You may be wondering, What is corporate social responsibility, and how does it impact your small business growth? You can be drawn to a business not only for their great products and services, but because they also support issues and organizations that interest you. When everything else is equal – similar pricing, product or service availability, convenience – a business’s social-impact stance may be the deciding factor of where to spend your money.
The same can be true for your customers! Here, you’ll learn what corporate social responsibility is, with information and steps to build your corporate social responsibility business profile.
What is corporate social responsibility?
Simply put, corporate social responsibility (CSR) is a way of doing business where you aim to make the world better while still making a profit. This is demonstrated in daily operations and special initiatives, such as labor practices, the vendors you choose, choices that impact environmental sustainability, and volunteer work or donations in your community or industry.
While CSR is often associated with major brands, like Patagonia and Ben & Jerry’s, it’s important for building positive brand awareness for small businesses, too.
Why does corporate social responsibility matter?
Businesses include CSR in their operations and initiatives because it has numerous benefits, both internally and externally:
- Internally: Businesses focused on CSR often attract like-minded employees who are proud to be a part of something that supports an issue or organization they care about.
- Externally: Potential customers whose values align with a business’s are more likely to support that business. Communities and community-based organizations are often beneficiaries of CSR initiatives in their areas, too.
More and more businesses are considering CSR as part of their values and operations. How you incorporate it often depends on the founders’ or owners’ vision and priorities.
How does corporate social responsibility look for small businesses?
When small businesses prioritize CSR, the benefits spread throughout communities and industries. There are four primary strategies your small business can implement for CSR, including:
Environmental responsibility
To have a positive environmental impact, you can choose to operate more sustainably, give back to your community, or support initiatives on a national or global scale.
An example
You run a local retail boutique for women’s clothing that commits to only carrying goods made from high-quality natural materials with a lower environmental impact. Your commitment is clear in the quality of goods you offer and in the higher-than-average prices.
Even with the higher prices, your customers don’t mind paying more because they know the clothing will last for many years and that your business’s practices have a much lower impact on the environment than cheaper fast-fashion brands.
2. Economic responsibility
This is when businesses operate and give back in ways that add to the community’s economic strength.
An example
Your restaurant buys its fish from a local, fresh-caught supplier instead of a supplier across the state, and you support local farmers by purchasing their produce and dairy products as often as you can. You promote the fishery and farmers through your menu offerings, including seasonal dishes and daily specials. Although the business sometimes pays a premium for local goods, your customers know they’re helping several local businesses when dining.
3. Ethical responsibility
When running your small business, you’ll need to carefully consider fair and ethical practices, both internally (for employees) and externally, such as the vendors you choose.
An example
You are a small manufacturer of specialty pet toys and are sourcing materials for a new line of products. When presented with several material options, you discover that some potential suppliers have labor practices that don’t align with your business’s standards. When you find one that does, the price for materials is higher. You decide to go with the higher-cost supplier because you won’t compromise on your ethical standards.
4. Philanthropic responsibility
This is when small businesses commit to financial support of their communities through charitable donations.
An example
Your gym sponsors a 5K charity race to benefit a cause that you support. Your staff also organizes group trainings twice a week in the month leading up to the race. By sponsoring the race, prepping participants, and showing up on race day, your gym supports the community and cause while connecting with potential new members and charitable partners.
As you can see, there are often overlapping benefits from CSR. For example, a local business that practices ethical responsibility by offering living wages and benefits to all employees is also making a positive economic impact on the employees and their families, which has a broader economic effect throughout the community.
How to find the right CSR opportunities for your business
When deciding which CSR goals and initiatives are right for your business, some may be in clear alignment with your business type or industry, and others may be important to you personally. In both cases, it’s important to be transparent with customers, staff, and the public about your goals and motivations.
If your business’s CSR goals and initiatives align directly with your business’s operations, then customers can easily make the correlation between what you do and why you’ve chosen that. Here’s an example:
- If you run a pesticide- and herbicide-free lawn-care business, no one will be surprised if your CSR initiatives include using only organic lawn products and seed, promoting safety and sustainability, and giving annual donations to a local environmental organization.
