Investors and consumers partner with businesses that uphold social welfare. The environment and employee welfare are some of the key concerns. PHOTO | DENNISH OCHIENG
What you need to know:
Regulations on employment and environment compel businesses to be more considerate.
A lot of businesses are more conscious of their social impact than was the case before. In the capital era, businesses did not care much about their impact on society. Working conditions were terrible but today businesses have no choice but to be considerate.
This is due to many reasons and the first is to avoid falling out with legal requirements.
There are some regulations like the Employment Act and the Environment Act which compel businesses to be more considerate of the social impacts of their operations.
Investors, consumers and stakeholders are keen to partner with businesses that uphold social welfare. Businesses have to consider the welfare of all their stakeholders including customers and the public at large as the trend is changing fast.
Every business will impact society in a way and it is, therefore, important for your business to assess its impact on society.
In some cases, the operations are imposed by statute such as in the employment laws, consumer laws and environmental laws. Therefore, a business will be compelled to observe the laws that regulate on social impact.
In some industries, the social impact of a business is encouraged by formation of industry best practices and benchmarks. In as much as it is not compulsory to adhere to industry best practices, such compliance will attract investors and stakeholders passionate about social welfare.
Other businesses go a step ahead and formulate policies and regulations on social welfare.
A lot of businesses engage in corporate social responsibility as an assessment of how their existence will impact stakeholders’ welfare.
It is important to streamline such CSR activities. Many larger organisations especially in the manufacturing industry have CSR departments that determine how operations can be best done with the stakeholder interest.
Businesses need to know how to incorporate social enterprise in CSR goals and analyses how your organisation handles such activities.
The first thing to decide on the objectives of your social enterprise. It is important to know the goals and objectives beforehand as this will be relevant in incorporating the enterprise.
The second thing is to decide on the ownership of the enterprise. Your business could own it entirely or it could be co-owned with other stakeholders. It is then important to decide on the best business structure to use for the social enterprise.
Take the simplest structure possible as the CSR activity is not the core object of your business. Trusts are the best form of structure as they are fairly simple to run and also have a high accountability standard imposed on them by trust laws.
Many leading businesses have formed social enterprises in form of trusts and whose main reason is to pursue CSR. In some cases, wealthy individuals are able to form family foundations to pursue social welfare activities.
You do not have to form a large foundation to pursue CSR; sometimes offering some of your services for free can be termed as CSR. For example, in the legal industry, some firms offer pro bono and legal aid services to select persons in giving back to the society.
Almost any type of business can have CSR activities.
