Sustainability and corporate social responsibility (“CSR”) have become mainstays of business activities, and the percentage of companies of all sizes professing to practice some form of sustainability and CSR has been steadily increasing. Sustainability reporting is gradually becoming the norm, particularly for large global businesses. Traditionally, companies practiced CSR through philanthropic activities; however, today’s definition of CSR has expanded to include strategizing to identify and exploit internal and external activities that can deliver value to the company, all its stakeholders (not just shareholders), and society at large.
The first step in bringing a CSR strategy to life is the development and formal adoption of CSR commitments, which are the policies or instruments of a company that indicate what it intends to do to address its social and environmental impacts. CSR commitments ensure that the company’s organizational culture is consistent with CSR values; help align and integrate the company’s business strategy, objectives, and goals; provide guidance to employees about how they should conduct themselves, which is particularly important for companies whose employees are widely dispersed in locations all around the world; and communicate the company’s approach to addressing its societal and environmental impacts to business partners, suppliers, communities, governments, the general public, and others. Commitments also provide a basis that senior management and stakeholders can use to benchmark and assess the company’s CSR performance.
CSR commitments have been broken out into two types, which are closely related. The first type, aspirational commitments, typically focus on articulating the long-term goals of the company. They are usually written in general language that is disseminated through vision, mission, values, and ethics statements. Examples of aspirational commitments include moving to “zero emissions,” “eliminating any negative impacts our company has on the environment,” and celebrating balanced emphasis on “people, process, product, place, and profits.” Aspirational commitments offer a basis for a shared view of what the company stands for and where it is heading that can be referenced by people throughout the organization as a guide when they implement the tactics of the CSR initiative. However, the real tactical nitty-gritty appears in the second type of commitment, “prescriptive commitments” such as codes of conduct and standards that lay out more specific behaviors to which the company explicitly agrees to comply. Some companies choose to develop their own set of prescriptive commitments tailored to their own specific circumstances; however, this can be a time-consuming process. Other companies have found it easier to incorporate and publicly sign on to an existing CSR code or standard for their sector (i.e., codes and standards developed for a particular issue, such as human rights or climate change, or a specific industry, such as mining or agriculture) or another CSR instrument such as the United Nations Global Compact. Prescriptive commitments can be quite extensive and cover a range of legal and CSR-related topics, including the following:
- regulatory compliance
- financial responsibility
- fair competition
- prohibitions on bribery and corruption
- conflicts of interest
- customer relationships
- supply chain relationships
- workplace conditions and employee well-being
- environmental responsibility and community relations
- environmental policies
- human resources policies
- principles of responsible purchasing
Since the development and dissemination of CSR commitments is pivotal to the launch and success of a company’s CSR initiative, companies should follow a deliberative process that includes the following steps.
- Scanning CSR commitments already in use: This step involves researching and analyzing existing CSR commitments that other companies have made. This can help identify best practices and areas where the company can improve.
- Understanding existing organizational norms, values, and strategies: This step involves identifying the company’s existing norms and values and understanding how they relate to CSR. This can help ensure that the company’s CSR commitments are aligned with its overall mission and values. The development of commitments should also deploy traditional strategic planning techniques such as SWOT (strengths, weaknesses, opportunities, and threats) analysis.
- Discussions with major stakeholders: This step involves engaging with key stakeholders, such as employees, customers, suppliers, and investors, to understand their expectations and concerns regarding CSR. This can help ensure that the company’s CSR commitments are relevant and meaningful to its stakeholders. Engagement with customers is important because research shows that they are more likely to support and buy from companies that share their values and address the environmental and social issues that they care about. Developing CSR commitments that employees can be proud of, and which have been adopted with their participation, builds loyalty in the workforce, and it ensures that employees will be engaged ambassadors for the causes selected by the company.
- Identifying the company’s key CSR perspectives (i.e., material CSR topics and issues): This step involves identifying the most important CSR topics and issues for the company, based on factors such as stakeholder expectations, industry standards, and regulatory requirements. This can help ensure that the company’s CSR commitments are focused on the most relevant and impactful areas. Be sure to choose commitments that are aligned with the company’s business model, expertise, and values so that the strengths and resources of the company can be effectively leveraged to create maximum positive impact and value for all stakeholders, including shareholders, employees, and customers.
- Creation of a working group to develop the list of commitments: This step involves assembling a team of individuals from across the organization to develop the company’s CSR commitments. This can help ensure that the commitments are comprehensive and representative of the company’s various functions and perspectives.
- Preparation of a preliminary draft of the commitments: This step involves drafting the company’s CSR commitments based on the input and feedback received from stakeholders and the working group. This can help ensure that the commitments are specific, measurable, and achievable.
- Identifying performance targets for the commitments, followed by consultation with affected stakeholders: This step involves setting specific performance targets for each of the company’s CSR commitments, and consulting with stakeholders to ensure that the targets are relevant and meaningful. This can help ensure that the company’s CSR commitments are aligned with its overall goals and objectives. This is the point where the company should assess current performance and impact for each of its commitments to establish a baseline against which future performance can be measured. Target goals should be SMART (specific, measurable, achievable, relevant, and time-bound).
- Revision and publication of the commitments: This step involves finalizing the company’s CSR commitments, based on the feedback received from stakeholders and the working group, and publishing them publicly. This can help ensure that the company’s CSR commitments are transparent and accountable.
- Continuous monitoring of the external environment: This step involves monitoring the external environment, such as changes in regulations, stakeholder expectations, and industry standards, to ensure that the company’s CSR commitments remain relevant and up to date.
- Identifying and pursuing business opportunities aligned with the commitments: The CSR program should not be separated or isolated from core business activities, and commitments should be made in areas where there will be reasonable and attractive opportunities for creation of shared value for the business and society, such as developing products or services that solve social or environmental problems, partnering with NGOs or social enterprises, or investing in social innovation.
- Implementation of the commitments and reporting progress: This step involves implementing the company’s CSR commitments and tracking and reporting progress against the performance targets. This can help ensure that the company’s CSR commitments are integrated into its overall operations and culture, and that it is making meaningful progress toward its CSR goals. Reporting—using transparent and credible standards and frameworks—ensures that the company continuously communicates its achievements and challenges to its stakeholders and sets an agenda for reiteration of the entire process to ensure that commitments remain relevant and achievable.
It often seems easier to merely adopt, without customization, the standards laid out in recognized third-party CSR instruments. However, doing so misses opportunities to expand organizational understanding of CSR and engage stakeholders in the process in a way that leads to an end product that is focused on their specific needs and expectations, and that is feasible given the company’s available resources. For example, a smaller company is best served by adopting a relatively short list of commitments that can be realistically implemented and achieved rather than creating a voluminous collection of policies and procedures that are not taken seriously.
To learn more, see the author’s book Business and Human Rights: Advising Clients on Respecting and Fulfilling Human Rights, published by ABA Publishing.
Copyright © 2023 by Alan S. Gutterman. All the rights of a copyright owner in this Work are reserved and retained by Alan S. Gutterman; however, the copyright owner grants the public the non-exclusive right to copy, distribute, or display the Work under a Creative Commons Attribution-NonCommercial-ShareAlike (CC BY-NC-SA) 4.0 License.