Unlocking market leadership: How CSR and ESG drive sustainable business success
CSR (Corporate Social Responsibility) and ESG (Environmental, Social, and Governance) are the backbones of a successful business. Social Value trends depict an ever-growing uptick in CSR and ESG commitments from businesses, and these commitments pay off.
To become a market leader and dominate your industry, you need to lean on your social and environmental commitments to bring you sustainable business success. 79% of businesses report that customer retention has improved where the importance of ESG principles has increased in recent years. This compares to only 47% for other organisations.
Likewise, among businesses indicating progress in ESG practices, 81% also reported an improvement in their brand image compared to only 49% of other businesses. CSR and ESG commitments are huge factors in the success of your organisation, in terms of profitability, retention, social impact, and, crucially, sustainability.
The State of CSR and ESG in 2024
As we head into 2024, Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) are undergoing significant shifts.
According to Skillsoft’s Corporate Social Responsibility at Work Report 2023, 66% of participants reported that CSR has become more important in the last year. In addition, 63% said that leadership investment in CSR has increased, and 61% said employee participation is on the up too. The CSR trend is clear: CSR is becoming more important as we begin 2024. Also in 2024, more than half of investors plan to increase their ESG-oriented investments, according to a survey from deVere Group.
CSR and ESG reporting has been getting more transparent – and more important – for 20 years. 2024 is no exception to this trend: with reporting and disclosure regulatory frameworks developing rapidly, we can definitely expect greater demands on organisations to provide comprehensive and standardised reporting. No matter where you are, one thing’s for sure: rigorous reporting is going to be fundamental for CSR and ESG in 2024. It's vital for your organisation to tune into these trends to impress investors, win customers, and ensure your success across the board.
Revisit your best practices to engage employees in volunteering in 2024 by taking a creative approach to your volunteering policy. From in-person group volunteering to solo skills-based virtual opportunities, variety is the key to keeping that do-good momentum alive. Volunteering is also a key way to maintain sustainability commitments – collective eco action can have a huge impact on retention, attraction, and return on investment.
And with the spotlight firmly on reporting – from alignment with the UN’s Sustainable Development Goals (SDGs), revamped regulation in the EU, the UK, and the US, greater scrutiny on greenwashing, and the involvement of AI – you’ll need to make sure your organisation is tracking its impact in a truthful, trustworthy, and transparent manner.
In a nutshell, businesses that embrace these trends aren't just chasing success in 2024 – they're changing the game and making a real difference. These trends are your roadmap to stay ahead of the game in a future where doing good isn't a choice, it's the only way to do business.
OnHand’s Global Leadership in CSR
OnHand had received multiple global leadership certifications for our volunteering and eco action, and its relation to CSR.
The G2 Winter 2023 report recently named OnHand a global Leader in the Corporate Social Responsibility (CSR) software sphere. With G2 being the world’s largest software marketplace, compiling honest reviews from authentic users, this recognition is an exciting step in OnHand’s journey to carve its space as a leader in the CSR sphere.
We’ve proudly ranked above average in quality of support, ease of admin, and ease of setup, with mobility being our highest rated feature. With OnHand, we’re making volunteering easy and accessible, and we’re thrilled that this is being reflected in our G2 statistics. OnHand is proven to dominate CSR spaces; our leadership is reflected in both our success and our partners’ success.
OnHand enables organisations to facilitate CSR schemes, making us intrinsically CSR based. Our facilitation of anywhere, anytime volunteering ensures that social responsibility is accessible to all. The issue of employees having neither the time nor the capabilities is solved by putting the volunteering in their pockets, able to be picked up anytime. A partnership with OnHand, as we dominate the G2 CSR Leadership charts, ensures sustainable, long-term success for your organisation.
