We’ve spoken extensively about the benefits of investing in social good. Here we look at the costs involved. Done right, engaging in corporate social responsibility (CSR) is a win-win. It helps the community, it supports important causes, it motivates purpose-driven employees, it appeals to potential customers, and shareholders are happy because it helps the bottom line.
What are the costs?
When considering a social good strategy, it’s important to understand what you hope to gain from it. Will you get out what you put in?
Responsible business means investing in your people and minimising harm. It also means budgeting wisely and making a profit. It goes without saying that you shouldn’t invest more than you can afford on costly social good activities purely for the sake of your public image.
Some of the costs involved in a social good strategy may be:
Employer-supported volunteering is a great way to galvanise your team to give back to the community, develop their skills, and make a real impact. It’s most effective when employees are offered regular time during working hours to volunteer.
At Social Good Connect, each member of staff gets the equivalent of a day a month to give to a not-for-profit organisation. Many of our employees opt to volunteer virtually, spending an hour or two each week using their skills to offer guidance, or telephone befriending for various non-profits.
A helpful first step to improving your social good activities is to consider your current impact on the world.
Think about the suppliers you currently use. Are they ethical? Do they pay their workers a fair wage? Do you use sustainable raw materials in your products? What do you do with any waste that is produced in production?
This doesn’t just go for manufacturers, service-based businesses can assess the sustainability of their energy providers, partner organisations, staff transport and travel, and office suppliers.
Using a tool such as the B-Impact Assessment is a great way to challenge your current practices and understand how you can improve your social impact.
It may be that making these changes means slightly higher costs, but you may also find that your customers would be willing to pay more for a more ethical offering. In fact, a 2019 study by Accenture found that ‘more than half of consumers would pay more for sustainable products designed to be reused or recycled’.
Large companies who decide to improve their social good activities often choose to hire a CSR manager to drive forward their social good initiatives, meet agreed CSR targets, and report back on impact.
Creating a CSR role ensures accountability and commitment to keeping social good at the forefront of the business plan.
But for some smaller businesses, bringing on a new employee for this role is an impossible extra expense. If you’re an SME assigning extra social good responsibilities to an existing employee role, you may be wondering what kind of increase in their wages should come with the increase in duties.
Two schools of thought…
There are two main trains of thought on social good in business.
The first is that changing suppliers and investing in your employees can increase costs and so could be detrimental to profits.
However, stakeholder theory argues that ‘the dissatisfaction of any stakeholder group can potentially affect economic rents and even compromise a company’s future’. Therefore ‘CSR is a prerequisite for protecting the bottom line’.
So even if you are spending more on supporting your employees, using ethical suppliers, and providing higher quality products or services, it should have a positive impact on your profitability. Employees will be more engaged and productive, you will build good relationships with suppliers that could lead to future discounts, and customers will be more likely to make repeat purchases and recommend your products to others.
Is it worth it?
It does cost money to build an effective social good strategy, and this may well impact on profits in the short-term. But, when managed properly, improving your social impact is an investment, not a cost, and will likely bring a good return in the long-run.
If you want to know more about investing in social good, check out more of our articles below or take the leap and get in touch!