The term “corporate social responsibility” (CSR) may cause us to think of companies planting trees or donating to children in developing countries. While these activities are socially beneficial, they may not be viable for startups operating on limited budgets. However, as a startup founder, you are in a unique position to implement ethical practices into your core business processes. CSR will not only benefit society but it can also help you achieve your economic targets. Therefore, setting CSR goals that are aligned with your values does not have to break your budget. This article sets out the economic and social benefits of making CSR a core element of your startup.
1. Build a Positive Brand
In a competitive business environment, it is vital that your startup has some advantage or point of difference that will make customers pick you over a competitor. Positive branding through CSR can act as this point of differentiation. There is an increasing trend towards customers buying from brands that are aligned with their personal beliefs: 66% of consumers are willing to pay more for a product or service that comes from a socially responsible brand. Millennials are particularly responsible consumers, with 73% indicating that they are eager to spend more on products that are aligned with their beliefs.
Startup The Elephant Pants created an ethical brand image by entrenching environmental and social benefits into their core business operations. They pay their factory workers twice the minimum wage and provide them with safe working conditions and maternity leave. The company also donates 10% of every sale to organisations protecting elephants from poaching and habitat destruction. Consumers that are passionate about animal protection and ethical supply chains are more likely to buy from The Elephant Pants because of their brand image.
Therefore, as a startup founder, your commitment to CSR will help you to:
- create a positive brand image;
- increase sales; and
- reach your economic goals.
2. Access Funding
Being socially responsible is not only a point of differentiation for your customers, but it can also help you stand out when pitching to investors. Some organisations provide grants and investment specifically to startups that are dedicated to making the world a better place.
For example, Impact Investing Australia supports investment opportunities that deliver a positive social and environmental impact alongside a financial return.
Government grants are also specifically available for startups creating a positive social impact, such as the:
- Advancing Renewables government initiative, which provides funding for the development, demonstration and pre-commercial deployment of renewable energy initiatives; and
- Innovation Fund, which gives grants for emerging Australian technologies and businesses working towards Australia’s transition into a renewable energy economy.
Accordingly, being a startup with a social purpose allows you to pitch directly to CSR focused investors and may enable you to apply for government grants.
3. Reach Greater Audiences
Your startup has to be able to reach your target market in an economically viable way to succeed. Having socially responsible business operations can help you reach greater audiences using free social media marketing channels. People often share videos and images they feel deeply passionate about. Incorporating ethical practices in your startup enables you to create marketing campaigns that are shared by many online, helping you reach customers without breaking the bank.
For example, Lush is a company that sells soaps, shampoos and creams. They pride themselves on social responsibility by using environmentally friendly packaging and fighting animal testing. Videos exposing the environmental benefits of their products are shared by people who are passionate about reducing waste. In fact, a video explaining the benefits of their packaging-free shampoo bars on the environment has over 66 million views on Facebook!
4. Boost Employee Morale
A positive workplace culture is vital to attract and retain a great team that shares your values, purpose, and desire to solve a problem. Having socially responsible processes can help you foster passion in your startup culture. CSR helps give your employees a sense of purpose, which can motivate them to work hard to achieve your company’s goals.
Considering the social impact of your operations can also help you attract and retain top talent; 67% of employees believe that CSR is either essential or a strong preference when choosing the right employer. Leverage the positive social impact your startup has to attract and retain high-performing, dedicated employees who will help you achieve your business’ vision.
Take TOMS, for example, a social enterprise that operates on a ‘buy one give one’ model. For every TOMS pair of shoes you buy, it donates one pair of shoes to a person in need. TOMS has many initiatives in place that encourage employees to live out the company’s values. For example, they encourage employees to submit ideas for charitable projects that inspire them. Every month, the company votes on one idea to win and puts $10,000 towards making it happen. These initiatives help create a sense of purpose among employees, building a workplace culture and inspiring them to achieve the company’s goals.
5. Work Towards a More Sustainable Future
Finally, you should consider the ethical benefits of CSR. Businesses play an integral role in creating a sustainable future. As a developing business, you are in a unique position to integrate social responsibility into your core processes and activities.
Whatever your social passion, incorporating environmental and social considerations into your core business processes helps make the world a better place.
CSR is often associated with large, established companies that have stable cash flows and large budgets. However, it is also crucial for startups to consider the social impact of their operations. Not only is it an opportunity to benefit society and build a sustainable future, but CSR may also help you achieve your economic goals. If you have questions, contact LegalVision’s startup lawyers on 1300 544 755 or fill out the form on this page.
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