The business case for CSR and ESG
From newly-coined quiet quitting to a recent increase in employee burnout (46% of UK workers are now close to burnout, according to Westfield Health), the eyes of the world have never been more closely trained on what employers are doing for employee wellbeing. Workers don’t want empty promises; they want purposeful, meaningful action taken to protect wellbeing, mental health, and overall workplace happiness.
With so much freedom for candidates to be selective about who they're applying to work for, having a strong CSR and ESG programme can do wonders for hiring the candidates you want, without worrying about losing them to similarly advertised positions.
With 64% of millennials saying that they would consider a company’s values when applying to work there, ensuring that you have a strong social value ethos that 1) attracts the talent you want and 2) convinces the talent you want that you’re the best company to work for is going to be an integral element in your hiring process.
Similarly, unhappiness is one of the leading reasons for employees to consider leaving their jobs; 21% cite being unhappy as a deciding factor to quit, just behind unfair pay with 26% (Indeed).
These numbers prove that happiness is key; when your employees are happy, they're less likely to seek new employment, and when you can provide the key to happiness to prospective employees, you increase your chances of hiring. Employees are happiest when they’re engaged at work – 16% of employees in the Indeed survey, the highest figure presented, stated that being engaged was their primary reason for happiness at work, ahead of having purpose and having belonging (both 13%).
Engagement at work isn’t just about job specifications and daily tasks. It’s also about the wellbeing and ESG culture around employees’ day-to-day roles. It’s about doing good and giving back; it’s about incorporating volunteering into your employees’ regular days. By incorporating such a simple thing into daily routines, employees will become more engaged, and subsequently become steadfastly loyal figures within your business model.
Understanding ESG
Like CSR, ESG is an extremely beneficial framework for creating value within your organisation.
There are a ton of reasons why you might want to incorporate ESG into your daily workings; the obvious one is that it can increase your quality and quantity of investments, from investors who are seriously into what you do. Investment in ESG is only getting bigger, too: 73% of investors say that, to win their support, companies must first show how they’re supporting communities and the environment. Likewise, 86% of investors say companies should work for the benefit of all stakeholders, not just shareholders; it’s an everybody issue, not just a few-person issue.
On top of that, a strong ESG framework also reduces regulatory interventions further down the line, attracts and retains strong talent, and helps you build trust with stakeholders and investors. While the thought of being a sustainable, ethical corporation should be incentive enough, being able to see the value in various trickle-down aspects of ESG should also be an indicator that ESG is something you need to be seriously thinking about.
53% of organisations see a positive relationship between ESG and financial performance. 1 in 3 young people have turned down a job offer because of a company's ESG credentials, choosing instead to take a more environmentally friendly role. 70% of employees claim that they get their main sense of purpose from work. ESG plays a seriously big part in every aspect of your business.
Much of public mistrust in ESG initiatives comes from the fact that either insufficient or suspicious data has been provided around the success rates and actions taken to fulfil ESG requirements.
Ana Rivero Fernández, head of investment content and ESG at Santander Asset Management, urges that ESG data must be “consistent and mainstream” to achieve the level of sustainable investment that currently just isn’t being reached.
Actions have been taken in the past few years to ensure this is the direction that ESG takes; for example, the EU implemented the Sustainable Finance Discourse Regulation (SDFR) in March 2021, which “requires financial providers and advisers to disclose all of the information that investors need to make investment choices in line with their sustainability goals.” In the UK, likewise, it’s mandatory for publicly listed companies to make Taskforce for Climate-related Financial Disclosures (TCFD) aligned disclosures.
It’s actions like these that will help regain the public’s confidence and trust in ESG. On top of this, integrating specific ESG teams and ESG-related professionals into your organisation’s decision-making process, while also making sure ESG is present at every stage in the investment process, is also key to strengthening public faith in the framework.
By showing that you care and are committed to implementing ESG through your business, that will trickle down and be reflected in your actions. If you’re doing ESG right, then you shouldn’t have anything to hide – and public faith should follow accordingly.
