The expression Corporate Social Responsibility (CSR) – or rather Corporate Sustainability and Responsibility – is intended to mean that businesses must embrace a business model that is socially responsible, in relation to the reconciliation of financial and economic objectives with ethical standards, relating to the social and environmental impacts of their activities.
In the most important global rankings on CSR, among the various ethical areas that make up corporate social responsibility, the first place is undoubtedly the promotion of environmental issues, but it is also crucial a holistic approach that considers both social (social impacts of the business model) and economic factors (long-term survival of the company).
The satisfaction indexes of the general public and of the various relevant stakeholders, with reference to sustainability, have now reached high scores, therefore companies must exploit the huge competitive advantage offered and maximise their long-term profits.
Sustainability has received more evidence from the regulatory point of view, first with the entry into force of the Code of Conduct for companies listed on the Italian Stock Exchange and finally with the Legislative Decree of 30 December 2016, nr. 254.
This latter provision introduced the obligation of non-financial reporting for companies with at least 500 employees that exceed one of the two size limits indicated below the obligation to draw up the declaration of a non-financial nature pursuant to art. 3 of the decree in question:
a) a net worth exceeding € 20 million
b) a net turnover from sales and services exceeding € 40 million
This declaration must cover environmental, social, employee-related issues, respect for human rights (measures adopted to prevent violations and actions taken to prevent attitudes and actions that are in any case discriminatory), the fight against active and passive corruption (with an indication of the instruments adopted for these purposes), which are relevant taking into account the activities and characteristics of the company, describing at least:
- the business model for the management and organisation of business activities;
- the policies applied by the company;
- the main risks generated or incurred in connection with the above issues and arising from the company’s activities, products, services or business relationships, including, where relevant, supply and subcontracting chains.
Article 4 of Legislative Decree nr. 254/2016 provides for the consolidated declaration of a non-financial nature for corporate groups, including the data of the parent company, its subsidiaries consolidated on a line-by-line basis, and covers the above issues.
To date, Corporate Social Responsibility is mandatory for 400 Italian companies, but it has become fundamental for all associations that require a further competitive and distinctive leverage factor on the domestic and international markets.
Social reporting, charter of values, ethical-social rating, sustainability report, SRI (Sustainable Responsible Investment), enhancement of the territory and cultural heritage are just some of the tools that make up an effective CSR model.
Our Firm, in association with technical-scientific experts with a deep knowledge of innovation and sustainable development-related matters, provides integrated advisory services in terms of Corporate Social Responsibility to enhance the economic value of the activities of companies and public administrations, promoting the integration of sustainability in the governance structure, and the establishment -where possible- of ad hoc committees or units (dedicated to the supervision of sustainability issues related to the performance of business activities) directly reporting to the Chief Executive Officer.
The importance of the non-financial declaration of sustainability, together with an adequate communication and reporting policy (in compliance with the principle of accountability), and associated with other non strictly financial instruments (such as the 231 organisational model and environmental certifications), constitutes an irreplaceable means of differentiation, capable of optimising social and environmental performance, reducing costs and improving the company’s reputation, must not be underestimated.
BUSINESS ETHICS: ESG FACTORS FOR BUSINESS
The perception of ethical issues in business has changed dramatically over the last 20 years.
At first, these factors were treated more in philosophical terms and only incidentally related to the business world.
Currently ethical research focuses primarily on business issues and thousands of people are involved in research and training on business ethics.
This is primarily the result of numerous changes in the sphere of modern business operations.
The development of a modern business is determined not only by the effective and efficient allocation of resources and the application of appropriate business strategies, but also by considering the concept of corporate social responsibility (CSR) and business ethics in management processes.
The code of ethics and corporate social responsibility can bring significant benefits to a company.
For example, some elements of added value are given below:
- Attracting customers to the company’s products/services
- Ensures that employees wish to remain in the company, reducing turnover and thus increasing productivity
- Attracting more employees who want to work for the business, thus allowing the company to recruit the most talented employees
- Attracting investors and keeping the price of the company’s shares high, thereby protecting the business from acquisitions and scaling.
Conversely, unethical behaviour or a lack of sustainability and corporate social responsibility strategies can damage a company’s reputation and make it less attractive to shareholders, resulting in reduced profits.
However, on a macroeconomic scale, the significant benefits associated with the application of CSR and business ethics can be used not only as a tool for improving a company’s competitive advantage, but also in a much broader context: the application of these concepts can be considered a useful tool for sustainable development.
Do you want to implement an innovative CSR and Business Ethics strategy in your organization?
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