Many people may have heard of the term CSR (Corporate Social Responsibility) when starting a new business or advancing business. However, you may not know what CSR refers to or what you specifically do. By implementing CSR, it is possible to increase the competitiveness of your company, so it is a term that all executives should know.
Therefore, in this article, we will introduce an overview of CSR and the advantages and disadvantages of implementing CSR. We will also explain what we specifically do with CSR and provide actual examples, so please use this as a reference.
What is CSR?
CSR is an abbreviation for Corporate Social Responsibility. Companies have various stakeholders. This includes management, employees, investors, business partners, the environment, etc., and the outline of CSR is to make appropriate decisions regarding these.
However, there is no such thing as a homogenized CSR; CSR differs from company to company. This is because the employees and management teams working there are different, and the environments surrounding them are also different. Each company will reconsider its own stakeholders and issues and create its own unique CSR.
The idea of CSR has been spreading since 2000, and many companies are now interested in it. Some companies also publish information in the form of CSR reports. Many companies should engage in CSR activities because they can change the way business partners see them and improve the quality of their business relationships.
Why has CSR spread?
Earlier, I explained that CSR began to spread after 2000, but why did the idea of CSR spread in the first place? Although there are various theories about this, the most commonly cited reason is that corporate fraud and activities have increased.
An easy-to-understand example is food companies selling products with falsified expiration dates or falsifying the country of origin. This will inevitably lead to greater dissatisfaction from consumers, so from a company’s perspective, the key is how well they can convey their credibility. One such initiative is CSR activities.
I used a food company as an example here, but the same can be said for other industries and business types. From the perspective of business partners and stakeholders, companies that engage in CSR activities and increase their credibility appear more attractive, which leads to competitiveness in all aspects.
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CSR and other differences
If you are interested in the environment or external activities, you may have heard of the terms sustainability and SDGs. However, there may be cases where you do not understand the difference between these terms and CSR. From here, we will introduce the differences between CSR and other words.
Difference with sustainability
Sustainability is a way of thinking that aims to create a sustainable society by taking into consideration the balance between society, environment, and economy. This word is often confused with CSR, and many people think that they mean the same thing. In fact, sustainability and CSR are similar in a broad sense.
In the case of companies, this is referred to as “corporate sustainability,” and each company considers its impact on the environment and economy and incorporates this into its business.
Difference with SDGs
SDGs are international goals. Announced at the United Nations Summit in September 2015, it aims to achieve the Sustainable Development Goals for the period 2016-2030. A total of 17 sustainable development goals have been set, such as “eradicating poverty” and “eradicating hunger,” and are expressed as SDGs, an abbreviation of the word Sustainable Development Goals.
CSR is an activity that each company should undertake, but the difference is that SDGs are international goals. Although CSR and SDGs have different scales of thinking, there is no problem as long as they aim for the same thing.
CSR also differs depending on the country (region)
CSR activities and attitudes towards CSR differ depending on the country and region. Here, we will use America and Europe as examples.
american case
In the United States, there is a strong belief that companies belong to their shareholders. CSR has been attracting attention in the United States since the 1990s, and consideration for the environment, legal compliance, and community activities are emphasized.
In addition, the United States often employs people of other nationalities than the United States, and globalization is progressing. Against this background, many problems have arisen due to the nationality of workers, so there is a higher level of interest in CSR activities than in Japan.
european case
In Europe, there is the European Union (EU), which describes CSR as “investing in the future.” Because we believe that companies are necessary for the sustainable development of society, not only companies but also citizens are actively interested in CSR activities. Therefore, the company is characterized by a culture in which CSR activities are at the core of the company.
Sustainability report overview
When researching things related to CSR, you may come across the term sustainability report. A sustainability report is a document used by each company to report its sustainability-related activities, and is sometimes referred to as a “sustainability report.”
The difference from a CSR report is that a CSR report is from a corporate perspective, whereas a sustainability report is from a societal perspective. Both reports give a good impression externally, so it is a good idea for companies that are engaged in CSR and sustainability activities to prepare them.
Benefits of doing CSR
So far, we have explained the outline of CSR and the difference between it and words that are often confused. From here, we will explain the benefits of engaging in CSR activities.
Let’s look at each in turn.
Improving corporate image
Carrying out CSR activities helps improve a company’s image. Since companies are for-profit businesses, it is natural for them to prioritize their own profits. However, there is also the possibility that the company may not give a good impression externally, and it would be of great benefit to carry out CSR activities to resolve these issues.
Increased employee satisfaction
CSR activities also lead to increased employee satisfaction. If employees can recognize that their company and their activities are contributing to society, they will be more motivated to work.
As a result, the productivity of your employees will increase, which may lead to increased sales for your company.
Building quality relationships with stakeholders
Another benefit is that we can build high-quality relationships with stakeholders through CSR activities. Companies have a variety of stakeholders, including shareholders, business partners, employees, and the environment. If we can demonstrate that we are a company that can contribute to society through CSR activities, we will gain more trust from our business partners. Also, if you can gain the trust of your shareholders, you will have a better chance of raising funds and expanding your company.
What are the disadvantages of CSR?
CSR activities are not without disadvantages. The disadvantages of CSR activities are as follows.
I will explain each in turn.
costs will rise
Investing resources in CSR activities naturally increases costs. In particular, if a company is just starting out, the resources it can invest in are limited, and it is easy to see that cash flow will deteriorate. Additionally, it is more likely that sales will increase if you invest in expanding your business partners and sales channels rather than investing in CSR activities at the time of establishment.
Therefore, it can be said that CSR is better suited for companies that can make stable investments than for companies that have just been established.
There may also be a shortage of personnel
Naturally, allocating personnel to CSR activities may lead to a shortage of personnel. This puts pressure on resources devoted to core business, which is putting the cart before the horse. There are many companies that would like to engage in CSR, but are unable to carry out CSR activities due to a lack of human resources. Therefore, it may be better to focus on activities other than CSR until you can stably allocate your human resources.
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What exactly does CSR involve?
By the way, many people may not know exactly what they should do when they hear the term CSR. CSR covers a wide range of topics, but the following can be considered.
CSR means taking social responsibility towards stakeholders, so if you think about it in a broad sense, there is no problem in understanding it as taking actions that are beneficial to stakeholders. The content that each company should address is different, so be sure to proceed based on your company’s situation.
CSR examples
Recently, various companies are working on CSR. Uniqlo, for example, engages in CSR activities such as supporting the provision of clothing, actively recycling activities, and hiring refugees. Honda Motor Co., Ltd. is also characterized by its CSR activities related to the environment and safety initiatives.
Each company carries out CSR activities tailored to its own characteristics, so it is a good idea to use them as a reference when implementing your own initiatives.
summary
In this article, we have explained CSR. Implementing CSR has the advantage of improving a company’s image and increasing employee satisfaction. On the other hand, undertaking CSR activities requires a certain amount of cost, which may be difficult for small and medium-sized enterprises that have just been established.
Why not start by thinking about what CSR activities your company can undertake?