But if your CSR initiatives support pet shelters instead, you may need to explain why this is important to you, as the owner. It’s still worthwhile, even if the connection is less obvious. It’s also essential that it fits your budget and your time constraints. Here are a few more examples to help you see how you can integrate CSR into your business:
- A bike shop participates in a cleanup project for a local public bike trail.
- A private dentist’s office offers free educational presentations to elementary schools.
- A lunch restaurant gives leftovers to the local food pantry at the end of the business day.
You can also consider partnering with other local businesses or within your larger industry. For example, if your dry cleaning business takes donations of prom attire, cleans it, and offers it for free to local high school students, you could also partner and co-promote with a couple of salons to offer prom-day styling. In that way, both businesses can create an even greater benefit and positive publicity.
Small businesses can implement CSR in the same ways as large corporations. Even on a smaller scale, it has a positive impact on your team, your business, and your community.
How to measure the impact of corporate social responsibility
To ensure that you achieve your business’s CSR goals, you should have at least a simple plan in place. The metrics you use to measure success will vary depending on your initiative and specific goals.
For example, suppose your initiative is to make charitable donations of $500 each quarter to different organizations. In that case, measuring success is simply documenting how much was donated each quarter and who received the funds. You can then take this further by following up with the charity to see how the funds helped them.
If it’s something that’s built into your business model – such as sourcing only from vendors who certify that their textiles are organic – you may need to do some research, as well as request backup documents (like your vendor’s organic certification).
How much does corporate social responsibility cost?
Financially speaking, implementing CSR initiatives doesn’t have to cost much. For example, volunteering some of your time and encouraging your employees to do so can be a huge service for an organization in your community – and it only costs a few hours of work each week or month.
Other times, there may be choices that you make, as a business owner, that can impact your bottom line, such as having higher-priced goods due to your vendor and labor-practice choices. More often than not, though, the benefits come back to you, your business, and your brand, as well as to your customers, who feel good about doing business with you.
As with any business model, CSR presents opportunities for profitable returns when executed well. For your business and clients to benefit, it’s important to be transparent about your CSR activities. Share your contributions through your digital media and other publicity strategies – promoting how your business supports the community is great.
CSR initiatives can also be a great tool for hiring new talent and retaining good employees. Studies show that employees value working for a business with strong values.
Real-world business CSR examples
You may already be familiar with the CSR initiatives of some large corporate brands—as mentioned earlier, Ben & Jerry’s is well-known for its. Ben & Jerry’s is a multi-billion-dollar business, but its popularity and brand loyalty have been built, in many ways, on its well-publicized stances on many environmental and social-justice causes.
But you don’t need to be a global corporation to have a significant impact, as these show:
- Nicole Bryson, owner of FTMobility in Saddle Brook, NJ, has her business positively impact her community. For example, FTMobility donated a handicap-accessible lift van to a family in the community whose lives included challenges from both cancer and cerebral palsy. While it gained significant positive publicity for the business, it’s also the generous gesture that made Nicole and her team feel great about their ability to help others with a lasting impact.
- Eco-Baggeez creates a positive impact on the planet and people through its work, too – in fact, owner Beth Race’s business model is built upon her CSR beliefs. In addition to offering an environmentally superior option to plastic sandwich and snack baggies, Beth’s business works with several organizations that employ people with disabilities. This is how social responsibility is built into her business model for long-term benefit.
- Vetted Tech owner, Mike Mowins, has created a tech-based business with a specific goal of having the veterans who work there eventually become the business’s owners. This commitment to service members means there will be opportunities for excellent jobs today and long-term financial security for his team.
Pursuit can help you as you make your community better
If you need financing to build your team, expand product lines, or to allow you to be more selective about vendors or environmental practices to align your operations with your CSR goals, Pursuit can help with these and just about every other business need.
With loans from $10,000 to $5.5 million, we can help you secure financing for working capital, equipment, the purchase or construction of commercial real estate, to refinance business debt and more for businesses in New York, New Jersey, Pennsylvania, Connecticut, Nevada, Illinois, and Washington. And our Business Advisory Services are available to you as a Pursuit borrower to help you succeed.
Apply today to learn more!
