Corporate Social Responsibility (CSR), or Corporate Social Responsibility, was defined by the European Community, within the Green Paper, as “the integration on a voluntary basis by companies of social and environmental concerns into their business operations and relations with stakeholders.”
That of CSR is a concept that has evolved over time from referring to the relationship between the company and its stakeholders in terms of trust and corporate reputation, to that of concrete commitments made by the company in the social and environmental spheres.
This type of Corporate Social Responsibility is commonly referred to as “social” because it refers to logics that go beyond profit maximization goals.
The principles of Corporate Social Responsibility include: promoting environmental sustainability, respecting human rights, transparency, compliance with laws and regulations, stakeholder involvement, and improving the social and economic conditions of communities.
In this article we delve together into the role of CSR in companies, what kind of effects it has in terms of corporate reputation, and what are the best strategies for communicating these principles to consumers and stakeholders.
The CSRD Directive and Corporate Social Responsibility
Corporate Social Responsibility encompasses within it numerous sustainable practices that pertain to Environmental, Social and Governance factors, such as: reducing greenhouse gas emissions, adopting fair labor policies, supporting local communities through third-sector funding programs, and adopting policies of transparency and reporting about the impacts of the business conducted.
On the topic of Corporate Social Responsibility, and its integration within ESG factors, there are numerous legislative initiatives on the subject: the ISO 26000, the European Directive on mandatory DNF (Non-Financial Reporting), and the more recent Corporate Sustainability Reporting Directive (CSRD).
The CSRD directive, which came into effect on January 5, 2023, strengthened the rules inherent in social responsibility reporting and disclosure requirements for companies with more than 500 employees, banks, insurance companies, and listed companies of any size (except for micro enterprises), totaling about 50 thousand companies.
The benchmarks that companies will need to refer to are. the ESRS standards issued by the European Financial Reporting Advisory Group (EFRAG) and mentioned within the directive as a benchmark for assessing compliance with the ESG obligations of the companies involved.
From a Corporate Social Responsibility perspective, it is necessary for companies to adopt a culture of commitment and transparency about the social and environmental impact of their business, with a focus on the following aspects:
- Environmental issues;
- Social, welfare and workers’ welfare issues;
- Respect for human rights;
- Countering corruption;
- Promoting inclusiveness and inclusion.
Compliance with these principles must be reported and made accessible to the public, through ESG performance analysis and evaluation tools such as the Report or Sustainability Report.
What impact does CSR have on the external community and corporate reputation?
The concept behind Corporate Social Responsibility (CSR) emphasizes that the pursuit of profit alone is no longer adequate to ensure an organization’s survival.
Since CSR is closely linked to stakeholders, who play a crucial role in creating and maintaining corporate reputation, it becomes imperative to adopt CSR policies and practices to preserve, on several fronts, the company’s reputation, which is directly related to social relations and communication activities.
Corporate reputation is a central element in the management of the company’s relationships with external society: both with respect to potential and current investors and with respect to end users, consumers and potential candidates.
A transparent and clear policy about a company’s Social Responsibility initiatives is the most immediate way of external transmission of corporate values: a factor that creates a solid corporate reputation, contributes to increased profits and builds the loyalty of the investing public and consumers.
It is necessary to view CSR practices as a long-term investment that the company chooses to make in order to enhance its reputation and to integrate or improve the Social factor within business operations, with the aim of creating a positive and sustainable-conscious climate.
In essence, it is the initiatives pertaining to Corporate Social Responsibility that are the main driver for value creation in the company, because they encapsulate the commitment to sustainable, social and governance issues that the company undertakes.
How to communicate corporate social responsibility?
With the rapid evolution of Corporate Social Responsibility (CSR) and the increasing need to act in accordance with institutional and social-environmental standards, numerous tools have been developed that facilitate the implementation of ethical policies, allow monitoring of results and, most importantly, offer companies the opportunity to demonstrate externally that their actions are in line with what they claim to practice.
These tools include reporting documents on companies’ ESG performance, goals and achievements, such as the Sustainability Report and the Sustainability Balance Sheet also of fundamental importance as a matter of relationship management with stakeholders, who, thanks to these tools, have a pool of sources from which to find information about the company.
To communicate Corporate Social Responsibility, the company can also use more traditional tools designed to show the public what principles the entire organization is founded on, for example:
- Charter of Values: containing the vision and mission; a document encapsulating long-term strategic goals;
- Code of Ethics: a corporate document in which the moral duties of the company and the rights of employees appear.
Its usefulness is to define and illustrate the ethical-social responsibility of each member of the organization.
The general principles contained in the Code of Ethics are fairness, transparency, honesty, environmental and personal protection; - Other corporate communication tools, such as training initiatives carried out, or online and offline awareness campaigns.
In communicating a company’s social responsibility, it is important, as well as required by law, that the information provided be:
- True and not misleading, thus pertaining to initiatives actually implemented by the company;
- Consistent with the Environmental, Social and Governance goals that the company has established.
In addition, the communication of corporate sustainability, and everything that falls under Social Responsibility, must be structured in such a way that the information is made accessible to external audiences, and thus is clearly understandable and usable.
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Understanding the central role played by corporate social responsibility within ESG dynamics, it is appropriate to structure a model of it that can endure over time.
A business model marked by diversity and inclusion, compliance with sustainable reporting obligations and contribution to the social and environmental development of people, corporate employees and the territory.
At Tecno, we support companies on their path to sustainable growth with tailored paths made up of concrete actions, clear objectives and measurable results.
Increase your company’s Social Responsibility with us.
