VIEWPOINT

A DIFFERENT APPROACH TO CSR

NEED FOR CHANGE TO EMBRACE CHANGE

DR ANG HAK SENG

A DIFFERENT APPROACH TO CORPORATE SOCIAL RESPONSIBILITY

Businesses serve as the backbone of our society. In fact, about 65% of our working population is employed by small and medium-sized enterprises (SMEs). SMEs, collectively, have the power to positively influence many Singaporeans by inspiring their employees to care for those in need.

Many businesses have demonstrated their corporate social responsibility (CSR) through traditional ways such as donating money to a certain cause or volunteering at various beneficiary organisations. From a business perspective, CSR helps SMEs to build brand equity as customers will see the company as an ethical and caring business.

However, over the years, there has been a shift in the CSR mindset of businesses – CSR is becoming a part of their core business. In a recent corporate giving survey, 64% of corporate givers shared that they have tried to integrate giving into their core business functions.

Truth is, CSR does not merely build the brand equity of a business – it directly helps to increase profits and reduce cost. Therefore, to benefit from this, I would like to suggest four big changes. First, the change in customers; second, the change in operating model; third, the change in bottom line, and fourth, the change in CSR strategy.


Dr Ang Hak Seng speaking at a conference on corporate giving, 29 October 2019

1) CHANGE IN CUSTOMERS

Regardless of whether it is the provision of a product or service, businesses are built and sustained by catering to the demands of customers. In the changing business landscape, we see a shift in customer behaviour. Customers no longer view businesses as a place where they can obtain products but they also expect businesses to do good. Just to cite a few key statistics, 88% of Singaporeans think that businesses have a responsibility to do social good, and 56% believe that businesses have a responsibility to ensure their supply chain does not harm the environment.

But what does the change in customers’ mindset mean to businesses, exactly? Well, by doing good, businesses will be trusted by their customers. This will lead to more loyal customers who will not only buy more but will also recommend others to buy from that particular business. This is evident from a finding that 51% of Singaporeans indicated that they would more likely recommend a brand that gives a small portion of its annual profits to charity.

One example of how a business has managed to do good and expanded its customer base is Carousell. Carousell is an online marketplace where people can sell and buy new and pre-loved goods. Weaving its CSR strategy into its main business, Carousell not only helps customers buy and sell items, it also champions causes. This is demonstrated through their #AllForFree campaign where sellers were encouraged to give away their items to someone in need.

2) CHANGE IN YOUR OPERATING MODEL

Doing good and integrating the value of care into your business goes beyond improving engagements with customers. It affects the entire operating model in terms of people, process and structure.

PEOPLE

What is the strongest asset of any business? While some may say it is the intellectual property or the state-of-the-art technology, I would say it is the people as they are the ones who run the business and think of bright ideas to improve business. By doing good, people will be inspired to serve and contribute more.

When a company’s drive is about social impact, there is more internal energy in the firm. This is because to many employees, and in particular to millennials, working is not simply about earning a salary to pay the bills; it is also about purpose, meaning and making a contribution to society. With this changing tide in workers’ mindsets, it is crucial for a company to have a strong focus on doing good and making an impact.

In addition to inspiring employees, integrating the value of care into business also helps to deepen employees’ skill sets. By caring for others and helping those in need, employees are able to pick up one very important skill – empathy. Empathy is key to improving service delivery as it helps employees to place themselves in the shoes of the customers and understand their needs, their pains, their challenges and their concerns. By understanding the customers, solutions and products will be tailored to better fit their needs. This will strengthen the company’s value position and allow for more business.

For example, in the public service, officers in the senior management are given the opportunity to have short attachments at frontline roles to work on operational issues and interact with service users. This programme is very helpful as it allows the senior management to understand the impact of policies and the needs on the ground. More importantly, it also fosters a deeper sense of empathy that will enable officers to draft better policies.

... working is not simply about earning a salary to pay the bills; it is also about purpose, meaning and making a contribution to society. With this changing tide in workers’ mindsets, it is crucial for a company to have a strong focus on doing good and making an impact.

PROCESS

Next, by focusing on doing good, the business processes will improve. To succeed in this dynamic business environment, products and services need to be produced in a cheap, good and fast way. By focusing on doing good, this can be achieved. One take on this is by seeking to strengthen environmental sustainability practices through the reduction of waste. For example, Subaru adopts a zero-landfill manufacturing practice when building their cars. The company also recycles more than 95% of its waste, resulting in both the promotion of environmental sustainability and a sustainable supply chain. This has helped the company reduce costs and boost its bottom line.

