Corporations can reduce environmental pollution, challenge gender pay inequities and resist exploitative labor practices — all of which affect a company’s value and contribute to the health and wealth of the broader community. In business, taking ownership for actions that affect society is known as corporate social responsibility (CSR).
But how can businesses measure their social impact, gain insight into their current practices and predict future outcomes for social responsibility interventions? Business analytics enables companies to collect, process and ultimately use data to drive decision-making through various techniques, including:
- Descriptive modeling to explain the relationships between variables based on past, real-world events
- Predictive modeling to anticipate what may happen next or in the near future, given current data
- Prescriptive modeling to specify the necessary actions required to achieve predicted outcomes, empowering companies to identify an optimal approach to a specific problem
Business analytics can directly contribute to CSR by:
- Establishing a baseline for sustainability performance
- Conducting competitive benchmarking for CSR metrics compared with companies in the same industry
- Collecting and analyzing quantitative and qualitative data using questionnaires and surveys
- Performing multiyear trend analysis to show the change in CSR scores over time
Companies looking to improve their CSR metrics can use data to analyze their social impact — and business analytics empowers companies to do just that.
By leveraging business analyticstechnology, companies can develop socially conscious business strategies that benefit greater society, as well as the organization’s bottom line.
Defining Corporate Social Responsibility
First, what is corporate social responsibility? For businesses, corporate social responsibility entails promoting social good. CSR obligates businesses profiting off society’s resources to pay society back in some way. Today, business analysts track CSR metrics globally — empowering companies with social impact data and providing actionable insights.
Companies have many reasons for caring about CSR. Tracking CSR metrics can empower businesses to manage their risks more efficiently. A company’s reputation hangs on its ability to navigate legal, environmental, financial and social challenges. Also, CSR often encourages resource and energy optimization, which can result in overall cost reductions for companies. For example, reducing the energy needed to power machines through more efficient systems — which benefits the environment — can also lead to a decrease in costs.
Why Does CSR Matter?
Consumers care about CSR. In 2020, the Society for Human Resource Management (SHRM) reported that 78% of Americans wanted companies to address social justice issues, and 87% said they would purchase a product because the manufacturer advocated for an issue the consumer cared about. Organizations that demonstrate transparency and support of various issues can be viewed as industry leaders in a broader sense.
Conversely, companies that fail to assume social responsibility may notice a negative impact on profitability and growth metrics. In the same SHRM survey, 76% of consumers said they would refuse to purchase a company’s product or service if that company supported a practice that promoted social injustice.
CSR Metric Tracking
The Library of Congress compiled a resource guide comparing company CSR profiles and rankings. Some of its sources include:
- Better Business Bureau (BBB), which hosts CSR reviews and forums on sustainability analysis
- Business & Human Rights Resource Center, which tracks company records on human rights and environmental issues
- Corporate Register, which is an online directory of corporate responsibility reports using data from the International Integrated Reporting Council (IIRC)
- Global Reporting Initiative, which collects sustainability reports on companies worldwide
- Reputation Institute’s Global RepTrak, which ranks companies by their environmental social governance (ESG) scores and provides reputation tracking and analysis
- S&P Global Corporate Sustainability Assessment, which annually evaluates over 4,500 companies for sustainability practices using the Dow Jones Sustainability Indices (DJSI)
Using Business Analytics to Advance Corporate Social Responsibility
Business analytics is crucial to corporate social responsibility. Organizations can use analytics tools to examine and understand their impact in various areas. The following are four ways that organizations use business analytics to implement socially responsible business strategies.
Reducing a Company’s Carbon Footprint
Business analytics enables companies to understand their environmental impact. Using smart maps and dashboards generated by geographic information systems (GIS), business analysts can collect and analyze data that help company leaders determine where to innovate and improve their existing infrastructure.
For example, a company may want to conduct a carbon footprint analysis of its buildings to 1) understand its current environmental impact and 2) make a decision about which buildings it should upgrade with energy efficiency measures to maximize for carbon footprint reduction.
