Mar 9, 2023
How do you measure success on your CSR strategy?
Your CSR strategy shouldn’t be an obstacle to growth for your business – it should accelerate it. Here are the KPIs to put in place for a measurable ROI on your actions.
Measuring the performance of actions taken is crucial for your business. Often seen as a hindrance to the return of investments (ROI) for a company, a CSR policy can actually increase the overall performance of your business, along with helping to reduce your ecological impact.
So, what are the key performance indicators (KPIs) that your business should consider in order to measure its financial performance as well as social and environmental?
You can link CSR strategies and ROI
The overall goal of a business is to create both value and wealth, which CSR strategy fits perfectly into by adding deeper meaning to the day-to-day work. This is not necessarily contradicted by profit margins - quite the opposite. However, many businesspeople and entrepreneurs still consider these investments wasted. According to a study by Civitime (in French), only 54% of businesses state that they think their CSR policy paid off. But even if the ROI is difficult to measure, there are still other quantitative indicators that should become clear in the long term. To reduce one’s environmental impact is also to assure the future of one’s industry or manufacturing.
A CSR strategy should also open new markets and create new revenues for your company. Not only do more and more consumers expect their businesses to be responsible and show it, but investors, banks, contractors, clients, staff, and shareholders also keep a close eye on these values.
The average economic performance differential between the businesses who implement CSR policies and those who don’t is approximately 13%. However, this is just an average number, which is why it’s important to apply KPIs to measure the ROI specifically for your business.
Which KPIs do you need to keep in mind?
To monitor growth, it’s helpful to have an appointed project manager to evaluate and assign actions. Then, the progress made due to actions put in place after establishing a CSR strategy is what is actually measured.
Not all actions will be effective, and you should be prepared to reconsider each point of action, but the most important thing is to be well-versed with your plan while focusing on concrete results.
Good communication on CSR policies is crucial. In the same way a bad reputation can negatively affect the health of your business, you can boost your business positively by communicating in a thoughtful and meaningful way with your employees, clients, and stakeholders, while working together to give value to both your business and society as a whole.
ROIs won’t be the same across industries. Regardless of your strategy, there are four areas to watch out for:
- Cost avoidance
- Increase of productivity
- Risk aversion
- Increase of revenue
You must consider the outgoing cost of each responsible investment that you make. For example, how much will it cost if you change all the regular light bulbs in the office to low-energy bulbs? How much will be saved over a period of several years? For some CSR actions, the cost of initial actions might even be… well, nothing!
Sure, the example of turning off the lights in your offices at night might save you money and not have a great effect on other factors, but with other actions, it’s important to monitor any decrease in sales revenue over time. If there is no decrease, the advantage of change is undeniable for both the business and the employees, as well as the environment since you reduced your carbon footprint by taking action.
Risk aversion could also enhance productivity increases: if you enact a work-from-home policy to empower your employees, you’ll save money on energy costs and office space and allow your employees to regain time in their day (by not commuting), have a better work-life balance and be even more productive. You also reduce the likelihood of sick leave or absences all while saving money.
Develop your employer branding
76% of people born in the 1990s believe that social responsibility is important when choosing an employer (Stepstone).
When developing your brand through your CSR strategy, you’ll notice significant improvements to your business. Your company image defines how your business is seen by others: clients, employees, key players, and other businesses. According to one study by Glassdoor, strong employer branding increases the number of highly qualified applicants by 50%. This is how you give your employees a feel for the business!
Considering the Social Return on Investment (SROI)
Have you heard of SROI? Originally developed in the U.K., it’s starting to take hold more and more in the rest of Europe. It comes from an observation that our actions both create and deplete wealth each day, changing our world at every level. As it is, we tend to analyse our actions only in financial terms while ignoring the real costs - as well as benefits - socially and environmentally. SROI is explained as follows in “A Guide to Social Return on Investment”:
“(…) to reduce inequality and environmental degradation and improve wellbeing by incorporating social, environmental, and economic costs and benefits. SROI measures change in ways that are relevant to the people or organisations that experience or contribute to it. It tells the story of how change is being created by measuring social, environmental, and economic outcomes and uses monetary values to represent them. (…) SROI is about value rather than money. Money is simply a common unit and as such is a useful and widely accepted way of conveying value.”.
Measuring SROIs isn’t less interesting than other KPIs. Your CSR strategy is meant to better align your business with your values, namely a respect for the ecosystems which provide us with vital resources and wellbeing.
The most engaged businesses are the most highly ranked
The businesses considered the most virtuous in terms of CSRs are the most highly ranked, but also those with the lowest default rate, as noted in this French 2019 report. It also shows that, of all the major challenges of CSR, “European businesses of all sizes display, on average, higher scores than other businesses in the rest of the world.”
Labels (e.g. B corp, PME+, etc.) and rating systems (such as the CDP A-List) are widely consulted by investors, so your CSR strategy can bring easy-to-calculate financial gain. Nowadays, employees, like company stakeholders, have become more interested in business affairs, administration, and CSR commitments.
On their side, institutional investors are required to disclose information about their management of climate-related risks and, on a broader scope, about the integration of environmental and social parameters in their investment policy.
EcoTree’s CSR solutions guarantee a ROI
Buying trees in forests managed by EcoTree guarantees a ROI. In fact, the value of a tree increases on average 2% each year. We’ve created the possibility for a business to own trees as assets , while EcoTree retains land ownership and provides forest management.
Your business’ investment in sustainable forest management or ecological rehabilitation with EcoTree is an easy way to garner employees, collaborators, clients, and stakeholders. Some of our clients have even chosen to recommend tree ownership to clients of their own, with intentions beyond inspiring collaboration: sharing their enthusiasm for caring for the planet with others.
EcoTree, a certified B-Corp, creates real value by managing forests in France and Europe. We always favour local partners who work to fight climate change and to preserve biodiversity - the two major global challenges of this century.
Nexans: CSR partner of EcoTree
Nexans is a prime example of a business that’s cemented its relationship with EcoTree. They were motivated to reduce their carbon footprint in their industrial activity and wanted to support sustainable forestry management. The director of Nexan’s Loire location in Andrézieux, France, Merrouane Benrabah, decided to finance a forestry project for his employees in the Sarran Forest, the EcoTree forest located nearest to his business. His action is a local one directed at reducing greenhouse gas emissions and sequestering residual carbon. It allows him to bring his employees to the forest in question to see the actual trees they helped to grow. This project helped reinforce the image of the company for employees who are clearly invested, as well as reinforce employer branding. By buying trees in the Sarran Forest, Merrouane Benrabah created an income for his business. He also created significant energy savings by simultaneously deciding to change the lighting in his factory and reduce water leaks. A successful CSR strategy!
Do you want a hand in strategizing your emission reductions? Contact our team who will help you create a project that fits your needs.