Why CSR/Sustainability Practices Should Be Measured
We may have learnt in the past that corporate social responsibility (CSR) or sustainability is good for business and that it positively affects the core functions of a business from reputation to marketing, sales, employee engagement, employee productivity and morale, investors perception and decisions, human resources and many other aspects of the business. Some professionals especially those directly involved in the field of CSR and sustainability know this because it has been proven by research and some have witnessed it firsthand through measurement. Hence, the measurement of CSR or sustainability practices is as critical as the conceptualisation and implementation. Measurement is also important because it helps to know if CSR is making any difference.
Why measure?
Measurement as used in CSR or sustainability is simply the assessment of performance on internal and external CSR practices. CSR practices are measured to determine the company’s progress with regards to the practices embarked on. For instance, a company that develops and adopts a whistle blowing process, code of ethics, employee engagement, community engagement and development, pollution and waste management, and sustainable procurement management, would through measurement determine the level of progress that has been made with regards to the number of anti-corruption cases reported and addressed, how the welfare of the employees and their views are factored into the business’ decision making process, the number of community stakeholders reached through the development programs carried out, the number of waste diverted from landfills, and the number of suppliers abiding by the business’ code of ethics, among others. The above information can be found by assessing these practices.
The importance of measuring CSR or sustainability performance can be summarised in the three reasons below:
1. Communication of value added
Communication of value added is the single most important reason for measuring a business’ CSR practices. When the performance of a CSR practice is measured, the outcome is succinctly communicated to both internal and external stakeholders. Businesses want to know if they are making progress in any endeavour embarked on, as no strategic business decision can be taken out of sentiment without factual evidence of the value to be derived whether in terms of sales, reputation, environmental or societal good. By quantitatively and qualitatively communicating the value added, businesses are able to determine if CSR is making any difference,
2. Management and team support
The success of every CSR project depends on the support from management and employees of the business. By effectively measuring and communicating the value added by CSR practices, CSR or sustainability professionals would get the needed buy-in at the management and employees level. Also, with information on the value added and impact created by the CSR practices, CSR professionals can raise more resources for CSR.
3. Defense mechanism
As earlier stated, CSR contributes to the bottom line of a business, however, CSR remains relatively unpopular when compared to other traditional business concepts. Therefore, in most organisations, CSR is usually among the first to be affected during lean periods. If the benefit of CSR can be effectively quantified and communicated, CSR professionals can use the information to defend CSR during business down years. If the impact of CSR which visibly adds financial and/or non-pecuniary benefits to the organisations are available, CSR departments would be shielded from financial or related cutbacks.
For organisations with several CSR projects, there is need to measure the outcome of their CSR projects, in other to effectively determine the value added to internal stakeholders and impact created for external stakeholders, as well as communicate this value optimally.
