Written by Elena Bassoli
Reading time 3 minutes
Why Corporate Social Responsibility matters in 2024 and the EU Strategy on CSR
Corporate social responsibility (CSR) has been gaining more attention in the business world recently. However, there are still ongoing debates about the extent to which companies should be held accountable for their actions and policies. Should they only adhere to the existing laws and regulations, or should they also take additional measures to contribute to society?
What is Corporate Social Responsibility?
Corporate Social Responsibility (CSR), also known as Responsible Business Conduct (RBC), is a management concept that emphasizes companies’ integration of economic, environmental, and social objectives (a “Triple-Bottom-Line” approach) into their business operations, with the aim of minimizing harmful effects and maximizing the long-term benefits and expectations of both shareholders and stakeholders (UNIDO, n.d.-b).
For instance, CSR initiatives may include:
- Actions to support philanthropy, charitable donations, volunteer programs;
- Ethical sourcing;
- Employee wellness programs and actions to promote workforce diversity;
- The production of environmentally friendly products and services.
Why is CSR important?
It is important to recognize that the decisions made by companies have far-reaching effects on the well-being of individuals both within the EU and globally. This extends beyond the mere provision of goods and services, as it also encompasses matters such as working conditions, human rights, public health, environmental sustainability, innovation, education, and skill development.
For enterprises: the Business Case for CSR
There is strong empirical evidence that demonstrates the measurable advantages following the introduction of CSR initiatives into a company business strategy.
- First, CSR can improve a company’s reputation and brand image which can attract and retain customers who are becoming increasingly conscious of the environmental and social impacts of the products they purchase.
- Second, a company that prioritizes CSR has a competitive advantage in the war for talent, particularly among millennials and Gen Z, who seek meaningful work and purpose-driven organizations.
- Third, implementing CSR initiatives can in the long run help companies save costs by reducing waste and increasing energy efficiency, as well as by investing in renewable energy sources, which can lower energy costs.
- Finally, a strong CSR reputation can eventually translate into better financial performance and can reduce risks while creating new opportunities for growth.
For the Economy, Society and Planet
The implementation of Corporate Social Responsibility (CSR) and the adoption of Responsible Business Conduct (RBC) have been observed to enhance the sustainability and innovativeness of companies. This, in turn, contributes to a more sustainable economy at the macro level.
Corporate Social Responsibility (CSR) presents a framework of fundamental principles that can contribute to building a more unified society. In contemporary times, human rights have emerged as an essential component of CSR, especially in the context of global supply chains of businesses. The UN Guiding Principles on Business and Human Rights (UNGPs), endorsed by the UN Human Rights Council in 2011, outline the measures that companies and governments need to undertake to ensure that businesses do not adversely impact human rights (European Commission, n.d.)
The concept of corporate social responsibility emphasizes the importance of safeguarding our environment. Organizations can achieve this by adopting sustainable practices, such as minimizing carbon footprint, utilizing recyclable materials, conserving natural resources, or developing product lines that align with CSR objectives.
Public and Private Sectors
In order to effectively implement its CSR strategy, the EU recognizes the importance of empowering enterprises to take the lead in driving CSR development. However, the public sector also plays a crucial role in supporting these efforts through a thoughtful combination of voluntary policy measures and, where appropriate, complementary regulation as laid down in other international frameworks such as the UN Guiding Principles on Business and Human Rights and the revised OECD Guidelines for Multinational Enterprises. The overall aim is to promote transparency, incentivize responsible business conduct in the marketplace, and ensure accountability among corporations (The European Industry Summit 2024 — CSR Europe, n.d.).
As of the beginning of financial year 2024, a broader range of large and listed SMEs, as well as some non-EU companies generating over EUR 150 million on the EU market, must report on sustainability according to the rules set by the Corporate Sustainability Reporting Directive (CSRD).
Moreover, by the end of 2029, 50,000 European companies will have to comply with the European Sustainability Reporting Standards, which enables stakeholders such as investors, civil society organizations, and consumers to assess the sustainability performance of companies, as part of the European Green Deal. These standards are developed in a draft form by the European Financial Reporting Advisory Group (EFRAG), an independent body that brings together various stakeholders, and they apply to companies under the scope of the CSRD, regardless of which sector they operate in
(European Commission, n.d.).
Conclusion
In conclusion, in today’s world, Corporate Social Responsibility (CSR) is becoming increasingly significant for businesses. It is a crucial aspect of business operations that can benefit companies and their stakeholders in a multitude of ways. With the implementation of the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards, companies will be held to a higher level of accountability and will be expected to report on their environmental, social, and governance (ESG) performance. By prioritizing CSR, companies can improve their reputation, attract and retain top talent, save costs, and create new opportunities for growth while contributing to the greater good of society and the environment.
My name is Elena Bassoli, and I am a 20-year-old Italian student pursuing a Bachelor’s degree in Business Administration at KU Leuven University in Brussels. Moving to the heart of Europe was a life-changing decision that has allowed me to immerse myself in an international environment and get closer to the European Institutions. Being a part of this dynamic and stimulating community has laid the foundation of my knowledge in the field of Business and Corporate Social Responsibility.
I am passionate about driving positive change, which is why, as a creator within the Circle of Sustainable Europe, I aim to raise awareness and promote sustainable practices in the corporate world through my content. It is my firm belief that the future of our planet depends on our ability to make responsible decisions today, and I am committed to doing my part in making it a reality.
Sources
European Commission. (n.d.). Corporate sustainability and responsibility. Internal Market, Industry, Entrepreneurship and SMEs. https://single-market-economy.ec.europa.eu/industry/sustainability/corporate-sustainability-and-responsibility_en
European Commission. (n.d.). Corporate sustainability reporting. https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en
The European Industry Summit 2024 — CSR Europe. (n.d.). CSR Europe.
https://www.csreurope.org/the-european-industry-summit-2024
What is CSR? | UNIDO. (n.d.). https://www.unido.org/our-focus/advancing-economic-competitiveness/competitive-trade-capacities-and-corporate-responsibility/corporate-social-responsibility-market-integration/what-csr
