Academic commentary on the Indicative Baseline Assessment of Corporate Social Responsibility in Ireland, Research Matters Ltd, 2017

Dr Annmarie Ryan, Kemmy Business School, University of Limerick
Dr Sheila Killian, Kemmy Business School, University of Limerick
Dr Roisin Lyons, DCU Business School, Dublin City University
Dr Blath McGeough, IT Tallaght
May 2018

Irish companies engage in CSR to meet customer and employee needs, increase product/service/venture sustainability, encourage ethical decision-making, raise customer confidence, increase brand value and reduce their environmental impact (NSA, 2014), with the most important drivers including company reputation, attracting prospective employees and employee engagement (McGeough (2018). Encouragingly, 80% of respondents to the baseline survey view CSR as either “very important” or “moderately important”. This significant figure indicates a readiness among Irish businesses to engage in CSR. However, Ireland still lags in international studies on CSR, being placed 16th of 20 (Gjølberg, 2009), and more recently 18th of 37 developed countries (Skouloudis et al., 2016). This could indicate an under-representation of companies active in CSR relative to the size of the economy, or alternatively may be driven by the fact that a majority of companies in Ireland are SMEs, a cohort often excluded from such international examinations.

The baseline survey shows healthy levels of engagement in community-based CSR activity in Ireland, with 83% of businesses reporting engagement in some form of sponsorship and philanthropy. Such engagements have both internal and external benefits. Internal outcomes include increased staff morale, teambuilding and leadership skills development, particularly when staff are enabled to volunteer and hone their skills and expertise in their local community. External benefits include enhanced local visibility and reputation (enhancing the “licence to operate” granted by the community, investors and policy-makers as well as attracting employees) and a direct spillover to recipient organizations. Commercial sponsorships may have a more ‘market’ focus, where the key target is customers and potential customers. Studies show that taking a relational approach to community engagements can enhance the overall effectiveness of these activities, making them part of a strategic action, rather than ad hoc or once off donations, while smaller firms tend to donate in a less strategic way (see Ryan et al, 2010).

Research shows that workplace initiatives deliver an immediate bottom-line benefit to companies in the form of more motivated, diverse and engaged employees. In turn, this delivers greater employee loyalty, lower employee turnover, high productivity, increase innovation, enhanced company reputation, a wider employee pool and enhanced stakeholder relations. Compliance with workplace regulation is at a high level, and there are pockets of excellent practice particularly around diversity and work-life balance. However, wide variation persists in the level of engagement with health and wellbeing initiatives, with only 15% of micro businesses reporting activities in this area compared to 81% in businesses with over 250 employees. It is clear that smaller businesses need specific supports to enable them to engage in workplace CSR initiatives.

The baseline study shows that between 16% and 40% of businesses have practices related to environmental protection. Worryingly however, only 5-9% aim to initiate new practices within the next five years. Environmental issues are highly regulated in comparison to other pillars of CSR, so many companies may see environmental initiatives as compliance-driven. This could account for both the high priority placed on environmental management and the low level of ambition to initiate new practices. This risks missing significant business opportunities in innovating ecologically responsible products and services as a source of differentiation in the marketplace. Moving forward, aspects such as responsible supply chain policies and environmental awareness training or evaluation tools may foster a stewardship perspective on the environment.

The European Commission report on Responsible Entrepreneurship identifies “marketplace” as one of the least understood areas of corporate responsibility. However, due to its embeddedness in the day-to-day operations of the company, it is a pivotal CSR area for SMEs. The approach SMEs take in sourcing raw materials, engaging in supplier or customer relationships, marketing, advertising, pricing and distribution all reflect their commitment to responsible business practice. The baseline study suggests that small businesses identify lower proportions of CSR marketplace activity, although maintaining good customer relationships was noted as a top priority for all. This echoes findings in Killian (2012) that smaller firms do not always recognize their own best practices as CSR. Research suggests that developing trust-based, mutually beneficial relationships with key business partners facilitates SME implementation of CSR programmes, delivering customer and supplier loyalty, increased stability in the business environment, and relationships as a source of innovation and learning.

Key issues in the development of CSR practices in Irish SMEs include taking a strategic and holistic approach to CSR that recognizes existing good practice, engaging with measurement and reporting, and articulating the marketplace benefits of being regarded as a responsible enterprise. Research shows awareness of the benefits of CSR can drive more activity than knowledge of the concept itself (Chatzoglou et al., 2017). There may be a gap between the language of a CSR plan and the reality of business practice (Kearns, 2017) which can lead to companies not recognizing their own engagement, and so not prioritizing CSR in order to reap the benefits of strategic engagement under all four pillars.

Chatzoglou, P., Chatzoudes, D., Amarantou, V. and Aggelidis, V. (2017) "Examining the antecedents and the effects of CSR implementation: an explanatory study", EuroMed Journal of Business, 12(2), 189-206

Department of Jobs, Enterprise and Innovation (2017) “Towards Responsible Business: The 2nd National Plan on CSR 2017-2020”, Dublin: Government Publication.

Gjølberg, M. (2009) “Measuring the immeasurable? Constructing an index of CSR practices and CSR performance in 20 countries”, Scandinavian Journal of Management, 25(21), 0-22.

Kearns, A.J. (2017) “Rebuilding Trust: Ireland’s CSR Plan in the Light of Caritas in Veritate”. Journal of Business Ethics, 146 (4), 845-857.

Killian, S. (2012) “Corporate Social Responsibility: A Guide, with Irish Experiences”. Chartered Accountants Ireland, Dublin.

McGeough (2018) “Measuring the results of Corporate Social Responsibility: unmasking the gap (if any) between theory and practice”, paper at the British Academy of Management Conference, September 2018.

National Standards Authority of Ireland (2014) “CSR Survey Survey on Social Responsibility practices in Ireland”. NSAI., Dublin.

Ryan, A., O'Malley, L. and O'Dwyer, M., 2010. Responsible business practice: re-framing CSR for effective SME engagement. European Journal of International Management, 4(3), pp.290-302.

Skouloudis, A., Isaac, D., & Evaggelinos, K. (2016). Revisiting the national corporate social responsibility index. International Journal of Sustainable Development & World Ecology, 23(1), 61-70.

Indicative Baseline Assessment of Corporate Social Responsibility in Ireland, Research Matters Ltd, 2017