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On Leadership: What does social responsibility have to do with your business?


Here’s a walk down memory lane for you. Can you recall when your company started recycling? Or when you first started hearing about your company’s inclusion or environmental practices? These questions, which are part of the larger concepts of Corporate Social Responsibility (CSR)  and Environmental, Social and Governance (ESG), are still relatively recent, but they increasingly matter to your business.  


Whether you are the leader or director of a company – large or small; public or private; local, national or global – CSR and ESG are concepts to take seriously. That was not always the case. Back in the 90s, when I was working on Wall Street, many investors openly scoffed at the idea of  sustainability and corporate responsibility. I distinctly remember a client laughing out loud when I suggested a socially responsible investment option, saying, “Why would I give up returns to save the planet?” But times have changed. 


Today, a company might lose investors, customers or workforce if they cannot demonstrate their commitment to a sustainable footprint, social responsibility, or sound governance. The investor community is increasingly examining the relationship between business and sustainability, and consumers and employees are demanding that companies act responsibly, asking questions about everything from your carbon footprint to your DEI strategy to your charitable giving. The pandemic has amplified these conversations, creating urgency for organizations to address how they operate, manage risk and evolve culture. 


What are CSR and ESG? The terms CSR and ESG are emerging more and more frequently in boardrooms and on investor calls. A recent Forbes article, “Three Reasons Why CSR And ESG Matter To Businesses’’ explains, “While CSR holds businesses accountable for their social commitments in a qualitative manner, ESG helps measure or quantify such social efforts.” CSR is a way of doing business in ways that contribute to the betterment of society. Within ESG, environmental issues include biodiversity, emissions, natural resources and the environmental impact of your

product portfolio. Social responsibility encompasses topics like health and safety, human rights and human capital management, and governance issues range from data privacy to business ethics, compliance, to board structure and composition, executive compensation and shareholder rights. 


As a leader, you may ask if bettering

society is really the responsibility of your company. If you are a fiduciary or responsible for your company’s bottom line, it is your job to pay attention to your stakeholders, and stakeholders are increasingly making decisions on how to fund or engage with your company based on how you choose to operate your business. The investor community has intensified its focus on ESG, and there is significant pressure to do business according to specific criteria. Public and privately held companies alike are facing increased questioning and examination from their own employees and customers, who are calling for greater transparency about their  practices. 


Are you intentionally creating CSR and ESG strategies? In a recent National Association of Corporate Directors Survey, nearly 80% of directors reported that their board is focused on some aspect of ESG, with 52% seeking ways to improve their own understanding of the topic. I recently attended an educational session of local board directors on this topic and the majority had a plan for some but not all aspects of CSR  and ESG, and the consensus was that comprehensive plans are essential. 


Today, companies that are adapting to changing socio-economic and environmental conditions, as well as improving their cultures, will be better positioned to take advantage of strategic opportunities and compete in an ever-changing marketplace. They will also undoubtedly fare better with employee and customer retention. 


In other words, addressing CSR and ESG is just good business.

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