Published at 2020, June 5th
With the economic crisis that will follow the coronavirus pandemic, odds are many companies going through difficult times decide to disinvest in sustainability and in CSR initiatives. Here are 5 arguments that will help you defend your CSR budget during the difficult period ahead.
In times of crisis, companies tend to refocus on their “trades”. First reflex? Cutting down budgets thought as “not essential” to compensate for financial losses. Unfortunately, CSR is often among the sacrificed ones.
However, limiting the development of CSR is certainly amongst the worst mistakes to make in this post-COVID-19 period. Here are 5 reasons why.
1 – Companies With A CSR Reputation Perform Better In Times of Crisis
We know that in normal times companies invested in CSR subjects perform better than others. But it is also true in times of crisis. In general, companies that have solid CSR programs, in particular those integrating their production chain, seem to be better prepared to withstand the financial market fluctuations and even crises like that of the coronavirus.
Several studies published in recent weeks point in this direction: a Morningstar study has shown investors committed to ESG criteria suffered less from the economic crisis linked to the containment and the coronavirus than others. Moreover, another study published in the National Bureau of Economic Research has revealed companies with the most advanced CSR programs have weathered the crisis better.
And it is quite logical: more committed companies have better tools to assess and anticipate risks across their supply chain. They are generally more proactive in terms of issues like work flexibility, staff support, or reducing waste and harmful impacts. These companies usually benefit from strong employee support which helps ensure business continuity. They also usually interact better with their stakeholders.
2 – The Confidence of Consumers and Stakeholders Needs To Be Recovered
Another reason to keep CSR programs alive has to do with consumer confidence. In this pivotal period, many organizations need to adapt their operations and to build better. Although the polls for the post-coronavirus are contradictory, many studies have shown a clear consumer desire to modify their way of consuming and to support local and more ecological products.
This the lockdown period, many people have become aware of the flaws in globalized production systems and in the machinery of large companies. Society expects the main economic players to do a green recovery and it will not be possible by lowering environmental and social requirements, quite the opposite. In fact, in recent years, studies have shown the most committed companies are those which generate the most trust and loyalty from consumers.
Today, the polls are clear: many different stakeholders, including consumers and stakeholders, expect companies to commit to a more ecological and socially-just transition. Giving up on an organization’s CSR efforts would be to go against all trends and expectations.
3 – It’s The Time For Solid, Lasting Changes
The current period is particularly beneficial for lasting changes. A good part of companies are already in the process of or will have to quickly transform their business or certain aspects of their business.
Whether it’s changing suppliers to focus production more locally, offering adapted products in times of health crisis or differentiating to rebound after the crisis, changes are underway everywhere.
It is therefore the perfect opportunity to start thinking deeply about the meaning we want to give to our business, the way we envision its social and environmental impacts…
4 – Powerful Regulatory Changes Likely To Come Soon
The current momentum could also give rise to major regulatory changes. We can already see this in certain sectors: in exchange for public support, the State asks certain sectors to transform themselves or to orient their way of production, in particular by integrating ecological and social requirements.
This is particularly the case in the automobile and aviation industries, but it could spread. We can already see that urban planning policies are changing, public purchasing policies could also change, and we can imagine that popular pressure for more social and environmental justice even leads to new restrictive regulations.
In this context, CSR has a particularly important role: it is through it that the analysis of the risks and opportunities linked to the sustainable transformation of a company takes place. CSR allows the anticipation of regulatory risks and improves business resilience – which leaves organizations better prepared to deal with unexpected crises. Moreover, sustainability efforts, together with impact analysis also help identify a company’s main environmental improvement points and how to move forward with them.
5 – CSR and Resilience Walk Hand in Hand
Finally, it is important to understand that CSR is the main tool to help build business resilience. Being better prepared for a crisis is the essence of the work of CSR departments, be it a social, environmental, or health crisis.
In the world of tomorrow, with global warming, the biodiversity crisis, environmental disturbances, crises similar to those we are currently experiencing with the Covid-19 will probably be more and more frequent. Hence the need to continue to invest in ESG issues, even when these may appear secondary to short-term financial concerns.
After all, it is the lack of a long-term vision that has pushed businesses and society as a whole into this crisis. It would be good not to repeat the experience too often.
[Image credits to Shutterstock]