Designing a CSR Strategy: 5 Tips for Business Leaders

Quick look: Corporate social responsibility (CSR) doesn’t just support communities and the environment, it can also strengthen your employer brand, increase profitability, and enhance employee and customer loyalty. To celebrate National Volunteer Month, let’s dive into what CSR includes, how it benefits small- and medium-sized businesses (SMBs), and best practices for designing a CSR strategy.

A thoughtful CSR strategy offers employers more than just a positive public image. Companies that prioritize ethical practices and community involvement often see stronger brand loyalty, enhanced talent attraction and retention, and better bottom lines.

In honor of National Volunteer Month, this guide shares tips on building an effective CSR plan tailored to your business goals and how a professional employer organization (PEO) can support these efforts by streamlining human resources (HR) functions and helping you implement meaningful initiatives.

What is CSR?

CSR refers to a business’s voluntary efforts to operate ethically and sustainably, and its awareness of its impact on society, the environment, and the economy. These initiatives hold organizations socially accountable to themselves, their stakeholders, and their communities.

The four main types of CSR include:

• Economic responsibility: Encompasses adequately compensating staff, maintaining tax compliance, and adhering to financial regulations.
• Environmental responsibility: Includes actions like implementing a recycling program, utilizing solar and wind energy, using eco-friendly office supplies, etc.
• Ethical responsibility: Involves following fair labor practices and treating everyone equitably, including employees, customers, supplies, and investors.
• Philanthropic responsibility: Consists of a business’s efforts to give back to the community by volunteering, donating to charities, and supporting local initiatives.

Why is CSR important?

CSR contributes to society’s well-being and plays a role in driving business success. While these initiatives aim to make a positive impact on people and the planet, a well-executed program provides value to employers, too.

The benefits of CSR in business include:

• Improved public image and brand awareness: When companies act responsibly, it shows they care about something larger than themselves, improving their public image and building brand recognition.
• Increased customer retention: Many people want to feel like they’re supporting a business that helps, not hinders, the world. A CSR strategy helps create an emotional connection between a company and its customers, leading to stronger loyalty and word-of-mouth promotion.
• Elevated market performance: According to recent PwC research, consumers will pay nearly 10% more for sustainably produced or sourced goods. Further, a McKinsey and NeilsenIQ study found that products with socially responsible claims grew almost 30% in sales over the past five years, compared to just 20% for products that didn’t make such remarks.
• Enhanced recruiting and employee engagement: CSR efforts can help SMBs attract and retain employees. Today’s candidates are increasingly drawn to businesses that prioritize purpose alongside profits, and employees are likelier to stay at a company that empowers them to give back. Gen Z is slated to comprise 30% of the U.S. workforce by 2030, and many want their employers’ values to align with their own. In fact, almost 90% would consider leaving their current job for one that better aligns with their personal values.
• Better bottom lines: Per Morgan Stanley’s “Sustainable Signals” report, business leaders widely agree that sustainability initiatives can create financial opportunities. Here’s how they see the impact:
  • Improved visibility over cash flows (83%)
  • Increased cash generation capabilities (82%)
  • Stronger talent attraction and retention (82%)
  • Higher profitability (81%)
  • Larger revenue growth (79%)
  • Reduced cost of equity and/or debt (77%)

5 CSR best practices for business leaders

When properly executed, CSR initiatives benefit everyone. But how can employers ensure they develop a plan that will set them up for success? Here are five best practices to keep in mind:

1. Identify what you stand for

Will your organization prioritize volunteering, philanthropy, environmental conservation, ethical labor practices, or a combination? Is there an opportunity to align your CSR tactics with your products or industry? What local, national, or global initiatives are you interested in joining?

2. Outline potential benefits

Outline how a CSR program could enhance your company overall. These reasons should be measurable, and could include:

• Societal impact: What are you aiming to achieve in your community? You may want to raise $15,000 for the local food bank or reduce your office’s electricity usage by 25%.
• Employee attraction and retention: How do you hope these efforts will affect your recruiting and retention rates? For example, you could aim to lower your turnover rate by a certain percentage each year after implementing the CSR program.
• Brand loyalty: How could your CSR plan impact your customers’ loyalty to you, whether you are a business-to-business (B2B) or business-to-consumer (B2C) organization?
• Bottom line: In what ways can your socially responsible actions save the organization money or drive additional revenue?

3. Get people involved

Once you’ve established the foundation of your CSR program, it’s time to get executive buy-in and communicate it to employees. To garner interest and participation, consider incorporating volunteer time off (VTO) into your current paid time off (PTO) policy.

4. Measure success

After your program is active for a substantial period (e.g., one year), it’s time to measure its outcomes to determine if the potential benefits have come to fruition. These results will help you improve your CSR plan and be accountable to employees, executives, and investors.

5. Be flexible

Life is unpredictable, and your CSR strategy should be agile enough to stay relevant to current events. For example, when the COVID-19 pandemic struck, some companies shifted efforts to support nonprofit organizations that combatted the hunger millions of children faced due to schools closing.

Partner up and give back

Looking to develop an impactful CSR strategy? Good news: you don’t need to do it by yourself.

When you partner with a professional employer organization (PEO), you receive dedicated support from HR professionals who understand the intricacies of your business. For instance, ExtensisHR’s experts can help you build your CSR program by assisting with:

• Creating and managing VTO policies and updating your employee handbook as needed
• Conducting salary surveys to ensure your staff is fairly paid
• Recruiting talent who align with your company’s goals and values (plus, these services are included with our PEO solution at no additional cost)

ExtensisHR also contributes to its customers’ economic social responsibility by delivering trusted, high-quality services backed by industry-leading credentials, including:

• IRS Certified PEO (CPEO)
• Employer Services Assurance Corporation (ESAC)
• Certification Institute
• SOC 1 Type 2

Additionally, ExtensisHR provides comprehensive payroll and tax management and risk and compliance services, ensuring adherence to all applicable employment laws.

CSR isn’t just about doing good; demonstrating goodwill builds customer trust, attracts talent, and creates long-term value. A PEO like ExtensisHR supports these efforts by streamlining HR functions, maintaining compliance, and enabling business leaders to focus more on making an impact.

Ready to experience firsthand how CSR benefits businesses like yours? We’re here to help. Explore ExtensisHR’s PEO solution, or contact us today to get started.