More and more frequently, consumers and investors scrutinize companies to see whether they are producing their goods and providing their services in socially responsible ways.
As consumers scrutinize the behaviour of Canadian enterprises, and as larger companies adopt socially responsible practices, they in turn are expecting small and medium-sized businesses in their supply chains to do the same.
What is corporate responsibility?
"Corporate responsibility" is the way a company takes responsibility for its actions and their impact on employees, stakeholders and communities.
It includes the way your company conducts its business, how it manages its impact on the environment, how it treats its employees and how it supports community activities that aim to solve social problems such as poverty or discrimination.
It's not enough for companies to simply donate money to charity. While charity is commendable, the real core of corporate responsibility is ensuring that everyone in your organization is accountable and works to earn the trust of consumers and investors by meeting their expectations of ethical and responsible behaviour.
Often, being a socially responsible business involves higher material and labour costs. But there is a business case to be made for being seen as a good corporate citizen. In a competitive labour market, employees are drawn to companies that have a good track record for responsible behaviour, such as environmental protection. By being a good role model, a company will attract people who have skills such as innovativeness, leadership and the ability to work in teams. And by treating employees responsibly, costly employee turnover is minimized.
It is also good for a business to stand out from the crowd — for the right reasons of course. Being a good corporate citizen can help a company differentiate itself. For example, if a company shows that it's committed to helping solve social problems such as rising high school dropout rates, it is also showing that the firm values positive social change. That image will appeal to customers who want to deal with a company that genuinely cares about young people. And by adopting improved environmental practices, a company shows consumers and the public that it cares about the community, the planet and the future. This can help solidify and guarantee customer loyalty. (Improved environmental practices also help a company to comply with environmental regulations and avoid penalties.)
So where does a company start? There are a number of steps you can take to ensure your company is a responsible corporate citizen.
- Write a business code of ethics for your company that outlines employee conduct on issues such as ethics, values, environment, diversity, employee respect and customer service.
- Create a clear workplace health and safety program that documents your policies and actions. This is particularly important to ensure the well-being of your employees.
- Commit to protecting the environment, and develop policies and practices that allow your company to fulfill this commitment. Consider producing a report that documents your activities and results. Some companies produce broader "sustainability" reports, which encompass social, economic and environmental activities.
- Ensure your suppliers know and meet your expectations of responsible behaviour regarding issues such as fair pricing, for example. Screen them to determine their past conduct, and tell them what you expect.
- Get behind causes that are meaningful for your business. Reduce your impact on the environment by reducing your energy consumption, using cleaner energy sources and wasting less — in other words, reduce your environmental footprint.
- Your products and services must be safe and comply with laws and regulations. It may help to apply for ISO accreditation and to meet other standards that ensure quality and safety.
- Use marketing techniques that are fair and honest, and that reflect your company's integrity. Avoid any advertising or communication that could be seen as manipulative or harmful to the public.
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.
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