CSR as a leverage for performance and innovation
Today, CSR (Corporate Social Responsibility) is becoming more than just a communication issue. To leverage CSR as a tool for innovation and performance, it is crucial to understand the link between CSR and strategy, and the importance of stakeholder engagement and participation. Let’s discover together how CSR can be used as a real innovation leverage for any work organization.
According to the second edition of the “Open Source Barometer” published in 2022, the Executive Committee surveyed is a driving or supporting of CSR in 89% of cases. This survey, co-initiated by 14 key players in CSR including “Vendredi” and “1% for the Planet”, is based on a sample of 790 companies ranging from very small businesses to multinationals. It therefore affects a sample of committed companies and this figure can be put into perspective slightly downwards for companies in general. However, this allows us to make one observation: CSR is really beginning to emerge as a strategic subject and no longer just as a communication object. So how can CSR contribute to the overall performance of the company? How can it be a lever for business opportunities and innovations?
Connecting the CSR strategy with the core business
Today, CSR is not always linked to the core business of certain companies. Forced by increased regulations on the subject, some groups have sometimes implemented CSR policies on the various social and environmental aspects, but rather with a “compensatory approach to the negative impact” of their business. These social actions do not call into question business decisions, such as the choice of investments or the composition of their products.
To have a real strategic impact, CSR must ” have a positive impact “, i.e. it must lead the company to bring benefits to its stakeholders directly through its core operational activity. CSR will thus be in line with the company’s business model.
To establish this coherence, it is necessary to start by defining a Raison D’être that integrates a corporate mission that is broader than economic: what makes a body of individuals work together over time and for what contribution? The company’s activities may change over time. The reason why human beings in and around the company work together, no. Stakeholders work together for a common impact on each other and on the planet. The definition of the Raison D’être is therefore the first step in positioning CSR as a strategic issue.
Detecting new business opportunities through stakeholders
A key objective of CSR is to move from a logic of working with shareholders to a logic of working with stakeholders. Identifying your internal and external stakeholders and initiating an effective dialogue with them allows you to better understand the needs of the company’s ecosystem. This opens up a field of possibilities in terms of business opportunities / innovations that we might not have seen if we had remained focused on our own interests or those of our shareholders.
Open innovation which consists of opening up the company to a diversity of other external players in its ecosystem (researchers/research laboratories, partner startups, customers, suppliers, students, universities, local authorities, NGOs, etc.) or internal players (all employees, regardless of their departments) can thus make sense when a CSR approach is in place.
To identify business opportunities, the company can seek to meet the needs of its ecosystem (customers, employees, the planet, etc.) with its extended stakeholders through CSR. The problems encountered by our ecosystem constitute interesting constraints that will feed the framework of reflection of innovation workshops. This will allow us to identify new, more responsible and positive business models to be tested (e.g.: rental subscription, second hand, durability and reparability…). In the long run, this could even lead to the evolution of operational activities that had a negative impact (e.g. pollution via waste generation…) and thus ensure the sustainability and resilience of companies.
Implement a global performance measurement: financial and extra-financial
Today, extra-financial reporting, also known as ESG/RSE reporting or DPEF (declaration of extra-financial performance of companies), only concerns companies:
- of 500 employees and more ;
- 20 million or net sales of 40 million euros;
- unlisted companies with a total balance sheet or turnover of 100 million euros and 500 employees.
Moreover, this reporting can take a rather free form today (e.g. structured by issues, by risks, mentioning a CSR strategy or not…).
The European regulation in full evolution on the subject comes to upset these principles. The CSRD (Corporate Sustainability Reporting Directive) will not only impose extra-financial reporting for a wider audience, but also a stricter format to be respected with standards. The CSRD will be applicable as of 2024 and as of 2025 for the new companies concerned. Shareholders will be able to consult these CSR standards in the same way as the financial standards. According to the 11th edition of the study “Priorities 2023 for Finance Departments” by PwC and the DFCG, 73% of CFOs plan to change their management model to integrate CSR dimensions within three years. This new regulation demonstrates that company performance is no longer limited to economic performance. It must be considered in its entirety by including the principles of CSR.
It is therefore important to put in place a strategic vision of the company including CSR, which could be accompanied by monitoring indicators (KPIs), but also to involve the financial directors in the subject. Another important point will be to centralize the company’s data necessary for global performance, which may come from different departments and information systems (HR, Finance, Purchasing, Quality, etc.).
Conclusion on CSR as a lever for performance and innovation
Today, CSR is no longer considered as a simple communication tool, but as a performance and innovation lever for companies. It can contribute to overall performance by linking it to the company’s core business and by detecting new business opportunities thanks to stakeholders.
By adopting sustainable and ethical practices, companies can strengthen their brand image, attract and retain talent, and satisfy consumer demands. CSR can therefore be a real asset for companies wishing to maximize their overall performance.
To do so, CSR strategies will have to be declined in the different business units in order to have a concrete application.
At SQORUS, we have been implementing CSR actions for several years, and we improve them on a daily basis. We also provide CSR consulting services to our clients. Do not hesitate to contact us to discuss this with our experts.
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