To get straight to it – there is most certainly a point. And there is most definitely a value in CSR for Small Companies.
But let’s expand on this…
Whilst small and medium sized companies increasingly have to consider their approach to Corporate Social Responsibility (CSR), or sustainability either:
• due to changes in legislation, or
• to align with best practice,
there is still a sense amongst smaller companies –we are talking ones with more than 10 employees and a turnover of at least a million pounds -that CSR is regarded as being not applicable or too costly.
We have been pondering this issue for some time – where the drivers are for businesses who are not in the limelight, so to speak, be it due to share prices or media attention or in-house PR machines.
In response, we have developed a free tool – the sustainable business health check (coming soon!). It is intended for a business of any size to take a snap shot on how they currently manage their business risks, both financial and non-financial. It is also intended to get a business thinking about where there might be opportunities. It’s clear from this exercise that companies of any size still have to comply with the law, often have suppliers that are based in countries with lower social and environmental standards than those required in the UK, and rely on contracts to secure their products or services. They also rely on their employees to help deliver the products and services, which inevitably raises the question of health and safety.
So, the principles for running a sustainable business apply to all companies, big and small. But at what point then does it become imperative for small companies to consider developing a CSR/ sustainability policy? How do you get past the obstacle that it’s seen as costly and not applicable.?
I think there are a few things to consider. Firstly, studies and reports show that customers of businesses both large and small do care about CSR. In addition many large companies are requiring their suppliers to meet certain CSR targets as a price for doing business. Thus even for smaller businesses, CSR can attract customers and secure contracts. In other words, it generates a competitive advantage.
In the case of public sector provision, whilst companies may be supplying small quantities of products to a public sector body, they might not be caught by the sustainable procurement requirements. However, given the growing emphasis on sustainable procurement for public organisations, CSR may be thrust upon a broader range of companies sooner than anticipated. Defra’s guidance for SMEs on how to measure and report on greenhouse gases might just be another precursor for change. Like all things, it’s better to demonstrate forethought and preparedness –craft a CSR programme that is in line with your business, highlighting its strengths and values.
Nonetheless, that still does not address the big question of costs. The truth is that CSR does cost money. Moreover, the return on investment (ROI) may take time to materialise but that does not mean that CSR can’t be affordable. When tackled as part of a current business strategy and in bite sizes, companies can develop an integrated strategy. This is particularly true where a company looks ahead at developing sustainable profits and wants to demonstrate leadership over its competitors.
There is also question as to how to get employees on board. There are sufficient case studies showing that engaged employees are more efficient, loyal and save companies money by not leaving. This saves money on recruiting and retraining. And most employees value will resonate with good CSR. Given the opportunity to contribute, companies, large and small have found that employees can provide innovative ideas.
There is an additional CSR issue that is also relevant to small companies, and that’s respecting human rights. Most companies will never have heard of the UN Guiding Principles for Human Rights. It’s a global framework; It applies to ALL companies; and it requires companies to identify and address human rights risks. These issues should be considered as part of the overall CSR policy. The EU has provided a short guide on this, available here.
When it comes to small companies, the truth is also that more often than not they are already ‘doing CSR’ to some extent or another. There is no denying that small changes by all of us can create big impacts.
So where would you start?
1) Use our business health check. Email firstname.lastname@example.org for more information. An automated online tool will be made available soon.
2) Consider your employees- are you paying a fair wage, take an interest in your employees’ welfare, encourage training and professional development
3) Consider your customers –, keep communication open, engage with customers on sustainability issues
4) Suppliers- pay on time, deal honestly with suppliers, ask the right questions and buy ethical products where you can!
5) Consider drafting a CSR policy that fits your companies objectives and tells stakeholders about what you are doing. Set goals which are proportionate to your size and capacity without hampering ambition and the potential for leadership.
Click here for another interesting report relating to CSR and small companies.