Throughout the year, we have discussed how 2020 has created an immense sense of momentum and drive towards a better world in terms of economic resilience, social equality, and environmental improvement. The hardships of this year won’t be easily forgotten. And with a lot of the damage already done, it can only be onwards and upwards from here.
So, ahead of what could be a very promising year in terms of social value and impact, we thought we would take this month to go back to basics.
Over the next few weeks, we are going to be delving deeper into the subjects of CSR and social value. We will outline exactly what the different terms mean, what constitutes a socially valuable business, and ideas on ways your company can operate more responsibly in 2021. After all, to maximise all the efforts across society, we all need to be on the same page.
But before we can delve into that, we need to define the terminology. CSR (or corporate responsibility as it’s sometimes now known), social impact, and social value all tend to be used interchangeably. And rightfully so – they are very similar. But while their meanings do overlap, they will all mean something slightly different to your business.
CSR is more of a strategic initiative – a business model – that keeps businesses more accountable for their impact. It looks to prioritise profits, people, and the planet in equal measure, operating as a means of improving reputation and profitability. It is a strategy to communicate all that a business does, as a means of appealing to a wider range of stakeholders, investors, and consumers.
Examples of CSR might be helping in the local community, reducing your organisation’s carbon footprint, or giving to local charities. CSR initiatives are however you can change and adapt your existing operations to better serve communities, people, and the planet. Ultimately, you do so with the long-term view of improving profitability and business success.
Social value, however, sits at the very heart of a company. It’s a desire to get the best value for money in terms of profits and financial success for the company, as well as generating long-term positive impacts for local communities, the environment, and other external parties. It marks an ongoing ambition to make a difference to society in some way. And, unlike CSR, it is a lot more embedded in every facet of the business.
Rather than encompassing a few initiatives, social value is a long-term commitment to giving back. Purely because it is the right thing to do and with the intent of being an ethical business. Examples might be ongoing partnerships with local non-profits, upholding ethical supply chains with organisations who align with your values, or donating a portion of all profits to a worthy cause.
Social impact is the direct outcome that happens as a result of businesses making these more conscious, socially valuable decisions. For example, X amount of money raised for a women’s charity or the amount of lives improved through a local hiring initiative.
Then there are terms like sustainability that also muddy the waters a little. Sustainability, in terms of businesses, is about operating in such a way as to secure longevity for people, planet, and profits. It is about aligning business operations with the greater good of people and the planet, finding new ways of working that have as little negative, and as much positive, impact as possible.
As you can see, there is a lot of overlap between these terms. And, to some extent, they can be used interchangeably. But to take an organisation’s efforts to the next level, we think it pays to understand them all individually.
What this means for businesses
Despite their differing definitions, the effect of being a responsible, purpose-driven organisation tends to be the same, no matter what specific label you give your efforts.
Engaging with CSR or social value can work wonders for an organisation’s reputation and competitive advantage. Especially going into 2021, suffering the ongoing effects of COVID-19, consumer and investor demand on businesses in terms of social value will be significant. People want businesses who mirror their own values and commitments. Businesses who go above and beyond to not only secure profit for themselves, but improve the state of society and the planet for everyone else.
As such, engaging with social initiatives helps massively when securing funding or investment. It helps to align you with consumer values and expectations, putting your organisation in the centre of your respective industry. In short, to be successful as a business in this day and age, you have to be making positive impacts to some degree.
Just look at these statistics:
- 63% of respondents will be expecting companies to continue their efforts in terms of social value and environmental impact, even after the pandemic.
- When a brand has a strong purpose, consumers are 4.5 times more likely to champion the company and recommend it.
- 85% of executives believe that being a purpose-driven company drives profit.
- Brands with a high sense of purpose have experienced a brand valuation increase of 175% over the past 12 years, compared to a 70% growth rate for brands with a lower sense of purpose.
Ethical drivers (76%) are 3x more important to company trust than competence (24%).
It is just the right thing to do
Profitability, reputation, and business success aside, operating in a more socially valuable way is just the right thing to do.
Becoming a more purpose-driven business that gives back and makes a difference is about the tangible, human-level impact and progress you make just as much as it is about what your business can get back as a result.
Now we have covered the basics and broken down the terminology, you are in a good place to improve your organisation’s social impact in 2021. Next week, we will look into exactly what being a socially responsible, valuable business looks like.
At Impact, we provide a simple, accessible platform that makes social value, sustainability, and CSR reporting easy. We empower businesses to make more social impact than ever before, simplifying how you collect, analyse, and report on your non-financial data. If you have any questions, or are interested in a demo, get in touch on 0161 532 4752.