuring they receive the same level of legitimacy as traditional profit-oriented objectives. Most companies treat progress in these areas as less important than improvements in profitability and productivity, but they could instead tie executive compensation to their goals for inclusive and diverse teams. These goals should be embedded into a sustainable business model.

Another method to the mission-driven approach is choosing to become a B Corporation. The rising demand from consumers for socially responsible and transparent business practices has driven the surge in B Corps. These companies adhere to standard metrics for certification and are accountable for their social and environmental impact. The certification process, however, is continuous and demanding, requiring recertification every three years. Organizations are granted access to a B Corp community that provides resources and support throughout the process.

Only half of consumers would believe a company making a commitment to social responsibility

Source: 2019 Aflac CSR survey

85 percent of Americans agree that companies need to disclose more about their business practices and impact on society

Source: 2022 Just Capital survey

3. Establish Genuine Accountability with Transparent Reporting

The demand for transparent environmental, social, and governance (ESG)reporting is on the rise, with 73 percent of investors indicating that efforts to enhance environmental and societal impact influence their investment decisions. But this transparency shouldn't be limited to investors; it should extend to the public as well. Even if the data aren't perfect, sharing it demonstrates a good faith effort.

Accountability measures are integral for a credible CSR initiative given that only half of consumers would believe a company making a commitment to social responsibility. Notably, 85 percent of consumers feel that companies need to disclose more about their business practices and impact on society. To ensure transparency and engagement, companies should regularly communicate their goals not only to investors but also to employees and other stakeholders, making anonymized data accessible to all interested parties.

Incorporating internal reporting on employee well-being into CSR and ESG initiatives is becoming increasingly prevalent among companies. Responding to a growing demand for transparency, more organizations are recognizing the importance of disclosing data related to worker health and safety, retention/turnover rates, average hours of training, and various other statistics. These comprehensive disclosures align with the evolving expectations of stakeholders who prioritize companies' commitment to employee well-being and broader societal impact.

Conclusion

There is an increasing societal demand for private firms to contribute to advancing the welfare of the society in which they operate. The strategies detailed in this article aim to provide guidance and resources for responding to this demand by crafting a robust and authentic CSR strategies that aligns with a company's values and culture while making a positive impact on the community and stakeholders. This approach will not only enhance companies’ reputations but also contribute positively to society and the workforce.