CSR costs to consider
Mar 6, 2024 22:25:08 GMT -5
Post by account_disabled on Mar 6, 2024 22:25:08 GMT -5
Social Responsibility (SR) is a pillar that every company must focus on, especially at a time when consumers are choosing the most committed brands.
With this awareness and social action gaining momentum, those responsible for leading companies must find and integrate green and sustainable policies into their processes. This means only one thing: investment .
According to a report by Geoffrey B. Sprinkle and Lauren A. Maines, from the Kelley School of Business, Indiana University, there are three initial costs associated with CSR activities that every company must take into account:
1. Opportunity costs
The first cost to consider is opportunity. This includes Chile Mobile Number List any activity that relates capital and labor to Corporate Social Responsibility (CSR) activity, which could result in loss of income.
2. Sunk costs
Sunk costs are all initial investments in new equipment or policies such as an environmental health and safety system, wastewater systems, improvements such as machine guards, buildings and infrastructure.
3. Recurring costs
These types of costs are the labor costs caused by the increase and equity of salaries. An increase in management time such as social security forms, training, monitoring and reporting, and equipment updating and maintenance.
The importance of these costs
The time and investment dedicated to CSR means an opportunity for companies and their CEOs to promote change in their environment, inspire and address some of the conflicts that threaten the planet and its inhabitants.
For starters, opportunity costs give CFOs a clear understanding of what the company stands to gain and lose by going with a particular CSR initiative.
In addition to the obvious benefits of benchmarking (i.e., elimination process), sunk and recurring costs allow the CFO to narrow their financial lens on every sustainable effort; In other words, it gives them economic specificity, they mention in the study.
By taking into account the importance of these costs, a company can adequately determine if it is capable of taking on the CSR imperative, and if not, think about other ways to create strategic partnerships to bring such a company to life.
Other studies have shown that socially responsible companies have higher performance and therefore a better return on investment in CSR.
They also gained greater relevance and fewer capital restrictions by being more transparent, and achieved more stable relationships with their stakeholders.
4 essential pillars
These initial costs are not only part of a solid CSR strategy, but also of the following four pillars that make a company truly committed to its environment:
Characterized by different governance mechanisms, which reflect the joint interests of all its interest groups. These companies involve the board more in CSR issues and link executive compensation to environmental and social objectives apart from financial objectives.
Understand the needs of stakeholders and invest time in managing these relationships. They report internally and externally on the quality of those partnerships, making them more proactive, transparent and accountable when engaging with their stakeholders.
Effective communicators. They talk about long-term strategy and persuade long-term investors to invest in their stocks.
They are more likely to measure information related to key stakeholders, such as employees, customers, and suppliers, and to increase the credibility of these measures using audit procedures. They measure and reveal more and higher quality non-financial data.
Success story: Whole Foods
One of the companies highlighted in the study is Whole Foods, a company that has focused its business model on the environment, society and corporate governance.
One report even notes that Whole Foods has accepted that it could represent a new form of capitalism, one that works more consciously for the common good rather than relying solely on the "invisible hand" to generate positive results for society.
Whole Foods has a foundation where they focus and promote all efforts regarding social responsibility and sustainable development:
We empower the world's poorest people with microcredit, giving them the opportunity to create or expand a home-based business to lift themselves and their families out of poverty.
This success story highlights that those who are business leaders on CSR cannot ignore its implications for their businesses, and the value it adds to companies and the environment.
These three costs are just the first step in developing a strategy to strengthen a company's commitment to its stakeholders and the environment.
With this awareness and social action gaining momentum, those responsible for leading companies must find and integrate green and sustainable policies into their processes. This means only one thing: investment .
According to a report by Geoffrey B. Sprinkle and Lauren A. Maines, from the Kelley School of Business, Indiana University, there are three initial costs associated with CSR activities that every company must take into account:
1. Opportunity costs
The first cost to consider is opportunity. This includes Chile Mobile Number List any activity that relates capital and labor to Corporate Social Responsibility (CSR) activity, which could result in loss of income.
2. Sunk costs
Sunk costs are all initial investments in new equipment or policies such as an environmental health and safety system, wastewater systems, improvements such as machine guards, buildings and infrastructure.
3. Recurring costs
These types of costs are the labor costs caused by the increase and equity of salaries. An increase in management time such as social security forms, training, monitoring and reporting, and equipment updating and maintenance.
The importance of these costs
The time and investment dedicated to CSR means an opportunity for companies and their CEOs to promote change in their environment, inspire and address some of the conflicts that threaten the planet and its inhabitants.
For starters, opportunity costs give CFOs a clear understanding of what the company stands to gain and lose by going with a particular CSR initiative.
In addition to the obvious benefits of benchmarking (i.e., elimination process), sunk and recurring costs allow the CFO to narrow their financial lens on every sustainable effort; In other words, it gives them economic specificity, they mention in the study.
By taking into account the importance of these costs, a company can adequately determine if it is capable of taking on the CSR imperative, and if not, think about other ways to create strategic partnerships to bring such a company to life.
Other studies have shown that socially responsible companies have higher performance and therefore a better return on investment in CSR.
They also gained greater relevance and fewer capital restrictions by being more transparent, and achieved more stable relationships with their stakeholders.
4 essential pillars
These initial costs are not only part of a solid CSR strategy, but also of the following four pillars that make a company truly committed to its environment:
Characterized by different governance mechanisms, which reflect the joint interests of all its interest groups. These companies involve the board more in CSR issues and link executive compensation to environmental and social objectives apart from financial objectives.
Understand the needs of stakeholders and invest time in managing these relationships. They report internally and externally on the quality of those partnerships, making them more proactive, transparent and accountable when engaging with their stakeholders.
Effective communicators. They talk about long-term strategy and persuade long-term investors to invest in their stocks.
They are more likely to measure information related to key stakeholders, such as employees, customers, and suppliers, and to increase the credibility of these measures using audit procedures. They measure and reveal more and higher quality non-financial data.
Success story: Whole Foods
One of the companies highlighted in the study is Whole Foods, a company that has focused its business model on the environment, society and corporate governance.
One report even notes that Whole Foods has accepted that it could represent a new form of capitalism, one that works more consciously for the common good rather than relying solely on the "invisible hand" to generate positive results for society.
Whole Foods has a foundation where they focus and promote all efforts regarding social responsibility and sustainable development:
We empower the world's poorest people with microcredit, giving them the opportunity to create or expand a home-based business to lift themselves and their families out of poverty.
This success story highlights that those who are business leaders on CSR cannot ignore its implications for their businesses, and the value it adds to companies and the environment.
These three costs are just the first step in developing a strategy to strengthen a company's commitment to its stakeholders and the environment.