How Can Businesses Integrate Social Responsibility?
For today's CEO, social sustainability has emerged as a critical factor for long-term success. Companies are increasingly recognising the need to address social issues within their operations and supply chains. This shift goes beyond corporate social responsibility, focusing on creating lasting positive impacts on employees, communities, and society at large.
The pressure for businesses to demonstrate social sustainability comes from shareholders, regulators and customers. A 2023 PwC survey shows 82% of institutional investors now include social sustainability metrics when it comes to making investments.
Social sustainability encompasses a wide range of issues, including fair labour practices, human rights, diversity and inclusion, and community engagement. The financial implications reach beyond compliance and reputation into core business performance.
Companies making social sustainability central to operations report 28% higher increased profitability, according to McKinsey research.
Sunil Misser, Global Leader of Sustainable Business Solutions at PricewaterhouseCoopers, writes: “Making sustainability an integral part of a company's business strategy delivers the potential of very real bottom-line benefits.”
And the costs of poor social practices hit the bottom line through staff turnover, regulatory penalties and lost contracts.
Research from Harvard Business School indicates companies with low social sustainability scores end up paying 25% more in recruitment costs alone.
Incorporating social sustainability
For CEOs and senior leaders, integrating social sustainability into business operations requires a strategic approach. It involves aligning company values with sustainable practices, developing robust policies, and ensuring effective implementation throughout the organisation.
The first step in integrating social sustainability is to align it with the company's overall business strategy. This alignment communicates to stakeholders that social issues are integral to your company's culture and operations.
Adrian Henriques, Professor of Accountability and CSR at Middlesex University, writes: "Social impact includes anything that affects company-stakeholder relationships: from how much and how reliably suppliers are paid, to how a product affects lives.”
Companies can start by conducting a thorough assessment of their current social impact. This evaluation should identify areas where the business can make meaningful contributions to social sustainability.
Engaging stakeholders
Stakeholder engagement is a critical component of social sustainability. This involves not only employees and customers but also suppliers, local communities, and other relevant groups.
According to the UN Global Compact, social sustainability can help businesses unlock new markets, retain and attract business partners, and improve risk management.
To measure the impact of social sustainability initiatives, companies need to establish clear metrics and key performance indicators (KPIs). These could include employee satisfaction rates, diversity statistics, or community engagement levels.
Monitoring performance
Social sustainability integration begins with supply chain analysis. Companies deploy technology to monitor social sustainability performance.
Nike, for example, maps social impact across 525 tier-one suppliers in 40 countries, while Walmart uses blockchain to verify labour standards across 100,000 suppliers.
Mastercard includes social impact assessment in all product development decisions.
And Apple tracks labour conditions across 3.5 million workers in its extended supply chain.
Once identified, these areas should be incorporated into the company's strategic planning process. This integration ensures that social sustainability initiatives receive the necessary resources and attention from leadership.
Developing robust policies
With a clear strategic direction, the next step is to develop comprehensive policies addressing key social issues. These policies should cover areas such as workplace safety, human rights, stakeholder engagement, and customer privacy.
Effective policy implementation requires consistent communication and enforcement throughout the organisation. Employee training programmes can help ensure that all staff members understand and adhere to these policies.
Measuring social impact
Regular reporting on progress is crucial for maintaining momentum and accountability. Many companies are now using established reporting frameworks such as the Global Reporting Initiative or the SASB Standards to communicate their social sustainability efforts.
Social sustainability requires specific metrics and accountability. Investors track metrics including worker satisfaction, supplier diversity and community investment.
This investment in monitoring systems pays off. Deloitte research shows companies with comprehensive social data reduce compliance costs by 45%.
Why social sustainability helps companies
Integrating social sustainability into business operations can lead to tangible benefits. It can enhance brand reputation, improve employee retention, and even drive innovation.
A study by PricewaterhouseCoopers found that companies with strong sustainability practices often see improvements in productivity, reduced costs, and increased sales revenue.
For example, floor-covering manufacturer Interface reported eliminating more than US$165 million in waste from products and processes after refocusing on a sustainable approach.
Moreover, socially sustainable practices can help companies mitigate risks. Poor social sustainability can pose significant threats to both brand reputation and product quality.
As regulatory pressures increase and stakeholder expectations evolve, integrating social sustainability into business operations is becoming a necessity rather than an option.
Companies that proactively address social sustainability issues are better positioned to navigate future challenges and capitalise on emerging opportunities. They can build stronger relationships with stakeholders, enhance their reputation, and contribute to a more sustainable and equitable society.
Or as Malcolm Bailey, Global Sustainability Industries Leader at PricewaterhouseCoopers, puts it: “The emphasis on wider stakeholder interaction and the discipline of integrating social and environmental as well as economic costs into business planning means that companies are better placed to stay ahead of the curve.”
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