How can CSR improve the financial performance of companies?

At the top of companies’ commitments, CSR responds to major sustainable development challenges, which are now unavoidable. But beyond its social and environmental utility, CSR can also be a real lever for financial performance for companies. According to a report by France Stratégie, there is a 13% gap between the economic performance of a company that has adopted a CSR policy and that of a company that has not implemented any social responsibility action.

 

What is CSR?

CSR (Corporate Social Responsibility) refers to “the voluntary integration by companies of social and environmental concerns into their business activities and their relations with their stakeholders”, according to the European Commission.

In other words, it is the set of initiatives taken by a company (beyond its legal obligations), in order to meet the challenges of sustainable development. These actions can be of a nature social, environmental, or economic.

Since the adoption of the PACTE law (Action Plan for the Growth and Transformation of Companies) in 2019, a CSR approach must be carried out by companies, which must integrate social and environmental issues into their strategic decisions and their daily activity.

 

How does CSR improve financial performance?

Implementing a CSR approach can be a real lever for the profitability and economic performance of the company, for several reasons:

CSR reduces costs

By implementing eco-responsible actions and deploying solutions to reduce its environmental impact, the company can, with CSR, reduce many costs:

• Reduce operating costs;
  • Reduce water and electricity consumption;
  • Improve the energy performance of the premises;
  • Use a renewable energy supplier;
• Reduce losses, waste and waste and rationalize the use of raw materials;
• Reduce daily costs through eco-gestures (reduce the use of paper, coffee capsules, water bottles, plastic cups, etc.);
• ….

CSR boosts operational performance

In addition, CSR is a powerful driver for promoting employee engagement, strengthen the sense of belonging and offer meaning in work. This can help reduce turnover and absenteeism, retain talent, boost team productivity and, ultimately, to increase operational and financial performance.

To do this, the company can, for example:

• Create more comfortable workspaces that are conducive to productivity and concentration;
• Change the managerial style, for example by adopting participative management;
• Guarantee equal pay for men and women;
• Offering teambuilding events, training, coaching, seminars…
• To guarantee compliance with safety, health and hygiene standards at work;
• Offer less polluting transport solutions to its employees such as carpooling;
• Reduce the carbon impact of the supply chain;
• Propose new ways of organising work (teleworking, hybrid work, etc.);
• …

CSR improves the company’s competitiveness

Finally, CSR is an excellent way for the company to strengthen its competitive advantage and stand out from other market players, which will directly impact its financial performance.

Developing a CSR policy makes it possible to:

• Enhance and promote the company’s brand image and reputation among customers and other stakeholders (partners, suppliers, customers, service providers, etc.);
• Retain a clientele that is sensitive to current and future sustainable development issues;
• Review the organizational model, the mode of governance, the corporate culture, its strengths and weaknesses and develop its agility, its capacity for innovation, its resilience and its competitiveness;
• Make responsible purchases from suppliers and service providers committed to the social inclusion of people who are far from employment or to the protection of the planet;
• Call on short circuits and circular economy actors;
• Creating sustainable and environmentally friendly products;
• Favor the use of sustainable and recycled materials;
• Implement an eco-design approach in the production chain;
• Reducing the carbon impact on the last mile (which alone accounts for 20% of greenhouse gas emissions);
• …

 

How to implement a CSR approach to the financial performance of your company?

To implement a CSR approach to the company’s financial performance , here are some of the key steps to follow:

1. Carry out a CSR audit : What actions have already been implemented? What have been their impacts and benefits? What are the areas for improvement? What will be the company’s future CSR commitments and the actions to be implemented? What solutions can significantly reduce costs and improve business performance while contributing to sustainability issues? What are the main sources of waste and losses?…
2. Establish a CSR action plan that defines the objectives, the actions to be deployed, the resources allocated and the deadlines to be met;
3. Involve all stakeholders in the CSR approach : the involvement of employees is obviously essential, but it will also be important to identify the actions that can be carried out with suppliers, service providers, business partners, carriers, etc. It will also be necessary to train its teams in social responsibility and to make them aware of the issues related to it.
4. Implement CSR performance indicators: operating costs, absenteeism rate, gender parity, operational efficiency rate, commercial performance, carbon footprint, etc. It will also be interesting to carry out a CSR report to report on the actions carried out and their respective impacts.
5. Elect a CSR manager in charge of steering actions, reporting to management, engaging employees, etc.
6. Call on a CSR interim manager : at WAYDEN, we can mobilise an expert in corporate social responsibility, specialised in your sector of activity (retail, industry, construction, luxury, etc.) and with more than 20 years of experience. This interim manager, directly operational, will help you identify the sources of loss and the levers to activate to boost the company’s financial performance through CSR.