Setting up a CSR policy for your company

Corporate social responsibility (CSR) policies have been increasingly adopted by many companies over recent years. In this article, we will look at how a company can set up its own CSR policy and consider the various benefits of doing so.

What is corporate social responsibility?

Corporate social responsibility (CSR) – sometimes known simply as ‘corporate responsibility’ – is defined as “the responsibility of an organisation for the impacts of its decisions on society and the environment above and beyond its legal obligations, through transparent and ethical behaviour.” CSR can cover a wide array of areas including:

  • Environment – this applies to both heavy polluters such as manufacturing companies and lower impact office based businesses. Industrial firms will need to consider both the way they manufacture goods (eg air and water pollution caused by factories) and the environmental impact of the goods themselves. Services based sectors will need to think about their own carbon footprint, how offices are heated and insulated, their use of paper etc.
  • Energy – this is often part and parcel of any environmental policy. Heavy industry may want to consider whether they can use green energy more effectively, and if they can adopt less energy intensive processes. Office sectors could look at switching their electricity and gas providers to utilities companies with eco-friendly credentials.
  • Health and well being – aside from their employment law duties, many companies will take further steps to ensure their employees and workers are healthy and happy both inside and outside the workplace. Other than providing private healthcare, this can involve offering cycle to work schemes or access to counselling services.
  • Supply chain – companies can take steps to improve their ethical credentials by only dealing with suppliers who have their own CSR policies in place, or refusing to deal with any businesses which have controversial working practices.
  • Social philanthropy – donating money to charities, sponsoring community events or allowing employees to take extra paid time off work to volunteer for charitable causes are some of the ways firms can demonstrate a social conscience.
  • Diversity and inclusion – there is a greater social awareness of various forms of discrimination than ever before, and companies which are seen to be taking active steps to promote equality amongst employees (eg by having a more diverse board) will often be held in higher regard by many consumers. But they also need to be careful to not engage in ‘positive discrimination’ as this can be considered illegal under the Equality Act 2010 (subject to certain exceptions).
  • Human rights – companies should ensure they are upholding all the human rights laws, and additionally check that they are not inadvertently supporting human rights abuses by dealing with suppliers or clients who are infringing human rights. This can be tricky for companies with extensive supply chains, such as clothing retailers, since manufacturing processes are often carried out in overseas jurisdictions with lower standards of employment regulation.
  • Education – providing continuous learning opportunities for its employees will boost a company’s CSR efforts. Taking on apprentices and offering training opportunities in partnership with schools, colleges and universities will also enhance their standing as an ethical employer.

How does a company set up a CSR policy?

Most companies will already have a range of policies in place. Employees will be provided with a health and safety policy as well a disciplinary and grievance procedure, in addition to policies on sickness, flexible working and use of IT equipment etc. Meanwhile, a data protection policy will often be made available on the company’s website for any customers or website users.

A corporate social responsibility policy is therefore just another form of company policy and can be added to the bank of existing company policy documents. But it should be written for both company employees and any third parties such as clients, suppliers and even journalists. Unlike internal policies, the CSR policy should be designed to be read by a wide audience and it can even be considered as part of a company’s marketing efforts.

There are several steps which need to be taken when creating a CSR policy:

  • Areas to include – company management should first decide which elements (ie those we have considered above) they would like to include in the CSR policy. Some issues may be more important to a company whereas others may not be feasible and highlighting these could even look hypocritical – such as a company with heavily polluting factories writing about its desire to be eco-friendly.
  • Writing the policy – a company can either design and write its own CSR policy, download a template policy or ask an external agency for help. A policy does not have to be particularly comprehensive – it can even simply take the form of a pledge by the company directors to uphold specified principles. It is worth looking at a few different corporate social responsibility policies adopted by competitors or companies in a similar area of business, to see what they have included.
  • Publication – once a CSR policy has been written, it’s important to ensure that it is circulated both internally and externally. All employees and workers should fully understand any principles contained in the policy, as they will need to uphold these. A PR agency can help to publicise a CSR policy more widely, but it will often be enough to link to it on the website and in the footer of company emails etc.
  • Implementation – there is no point creating a CSR policy which is merely cosmetic. Active steps need to be taken by companies to demonstrate that they are abiding by their own policies. It is a good idea to publish metrics where possible, to show evidence of improvements which support the policy aims.
  • Review – it is a good idea to regularly review the company’s CSR policy to ensure it is up to date, particularly if management has changed significantly. Social attitudes change over time and there may be new ethical considerations which need to be added to a policy to ensure it reflects the current society.
  • Social media – it’s crucial that any corporate social media accounts are seen to uphold the principles contained in the CSR policy. Furthermore, directors and other staff need to consider their own personal social media posts (both present and past), to ensure these do not contradict any pledges etc.

What are the benefits of setting up a CSR policy?

Corporate social responsibility is more than just a buzzword. Society is arguably more aware of company ethics than ever before, and socially conscious consumers will quickly switch their custom to a competitor who appears to be more ethical. Healthy profits are no longer the sole indicator of corporate success in the eyes of the wider public.

Some of the key benefits of creating a CSR policy are as follows:

  • Consumers – the ‘Amazon generation’ is far more fickle in terms of brand loyalty than in the past. Customers are likely to vote with their feet if a company is seen to be causing damage to the environment or fails to uphold human rights by dealing with rogue suppliers etc. A CSR policy will demonstrate to its clients that a company has ethical principles – but it will be equally important to carry out any promises contained in such a policy.
  • Staff – attracting and retaining the top employees can stand a company in good stead, providing an advantage compared to any rivals in terms of its skillset. But younger recruits are often very selective and will be looking for more than just a decent pay package; they will consider the ethos of a company and how it treats its employees and third parties. There is a lot of kudos that comes with working for a company which is seen to be socially responsible – so a CSR policy can appeal to discerning job seekers.
  • Investors – individuals or companies which are considering making an investment are increasingly looking beyond the balance sheet and likely ROI. Environmental and/or ethical investment vehicles are becoming more commonplace, appealing to a new breed of investor who wants to make sure they are not indirectly damaging the environment or contributing to human rights abuses whilst making a profit on their investment. Some investors will require to see a CSR policy before even considering buying shares or lending money to a company. But it may also be necessary to demonstrate any claims with hard data (eg if a factory has reduced its CO2 emissions, metrics should be published).
  • Brand – a limited company is considered to have what is known as its own ‘legal personality’. This essentially means that it can trade in its own right, own assets and be held liable for debts. It could be argued that a CSR policy provides a company with an additional element of personality; a sort of ‘social conscience’ – and this can become part of its brand. Many companies are viewed as ‘ethical businesses’ because they successfully promote their ethical credentials, not only through policies but also by highlighting the ethical nature of their trading activities. For example, the ‘International Fairtrade Certification Mark’ is now a core element of many brands.

About the author

Nicholas joined in 2018 to set up the Company Secretarial Department in the group’s company formation divisions. After establishing the department, he was a key stakeholder in the development of Linnear CoSec. Prior to joining the group, Nicholas worked in a variety of client-facing positions at an international provider of corporate services, caring for a diverse portfolio of companies. He is a Chartered Secretary and Governance Professional, and holds a bachelor's degree in Politics as well as a Masters in Corporate Governance.

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