Without pressure from shareholders and government regulations, the majority of Canadian private companies have placed Corporate Social Responsibility (CSR) low on their business priority list unlike their public counterparts. In fact, about half (48%) of Canadian private companies don't have a CSR plan in place, according to a new PwC report.
The survey found only 21% of respondents currently have a CSR plan aligned to the business goals and 29% plan to have one in the next three to five years.
This is largely because the majority of Canadian private companies view it as a 'nice-to-have' rather than a priority (53%). However, in an era of greater regulation for environmental and social responsibility practices, this could spell trouble for private companies who lag on CSR.
Moreover, these companies are missing out on opportunities to differentiate themselves from their competitors and attract a growing number of social and eco-conscious employees and consumers.
'Many of these issues that are currently being dealt with on a voluntary basis could very well be regulated in the future,' says Mel Wilson, associate partner, Sustainable Solutions Group, PwC.
CSR can be a competitive advantage for businesses, but the study revealed that only 30% of respondents saw it as such.
And despite the fact that a commitment to CSR can be a draw in attracting top talent, none of the respondents who had CSR plans in place were communicating their plans in their recruitment initiatives.
'Embedding CSR into a business is a good way to stay ahead of competitors and attract talented recruits, however, many businesses may not fully understand these benefits or know how to start,' says Wilson.
Private companies may be even more inclined to adopt CSR plans if they understood the opportunities they may be missing out on. Many private companies, for instance, operate in the middle of the supply chain, selling services and goods to large multi-nationals.
Increasingly, multinationals are becoming more vigilant in eliminating vendors in their supply chain that are not aligned with their risk tolerance or approach to CSR.
'This means private companies have to meet the CSR needs of the end-buyers in order to compete,' says Wilson. 'In this new business environment where social and environmental issues are front and centre, private companies should get ahead of the curve or risk being left behind from a competitive standpoint.'
Wilson recommends the following steps to creating a socially responsible and sustainable business:
- Create a longer-term vision. Senior management has to articulate what CSR means to their organization. There has to be a dialogue inside the organization between management, the board of directors and employees, and extended externally to stakeholders. 'What is the organization going to look like in 10 years as opposed to six months from now?' says Wilson.
- Identify what the impacts of your company's operations are on the environment and on people. 'Assess those impacts from the standpoint of whether you can improve upon them to be environmentally efficient,' says Wilson. 'The financial equivalent would be looking at the organization to see if you can be more efficient.'
- Measure CSR performance in a quantitative way as much as possible. The study found the majority of private company respondents (80%) with CSR plans in place track their progress. 'As long as sustainability is viewed as a qualitative, feel good concept, it allows companies to get away with a lot. They need to move into a set of performanceindicators that are of a quantitative nature,' says Wilson.
- Communicate that performance to your key stakeholders. This includes shareholders, customers, employees, potential recruits and the communities where you operate.