Corporate responsibility and social innovation: inseparable from business strategy
August 31, 2012
CSR Europe’s Stefan Crets states that companies must take advantage of their ability to innovate in order to address some of society’s problems, if we are to see a more sustainable economy in 2020.
The financial crisis and its effects on both society and the global economy brings unprecedented challenges to companies, governments and communities in Europe and beyond. As a result, traditional business perspectives on competitiveness, survival and profitability are being questioned. So, what does CSR mean in this context?
CSR, a term coined in the 1970s, was once considered as a practice of reputation and risk management. However, today’s companies now appreciate that CSR is no longer just a “nice-to-do” add-on to their core activities, but that responsible business practices can help build a more sustainable basis for competitiveness. CSR can help in strengthening brands and reputation, attracting and retaining talent, achieving efficiency gains and cost savings, meeting societal expectations and (perhaps most importantly) by creating new business opportunities through social innovation.
It has long been recognised that social innovation plays a key role in economic growth. Over the years, developments in healthcare and the rise of new technologies, such as the car, electricity or the mobile phone, depended on social innovation as much as they did on the innovations of business. Today, however, it is recognised that the onset of increased societal challenges is not only constrained to society itself; businesses now appreciate that they must take an active role in combatting these problems. In this context, it is widely accepted that some of the barriers to sustainable growth, such as climate change, demographic change or ageing populations, can only be overcome with the help of social innovation. Consequently, a greater impetus for developing new products and services linked to social innovation has emerged.
Examples of such innovations can now be witnessed from companies across all business sectors. For example: technological companies IBM and Hitachi are now involved in the development of energy and transport grids to overcome the challenges posed by urbanisation; consumer goods companies, such as Nestlé or Unilever, have adopted plans to source and produce sustainably; and financial institutions, such as Citi Group, are increasingly aiming to promote social inclusion by providing microfinance in Base of the Pyramid (BOP) markets.
Furthermore, stakeholder groups such as non-governmental organisations (NGOs) and the media have also played a key role in drawing attention to CSR-related issues. As a result, today’s companies appreciate that they can no longer operate in isolation from stakeholders. Mainstreaming CSR and advancing social innovation requires audacity, and joint efforts of many more companies and stakeholders working in new partnerships.
It is against this background that CSR Europe launched its flagship initiative, Enterprise 2020, in October 2010. Enterprise 2020 is an initiative for companies committed to (1) mainstreaming CSR and (2) developing innovative business practices and working together with their stakeholders to provide solutions and practical tools to help meet societal needs.
The increasing interest in the business opportunities associated with innovative CSR approaches, together with growing stakeholder expectations for corporate accountability and responsible business practices both within and outside Europe, has continued to push the European CSR agenda forward. In October 2011, the European Commission (EC) published a Communication on its renewed strategy on CSR for the period 2011-2014. Through its Communication, the EC has demonstrated its commitment to supporting CSR and has recognised the potential for CSR to contribute to sustainable development and competitiveness in Europe.
The year 2020 will undoubtedly bring with it a new set of challenges; however, those companies that find the right balance between minimising risks through accountability and maximising opportunities through social innovation will not only be amongst the most successful companies, but will also find themselves leading the transformation towards a smart, sustainable and inclusive society.
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