Good CSR Makes Good Business Sense - Report
27 August 2014 at 11:03 am
A survey of 2,500 businesses in 34 economies finds that businesses are being driven towards more socially and environmentally sustainable practices not simply by brand building or altruism, but because it makes good financial sense.
The research, from Grant Thornton’s International Business Report (IBR) also shows that an increasing number of companies report on sustainability while a majority now view integrated reporting as best practice.
The report (Corporate social responsibility: Beyond financials) reveals that the top driver towards more sustainable business practices globally is cost management, cited by two thirds of respondents (67 per cent), up from 56 per cent in 2011.
In the UK, businesses cited client/consumer demand (62 per cent) as the main driver behind their CSR efforts, followed by recruitment/staff retention (49 per cent) and cost management (48%).
“The research shows that across the world, CSR and broader business objectives are becoming more aligned,” Jane Stevensen, Director of Sustainability at Grant Thornton UK LLP said.
“The findings suggest that the benefits of adopting more environmentally and socially sustainable business practices are becoming ever more tangible, for example through tax relief on charitable activity or lower energy bills due to efficiency measures introduced.
"Despite the overall recognition of cost benefits, it's interesting to see that British businesses seem far more reactive in their approach to CSR and are largely responding to stakeholders' needs.
“Beyond the immediate cost benefits, strong social and environmental credentials can create customer loyalty and enhance reputations, which has become increasingly important with the rise of social media.
“We live in an increasingly digital world characterised by instant customer feedback, so businesses need to be mindful not just of what they are doing, but of how they are doing it. Companies which gain while the local population or environment loses can quickly find demand for their products or services eroding."
According to the IBR, the number one CSR initiative implemented over the last 12 months is donating to community causes/charities, cited by 68 per cent of business leaders globally (80 per cent in the UK).
Two thirds said they had participated in community/charity activities (73 per cent in the UK), while 65 per cent also said they had improved their energy efficiency or waste management (75 per cent in the UK).
“For business leaders, commercial drivers can no longer be viewed as separate from social or environmental ones. During the lean times of the global financial crisis, cutting costs became the norm – but improving energy efficiency or sourcing local products also makes financial sense when economies are growing. In an ever more crowded and competitive marketplace, we’re seeing businesses use CSR to differentiate themselves and unlock new potential for growth.”
According to the research at present just under one third of firms globally report on sustainability initiatives, either combined with financial reports or separately.
In the UK, only one quarter (24 per cent) of businesses stated they report on sustainable initiatives. However, a further quarter (26 per cent) of international businesses plan to begin reporting externally on sustainability matters in the next five years (31 per cent in the UK).
Overall, 57 per cent globally agree that reporting on non-financial matters, such as sustainability, should be combined with financial reporting, whereas in the UK, only 46 per cent agreed.