CSR and community impact

What impact does a business have on the communities in which it operates? A new research report aims to examine the impact of business on local communities.

A report released by Ethical Corporation, examines how organizations can incorporate the measurement of social and economic reporting into their CSR activities.

Its premise is that companies are beginning to realise that corporate responsibility is about much more than being green, despite a hazy understanding of exactly how social and economic impact studies benefit their business.

It attempts to analyse different impact models - giving case studies and examples from different companies. These include managing supply chains, assessing integration into the local community and contributing to social and economic development.

Its learnings include demonstrations of CSR achievements from other sectors. For example, it shows how international aid agencies have come to measure developments after years of struggle. It showcases examples which are relevant for the private sector.

As an organisation, Ethical Corporation has a long track record of research and investigation into CSR issues.

Its previous research has shown that companies are increasingly interested in how their business operations impact on the local communities in which they operate. When asked, "Has your company conducted a study of the social or economic impact of your operations on a local community?" 69% of respondents answered yes.

In the same study, 73% of respondents indicated that communication of their business impacts is one of the main reasons for conducting the studies. CSR really matters to how a company presents itself. Yet a growing number of companies are using the studies more strategically.
71% of survey respondents said that the results of impact studies directly affect their business strategy.

Companies are aware that how they act in the communities in which they operate has a direct impact on their reputation and 'licence to operate'. 62% of those surveyed wanted to communicate the company's beneficial impact to stakeholders and 61% wanted to build reputation.

Measurements as part of CSR programmes were specifically linked to community outcomes. By far the most important social and economic indicator of a company's behaviour was the economic livelihoods attained for the local community (43%). Job creation was also seen as extremely important (29%).

The impact of business on communities is becoming an increasingly important element of CSR activity. A new project, entitled "Impact Measurement and Performance Analysis of CSR" will examine the impact of CSR on the social, economic and environmental goals of the European Union. Funded by the European Union, it will look at what drives the creation of CSR impact and include the impact on communities as part of this.

This perhaps signals a new era of corporate responsibility, where measurement of the impact on local communities becomes a key area of measurement.

Photo credit: Annabel Symington