Business Case: Corporate Social Responsibility

This section provides a summary of aspects of a business case for Corporate Social Responsibility (CSR). It is based on the questionnaire employed by the Financial Times for the Sustainability Awards 2008.

Essential link

A business case is an essential and decisive link in implementing the concept of Corporate Social Responsibility in practice. The business case should preferably be designed to address specific issues relating to sustainability. Relevant stakeholders should be involved in writing it. A CSR business case is never simply ‘good' or ‘bad'. There is often a grey area, in which conflicting mechanisms play a role in the process of weighing up and making decisions. People with experience and expertise are able to manoeuvre through that grey area and seize opportunities.

Two orientations

The following survey is divided into two categories: (1) aspects directly and (2) aspects indirectly related to the company's financial performance. These categories correspond with two different views of CSR. Those who regard CSR from the narrower perspective are mainly concerned with the first category of aspects. Taking a broader view, in addition to the company's first category you also consider the second category: the more complex, indirect relationships between CSR and a company's overall performance. The point of departure is then the mutual dependency of business and society. This wider CSR perspective is particularly useful in the context of system innovations.

Narrow perspective: business case aspects with a direct relationship with the company's (financial) performance

• Advantages in key processes, products and services. What business advantages can the company achieve in relation to relevant aspects of CSR in the different chains, production processes, products and services that it regards as its core business?
• CSR-driven innovations. How does thecompanyincorporateCSR in the design of new products and services? What innovations has that already yielded or is it expected to yield?
• Improved access to funding from (international) financial institutions. To what extent does the company capitalise on its efforts in the CSR domain through improved access to funding for (international) programmes and projects that meet high standards in terms of CSR? Where is there still room for improvement?
• Improvement of internal processes To what extent has efficiency increased, have operating costs been reduced and has the company become CO-neutral? What realistic potential is there for further improvements?
• Improvement in recruiting and retaining staff. What positive effects have there been or are likely in the future in terms of recruiting and retaining talented employees?
• Improvement in the quality of assets. To what extent has the value of the company improved as a result of the improved performance in terms of CSR, particularly as a result of improved management of social and environmental risks? What further progress can the company make in that respect?

Broad perspective: Business case aspects with an indirect relationship with the company's (financial) performance

• Improving reputation and branding. How and to what extent do CSR activities improve the company's reputation, brand or market value and its legitimacy among relevant stakeholder? In that context, how and to what extent do those activities increase the loyalty of those stakeholder to the company? What is the current situation and what is the expectation for the longer term?
• Improving relations with NGOs. How are the activities expected to improve the relationship with and the confidence of local and international NGOs in the company in the shorter and longer term?
• Improving relations with the government. How is the performance on CSR expected to improve the relationship with and the confidence of the various public authorities?
• Improving relationship with and reporting in media. How is the performance on CSR expected to improve the relationship with the media and what effect will that have on the value of the brand?
• Capitalising on a corporate governance premium. What contribution has been made by changes made in the nature and quality of corporate governance? How is that contribution capitalised on?
• Capitalising on improved CSR performance with investors. How and towhat extent has the improved CSR performance increased interest in the company among CSR and mainstream investors and how is that capitalised on?
• Improving external rating results by mainstream and CSR analysts and rating agencies. How and to what extent can the improved CSR performance be translated into higher ratings from mainstream and CSR raters?

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