Differentiating CSR and ESG
To unlock market leadership, you first need a solid understanding of the differences between CSR and ESG.
CSR is a business model that helps an organisation be socially accountable to itself and to its stakeholders. It involves taking a look at the big picture of Corporate Social Responsibility and figuring out how to make sure the business is doing good, both socially and environmentally.
ESG is a framework embedded in an organisation’s strategy. It considers the needs and values of stakeholders, and can have an impact on a company’s success and market returns. It’s divided into the three pillars of ‘environmental’, ‘social’, and ‘governance’. ESG can be measured with a number between 0 and 100 – anything above 70 counts as a ‘good’ ESG metric for an organisation to have.
CSR and ESG are pretty closely intertwined, so a one-size-fits-all definition is a bit ambitious. If we want to give it a go, though…
CSR is the value and ESG is the measurement. Both can manifest as initiatives or programs; in general, the difference is that ESG strategies can be measured more effectively and concretely than CSR initiatives.
Both are increasingly important for reputation when it comes to employees and to stakeholders. As millennials and Gen Z start to integrate into the workforce, bringing with them a huge focus on workplace sustainability, caring about this stuff is the best way forward.
Looking ahead: Key considerations
The CSR and ESG scene is in for some serious changes in 2024, and it’s vital for your organisation to tune into these trends to impress investors, win customers, and ensure your success across the board.
In 2023, we hit the half-way point between the creation of the UN’s Sustainable Development Goals (SDGs) and the 2030 deadline for the completion of these goals. Because we’ve now passed the half-way point, the SDGs have received more attention than in previous years, and it’s more important than ever for businesses and corporations to focus on implementing these goals within their organisations.
The United Nations Global Compact-Accenture Global Private Sector Stocktake found that the private sector is a ‘critical stakeholder’ in the SDGs, and that for many of the goals, private sector action will be a decisive factor in meeting or missing the deadline in 2030.
As it stands, less than half (48%) of business leaders think that the private sector is doing enough to contribute to the SDGs. However, business leaders are stepping up. 91% of business leaders say their company has a public commitment to at least one SDG. With the focus on SDGs, the business case for CSR is absolutely necessary.
Likewise, ESG proves itself time and time again to be a crucial framework to implement. Not only does a strong ESG score attract trustworthy and worthwhile investors, implementing ESG values through your organisation can also do wonders for morale at work.
ESG is a big thing to grapple with, and even though the 3 pillars inform each other and work together to create an overall framework, it’s not a bad idea to start with just one aspect before moving on to the other two. With so many conversations around wellbeing and purpose at work, it might be wise to first look at your organisation's Social or Environmental framework and proceed from there.
Outside of business itself, the world’s eyes are on the countdown towards climate change deadlines. Events like the COP UN climate conferences (COP28 being the most recent endeavour) are huge in the news cycles, and call to the forefront things like carbon footprints, energy efficiency, and other such implementable climate-related organisation features.
Knowing who you are, what you do, and how to do it well is always going to be the key to getting ESG and CSR right. With social issues like cost of living crises, increasing conversations around employee wellbeing, and a post-COVID illumination on work-life balance, it’s up to you to take those first steps into implementing CSR and ESG programmes for a successful and sustainable business.
Takeaways
CSR and ESG are extremely beneficial frameworks for creating value within your organisation.
Over the past five years, products shouting about their ESG commitments accounted for 56% of all growth – about 18% more than would have been expected given their standing at the beginning of the five-year period (McKinsey x NielsenIQ, 2023).
Likewise, for organisations that added to their CSR team headcount in 2023, more than 90% increased integration with DEI and saw a higher percentage of increased volunteer participation (ACCP CSR Insights Survey 2023).
CSR and ESG are crucial to every aspect of business. Whether it’s attracting talent, retaining key employees, earning the trust of investors and stakeholders, increasing profitability, or giving back to communities and the planet, sustainable business success hinges on commitment to CSR and ESG practices.
