What Is Corporate Responsibility And Why Is It Important?

Corporate responsibility (CR) is relevant to all industries and, therefore, is interpreted differently according to the sector.

There are some key themes that all businesses should be aware of, whether that be new businesses starting as they mean to go on or existing businesses trying to improve. But what is corporate responsibility? And why is it important? Here’s what you need to know about what is meant by corporate responsibility and why it’s important for businesses to invest in it.

What Is Corporate Responsibility?

Corporate responsibility also referred to as corporate social responsibility refers to the wider impacts of an organisation. This can be broken down into three main areas:

• Social
• Environmental
• Economical

With an increase in focus on how corporations demonstrate their responsibility in these areas, now is the time for businesses to intensify their efforts if not already investing in CR.

What Is The Social Aspect Of Corporate Responsibility?

The Public Services (Social Value) Act 2012 makes social value a formal requirement of public authorities to consider the economic, social and environmental wellbeing of public service contracts. Quantifying the effects of a business on social wellbeing can be more difficult than measuring financial or environmental impacts, as it is based on how an organisation affects the people in society. This can link to health and wellbeing, happiness or engagement with the local community.

Corporate Responsibility And The Environment

What is corporate responsibility and why is it important from an environmental point of view? We’ve explored what is meant by sustainable construction, and this contributes greatly to a company’s corporate responsibility. This is where organisations consider how their environmental impact can be minimised or improved, and using this awareness, for example, to counteract their carbon footprint.

Economical Impacts Of Corporate Responsibility

Businesses prioritising CR will invest economically in various areas of business. One example of this is a commitment to paying the living wage, which also influences the social effects and investment in the local community. Creating jobs and contributing to the local economy is one of the biggest ways a business can demonstrate corporate responsibility. Taking positive action on social and environmental matters can also lead to business benefits including reduced overheads through reducing waste or energy consumption.

Why Is Corporate Responsibility Important?

Corporate responsibility is important in holding companies accountable for their influence on wider social issues. It can empower employees to leverage any corporate resources at their disposal to do good. Studies show that an effective corporate responsibility policy can boost staff morale and have a positive effect on motivation among employees.

Corporate responsibility is also important in telling customers your story. Being socially conscious allows businesses to be more transparent about what’s happening behind the scenes. Not only do they have nothing to hide, but socially responsible companies should also be shouting about their efforts in advancing corporate responsibility. This can increase engagement from customers who want to be associated with companies who have a strong brand based on good values and ethics.

How Businesses Can Benefit From Corporate Responsibility

Aside from the more general reasons why corporate responsibility is important, there are also a huge number of benefits to businesses. Increasingly, people are looking to work for companies that prioritise corporate responsibility and a strong track record can make a company more desirable to potential candidates in the hiring process. It can give businesses the edge on competitors who may not offer the same kinds of commitments — thus, giving businesses with a strong focus on corporate responsibility a wider candidate pool for vacancies.

By 2025, millennials will make up three-quarters of the workforce and an employee engagement study found that 51% of that generation wouldn’t work for a company that doesn’t have strong social and environmental commitments. A more recent study showed that 90% of participants interviewed from Gen Z believe companies must act to help social and environmental issues, and 75% would do research to check a company’s accountability.

Socially responsible companies also cultivate positive brand recognition, so these businesses benefit not only from a better reputation amongst potential employees but also to potential customers. Corporate responsibility is important in highlighting the positive efforts companies make, which can provide excellent PR opportunities. Uplifting stories about the effects of eco-friendly practices, employee wellbeing and community outreach make for great social media content. It’s also an opportunity for collaboration with local grassroots organisations, and social media audiences can be very responsive to positive local stories.

Promoting your efforts in corporate responsibility can also influence employees taking pride in their work! Sharing culturally responsible initiatives and the workers responsible for them can help bolster efforts from staff and engage workers to become more involved. A company’s reputation of corporate responsibility can be a source of pride for those who work there, meaning staff are more likely to share content about such efforts. This kind of endorsement from existing employees benefits companies not only in making it a desirable workplace but also reaching potential customers through the sharing of this positive content.

Join CHAS and gain access to risk management resources and accreditation schemes that can help you to improve your corporate responsibility. Ensure compliance with corporate responsibility through our Common Assessment Standard accreditation scheme to help demonstrate your commitment to new clients.