Why CSR For Startups?

Corporate (Social) Sustainability is good for every business, every organization, applicable in all industries, in all countries and at all levels of business. In this article you will get a status quo on sustainability and a few suggestions on how you can make your company fit for the future – from the very beginning on.

The European Commission regards CSR as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.

The fact that CSR is the integration of social and environmental concerns within business operations means that CSR is not just a philanthropy. The emphasis is being laid on how enterprises are doing their daily work: How they treat their employees, how they produce goods, how they market them, and so on. CSR is not charity. It is more about how organizations actually do their business. Interaction with stakeholders is a crucial aspect of CSR, though. Effective CSR requires dialogue and partnership with stakeholders such as trade unions, public authorities, non-governmental organizations and business representative organizations. By describing CSR as voluntary, this definition implies that CSR relates to what enterprises can do in the social and environmental fields over and above what they are required to do by law.

CSR is Charity. Not!

CSR is a very wideranging concept. Environmental, social and economic questions should stay on the 1st level of every project, every concept and every business-plan. At least, companies are interested in avoiding troubles with NGO’s, politics or law. But CSR should be transparent and clearly reported. Therefore GRI Reporting standards are recommendable.

Why CSR for Startups?

But why is CSR recommended exactly for startups? First, because it makes sense to introduce CSR standards right at the beginning of business activities. For many medium and large companies it is difficult to integrate CSR strategies in already grown and established structures. Second, startups can avoid risks already from the beginning on and the high attention on sustainability provides an opportunity to the demands of the market.

The German Federal Ministry of Labour and Social Affairs says, that conducting business with foresight, dealing fairly with employees, assuming responsibility for society and the environment ‒ these are the cornerstones of CSR. It’s not the “icing on the cake” that companies allow themselves because it is fashionable. Rather, it’s a cornerstone of a socially-responsible market economy. Civic involvement on the part of business ‒ corporate citizenship ‒ strengthens the economy and society. So, CSR is worth everyone’s while. Businesses can use CSR to shape their environment in positive ways. Avoiding risks and creating opportunities ‒ in this way, CSR becomes a part of business strategy and a strong added value for trade and industry when competing in international markets.

The European Commission for Enterprise and Industry now published a so called Green Action Plan (GAP) for SME’s. A GAP for SMEs proposes to exploit the business opportunities that the transition to a green economy offers, by improving productivity and driving down costs in European SMEs through resource efficiency, by supporting green entrepreneurship and by exploiting and developing Europe’s leadership in green processes and technologies. GAP sets out a series of objectives and corresponding actions which can be grouped in five sections:

1. Greening SMEs for more competitiveness and sustainability

Improving resource efficiency in SMEs offers enormous potential for the reduction of production costs and for productivity gains. A better use of resources is calculated to represent an overall savings potential of €630 billion per year for the European industry.

2. Green entrepreneurship for the companies of the future

Preventing environmental damage and moving towards a low carbon economy is a societal challenge which also offers new business opportunities for enterprises that bring green products and services to the market. SMEs need a favourable business environment in which green ideas can be easily developed, financed and brought to the market.

3. Opportunities for SMEs in a greener value chain

Re-manufacturing, repair, maintenance, recycling and eco-design have a great potential to become drivers of economic growth and job creation while making a significant contribution to addressing environmental challenges. SMEs and entrepreneurs need a supportive environment to move towards a circular economy.

4. Access to the markets for green SMEs

The EU’s international commitments in areas such as climate change cooperation or neighbourhood policies offer concrete scope for European SMEs with green expertise to gain access to new markets. However, 87% of European SMEs sell their green technologies, products or services only in national markets. A more supportive framework and more international cooperation are required in order to help SMEs successfully integrate into global value chains.

5. Governance

The Green Action Plan for SMEs has been widely supported by EU Member State administrations and SME stakeholders in consultations on the future of SME policy and in meetings with the Network of SME Envoys and business organisations. It is therefore important to implement the GAP thoroughly, so as to ensure an impact across Europe for the benefit of SMEs.

What’s next?

We look forward to a stimulating discussion on this blog. My next articles are about how to run a sustainable startup and we will have a look on some examples.

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