CR is a Smart Business Strategy
By Lana Chkhartishvili, Adviser on Corporate Responsibility Issues at CiDA and Global Compact Network Georgia
Corporate Responsibility is much more than just a cost, constraint, or charitable deed. Approached strategically, it generates opportunity, innovation, and competitive advantage for businesses—while solving pressing problems.
Harvard Business Review suggests number of examples how to practice strategic Corporate Responsibility, hereinafter referred to as CR.
Looking at Toyota’s example it is vivid that creativity and care towards environment where business operates always pays back; The company’s early response to public concern about auto emissions gave rise to the hybrid-engine Prius. The Prius has not only significantly reduced pollutants; it’s given Toyota an enviable lead over rivals in hybrid technology.
According to Michael E. Porter and Mark R. Kramer pioneering sustainable innovations in business operations are key to create distinctive value for your company and society; herewith, creating shared value for society, the environment, and businesses is defined as (CR) Corporate Responsibility.
For many years there have been large scale debates what does Corporate Responsibility mean and how can one differentiate it from charity and corporate philanthropy. Answer is very simple.
CR is a smart business strategy, a concept where companies integrate social and environmental concerns in their business operations; it is a process that undertakes responsibility for the company's actions and encourages a positive impact on the environment, consumers, employees, communities and other stakeholders, through company’s operations.
Corporate Responsibility is a notion that creates win-win situation for both – the responsible business actors and the loyal customers who are trusting business in a long-term perspective and guarantees sustainable development for all parties involved.
CR is simply a key to success; it translates into sustainability and long-term profitability for a company.
What does charity mean?
It is very important to underline difference between charity and corporate responsibility. Charity is the voluntary giving of help to those in need, as a single act or contribution that has no sustainable grounds; the giving usually occurs as an immediate response to disasters, pandemics, social needs, natural cataclysms and etc. Charity is a type of donation that can be reflected in the following formula:
Charity = voluntary act + immediate response to social problems+ short term
Where so philanthropy addresses the root cause of social issues and requires more strategic, long-term approach, looking from prevention, to preparedness of recovery, often found in advocacy work creating knowledge, stimulating research, managing and creating changes and development. However, philanthropy is not directly linked to business operations, or integrated into business plan.
Philanthropy = voluntary act + long term approach addressing root cause of the problem +not part of business plan
Therefore, we define corporate responsibility strategically, it encompasses not only what companies do with their profits, but also how they make them. It goes beyond philanthropy and compliance, it addresses how creatively companies manage their economic, social and environmental impact as well as their relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm.
CR = voluntary act + sustainable + long term + integrated into business plan and everyday operations
In 21st century companies are facing new demands to engage in public-private partnerships and are under growing pressure to be accountable not only to shareholders, but also to stakeholders such as employees, consumers, suppliers, local communities, policymakers, and society at a large.
If you still wonder why Corporate Responsibility, then here are 10 reasons why smart businesses integrate responsible practices in their business plans - and this is why Responsible Business Conduct Matters:
- It guarantees loyal customers;
- Raises trust towards company;
- Attracts quality professionals to join your team;
- Ensures long term prosperity and growth;
- Helps business develop further;
- Cultivates better reputation on the market;
- Grants competitive advantage amongst others;
- Increases Investment Potential;
- Is sustainable and has future;
- Opens up opportunities for cross-sectoral partnerships with Government, CSOs and Academia;
It is always important to remember that even small initiatives can generate important and distinctive benefits for society and the company. We live in the era where partnerships matter, stakeholder opinion is important, customers shape company future and guarantee long term success on the market.
AT&T director Arthur W. Page once said - “All business in a democratic society begins with public permission and exists by public approval,” these words said almost a century ago still remind us the importance of stakeholder opinion. That no company strategy shall be implemented without considering its impact on stakeholders, because public perception of an enterprise is determined 90% by what it does and 10% by what it says. It is always necessary for the company to listen effectively to its stakeholders, tell the truth and manage for tomorrow generating goodwill with its actions.
Last but not least Corporate Responsibility (CR) increases recognition for local and international trusted partners. CR is doing a business sustainably and responsibly.
Be smart, apply Corporate Responsibility in your business plan. Choose the act strategy not the say strategy. Just do the CR, because smart businesses do so.
This article has been published within the Swedish Government funded project "Leadership for SDG in Georgia".