In truth, this notion of maximising all materials is nothing new. In fact, most of us do this on a very regular basis without knowing it. Take the example of using reusable shopping bags instead of single-use plastic bags. If we can reduce wastage, recycle products and maximise efficiency in our food usage, this can also be done in business.

STRUCTURE

Apart from people and process, business structure is also very important. In particular, the financial structure will also be in a better state if businesses choose to focus on doing good. There is an emerging trend in the ways that capital is raised and this resides in the changing mindsets of the world’s richest people. Currently the richest 1% of the world’s population owns about half of the world’s wealth (45%) and this 1% of the population is increasingly focused on channelling their funds to the social good.

This emerging trend is well summarised by Jack Ma, who said, “When you have one billion dollars, that is not your money. That is the trust that society gives you; they believe that you can manage the money.” Increasingly, we also see asset managers investing in companies that have a positive impact on society. For example, in Blackrock’s 2020 letter to CEOs, Larry Fink wrote about the importance of sustainable investing, as climate change is a key investment risk. This shift means that doing good is not only about boosting a company’s image or brand equity, it helps to open doors to more capital.

In addition, there are new financial instruments that focus on raising funds for projects that promote social good. For example, Green bonds are a way for companies to raise capital for projects that seek to sustain the environment. Another instrument is social impact bonds, which seek to raise capital for certain causes or projects that benefit society.

... when a company does good, it not only benefits the bottom line but also gives purpose and drive to its employees. This will help the business grow even faster and better as motivated staff give rise to better ideas and better solutions.

3) CHANGE IN BOTTOM LINE

Given that businesses are profit-driven, doing good makes sound business sense. Companies with stronger CSR efforts have recorded an increase in revenue of up to 20% as rising numbers of customers are more inclined to purchase from them while encouraging others to so. Furthermore, by positioning the company as a sustainable one, the company’s goods may become more demand-inelastic as they become more niche and unique.

Apart from improving revenues and profits, good CSR practices will lead to a more productive workforce. In general, businesses with strong CSR saw a reduction of staff turnover of up to 50%, increased productivity of up to 13% and increased employee engagements of up to 7.5%. Simply put, when a company does good, it not only benefits the bottom line but also gives purpose and drive to its employees. This will help the business grow even faster and better as motivated staff give rise to better ideas and better solutions.

4) CHANGE CSR STRATEGY TO BECOME CORE STRATEGY

Thus far, I have shared about the importance of doing good due to customers’ changing behaviour and how this can also improve your people, process and structure, resulting in a boost to the bottom line. This begs one big question, “How can I make this change?”

For a start, the business’ CSR strategy needs to be part of the business’ core strategy. Here, I would like to suggest three actions that businesses can consider adopting, to make CSR an integral part of core business.

From CSR Strategy to CORE Strategy

INVISIBLE TO VISIBLE

First, make the invisible become visible by linking CSR objectives to direct and measurable outcomes. This will allow everyone to easily understand the outcomes of efforts, leading to more transparent tracking and robust communications. For example, a company wishes to focus on environment sustainability by reducing carbon footprint. However, carbon footprint is hard to measure and it is difficult for employees and customers to see the direct outcomes. So how can this invisible impact be made visible to everyone? One possible way may be to focus on lowering the utility bills as that makes it easier for everyone to track progress, leading to more transparency.

INTEGRATE WITH CORE

Second, CSR efforts can only be part of the core strategy if it is linked with business expertise. Every business is special and has a core expertise. It is thus effective to focus on what you do best and use that skill or resource to contribute to society and care for others, creating a more meaningful and impactful CSR strategy.

PARTNERSHIP

Finally, similar to the second point, a business could focus on what you do best, and outsource the rest. Just like no man is an island, partnership is key in developing a strong strategy. Collaboration between government, corporates, charities and the community is crucial to effectively address social needs.

CONCLUSION

Doing good makes good business sense. It helps to deepen engagement with customers, inspires employees, opens doors to capital and boosts the bottom line. Doing good is no longer a “good-to-have” but is increasingly a “must-have” for businesses. Through partnerships and through strategic integration with the company’s core expertise, I believe that everyone – from individuals to employees in the private and public sectors and the wider community – can benefit and make Singapore not only a home but also a home that cares.


Dr Ang Hak Seng is Deputy Secretary (Singapore Cares), Ministry of Culture, Community and Youth; Commissioner of Charities, and Adjunct Professor, Nanyang Technological University.