By: Alexie Roy-Lafontaine
The primary mission of businesses is to meet the needs, anticipated or real, of different types of customers. In doing so, these commercial companies operate under a “business plan” that provides profits for entrepreneurs or those who are shareholders.
Moreover, in the countries of the Organization for Economic Cooperation and Development (OECD), there is now a broad consensus that no one can ignore the economic, social and environmental impact of their business activities or risk being perceived as a bad corporate citizen. Even more so in the age of social networks and their morality.
This is why the traditional divide between profits and social impact tends to narrow, if not disappear.
While it is still true that in order to generate profits, companies must meet the expectations of consumers, they must also offer attractive working conditions to its employees and fit into what is largely called the well-being of people. This is what corporate social responsibility is all about [1].
This concept of the social role of businesses has not always been. Initially, some develop their business models in a way that favours communities over profits through fundamental values of honesty, authenticity and quality. Nevertheless, the spiral of financial prosperity soon began, confusing communities and profits. The desire for expansion becomes central and companies borrow shortcuts, implement programmed obsolescence, outsourcing and mass production. Then, when these loopholes surface, they must expose their lies, re-centralize their values and lose the trust of their consumers and employees. Several studies show that companies putting societal needs at the core of their values are more successful, but breaking this wheel requires taking risks and innovating [6].
So, in order to achieve their means, businesses must honour their social role, but to what extent? This is where the concept of Corporate Social Responsibility (CSR) becomes relevant. According to the Bank of Entrepreneurs of Canada, it is “a company’s commitment to manage the social, environmental and economic effects of its operations responsibly and in accordance with public expectations”.
In other words, CSR translates into the means that some companies put in place to take responsibility for their actions and their impact on their employees, stakeholders and the community they serve. The concept has its roots in the principle of sustainable development. By linking the spheres of social well-being, environmental preservation and economic development, CSR ensures ethical, fair, sustainable and eco-responsible evolution for the companies involved [2].
The skeleton of CSR
It should be noted that there are no regulations, policies and/or laws requiring companies to adhere to CSR principles: it’s on a voluntary basis. The concept relies on the level of commitment of the company that incorporates it into its business model. It is therefore that those who participate in it put in place practices that go beyond the legal framework imposed on them. Some go so far as to open up to new economic models [4]. The principles of circularity are thus at the forefront by favouring the rental of goods rather than selling them, for example [5]. The entire membership of the companies are musicians in the CSR concert: all must be responsible and involved in its action plan. From the eco-design of goods to voluntary contributions to charities, actions that are part of the sustainable development guidelines are considered CSR approaches [2].
Although the concept may seem abstract, various CSR programs are set up to guide companies in their efforts (ISO 2600 International Standard, B Corp certification, etc.). There are no official marking scheme or better ways than others to apply the principles: the approaches are subjective to everyone. Certifications can, however, serve as an application guide for businesses and as a benchmark for consumers. Certified companies seek to create value for society and to meet standards of transparency and environmental responsibility, and thus to work in the pursuit of the common good [2].
The aim is to contribute to social progress and ensure the stability of resources for future generations. While CSR practices can represent high economic costs in equipment and labour, in the long run, businesses can make financial economies. For example, the use of clean energy requires specialized facilities, but saves money in the energy sector and optimizes supply chains [3]. The costs of recyclable and compostable packaging are higher than disposable packaging, but they avoid waste of resources and reduce the amount of waste [8].
Also, the new generation of employees aspires to work with companies with societal and environmental values as much developed as their own. Employees who are interpellated by the values of the business they work for tend to stay in their position, thereby reducing costs associated with their turnover [2].
That being said, community consumption habits are changing. People have a real desire to encourage companies that incorporate eco-responsible practices into their processes and give back to their employees and their community. By applying responsible practices, businesses are able to demonstrate their commitments to social progress [4].
Impacts of Industries and Businesses
All activities of an organization depend on the state of the plant’s ecosystems [7]. Then, to produce their goods and services, companies can have negative impacts on the planet: the destruction of biodiversity through deforestation, pollution of soil, water and air. In Quebec, the industrial sector is the largest emitter of GHGs [9]. These negative impacts on the environment also lead to social and economic levels. As a result, companies may feel a sense of responsibility and implement more sustainable processes in their business models [4].
At the social level, pollution from industrial activities can be responsible for the degradation of human health. Examples include respiratory problems related to fine particulate matter fumes and water contamination from the dumping of toxic waste into rivers. Also, the health of employees may be compromised if companies do not provide safety equipment adequate to do their jobs.
At the economic level, industries can introduce corruption and contribute to the degradation of public services by opting for aggressive tax optimization techniques or by practicing tax evasion. This deprives governments of financial resources, which may lead to higher taxes and/or are reduction in public services [4].
On the other hand, by promoting the diversity of their staff, local employment and the integration of people who are remote or disabled, they contribute to social progress. Also, by choosing financial transparency and fairly distributing profits among shareholders, employees and communities affected by their activities, they reduce the potential negative economic impacts [4].
However, investment in clean technologies, recycling and composting, and incorporating human physical and mental health at the center of these companies’ values is the key to evolving into a business model consistent with CSR principles. Mitigation of their negative impacts is necessary in order to limit the impact on present and future societies [10].
By practicing CSR, companies are better equipped to respond to the climate, supply and transparency challenges they face. Stakeholders are all the more concerned about the behaviour of the companies with which they do business [10]. Thus, if they do not take into account the environmental and societal impacts of their activities, their sustainability is threatened. CSR’s approach is rewarded with a better overall performance by dodging the challenges of sourcing raw materials that are becoming scarcer and allowing it to differentiate itself more from the competition by attracting and retaining its employees [4].
CSR is more than just a marketing technique: it is the common thread of companies of various sizes. Globally, Johnson & Johnson is working to reduce its environmental impacts by investing in environmentally responsible energy technologies. The company is also working to provide safe drinking water to communities in need [11]. In Quebec, Hydro Quebec works in sustainable development using a multi-sector approach: production, transportation, customer service, construction, technological innovations are branches of their sustainable development plan [12].
Altruistic values lead to good businesses. CSR principles benefit the external and internal populations of the companies. It’s about valuing honesty rather than lying, sharing rather than hoarding and people rather than profits.