Business analysts can harness GIS data to conduct a descriptive analysis of carbon dioxide emissions across all company-owned buildings. The GIS data should include basic information about each building, including the building type, floor area and existing heating/cooling systems so that the geographic information can be combined with the carbon footprint analysis, then visualized on a map.
Further, business analysts can use predictive modeling to estimate the carbon footprint reduction potential of each building, using a combination of GIS data and data that correlates with energy efficiency. For example, a business analyst could select an energy efficiency intervention — such as installing an air-to-air heat pump (AAHP) — then predict the estimated carbon footprint reduction of that intervention in a specific company building over the 25-year life of the AAHP. Business analysts could use the same data, coupled with carbon footprint analysis, to predict the impact of other specific energy efficiency measures, such as installing HVAC systems or adding improvements to the thermal insulation levels.
Identifying Responsible Business Partners
Organizations and their business partners can have far-reaching effects on communities in today’s global, interconnected world.
Business analytics can help organizations evaluate their business partners and identify potential allies in achieving socially responsible goals. For example, business analytics can produce metric comparisons of a potential business partner’s:
- Environmental impact
- Gender equity achievements
- Sustainable business practices
- Social impact (e.g., donations and volunteer work with community groups)
Together, business partners may be able to effect more social change than a single business alone. For example, a tech company could partner with a veterans hospital to provide increased funding and vocational support for veterans with disabilities.
Calculating Growth Areas
How can a business identify how it can do better with respect to social issues? To properly assess its growth areas, organizations need data on social impact.
That’s where business analytics come in. Companies that use business analytics tools can conduct internal research to determine which issues are most pressing — either to its customers, its employees or both — and which initiatives might yield the highest return on investment (ROI).
For example, a company may want to understand the influence of its CSR initiatives on reputation and brand awareness. Business analysts, using descriptive analysis tools, can identify and measure potential metrics related to the social awareness of a company before and after a CSR initiative. These metrics include:
- Number of social media engagements related to CSR
- Number of placements in CSR indices
- Number of CSR-related media placements
- Number of public awards or recognitions since the start of a CSR inititative
Analyzing the amount of media engagements, interactions, placements and/or awards can help companies assess the reputational effect of their CSR projects.
Ensuring Responsible Working Conditions and Fair Wages
Business analytics can be used to ensure fair conditions for workers by keeping tabs on:
- How many hours employees work
- How consistently teams achieve the goals their leaders set for them
- What additional resources employees need to do their best work, including further training, equipment or improved staffing
Business analytics tools, such as PeopleTicker and RatePoint, can also be used to compare workers’ wages with industry standards and costs of living in specific geographic locations. Remote workers living in more expensive urban areas may require higher compensation compared with workers in rural areas where the cost of living is lower, for example. Additional resources such as the U.S. Bureau of Labor Statistics (BLS) and Payscale can also aid in compensation decisions.
Socially conscious companies may strive to pay all workers in the same role equally — and thus may need to raise wages. When workers feel adequately compensated and respected, they tend to stay at their jobs longer and show greater pride in their work, which can positively impact the quality of the products they make or the services they provide.
While paying employees equitably may add to payroll costs, it also contributes to lower turnover. Hiring and training employees is expensive. According to Enrich, when a company loses an employee to attrition, it costs an average of 6 to 9 months’ worth of that employee’s salary to replace them.
4 Types of Corporate Social Responsibility
These approaches to corporate social responsibility have distinct goals and can impact an organization’s business metrics and customer relations. Analytics can play a role in helping organizations identify opportunities to make a positive impact.. While there are numerous types of corporate social responsibility, they generally fall into one of the following domains.
Environmental Corporate Social Responsibility
Consumers care a great deal about sustainability. By harnessing business analytics tools — such as carbon footprint metrics and closed system designs — companies can deliver products in more efficient, creative and environmentally friendly ways.
For example, textile production of denim historically created harmful pollutants and an enormous amount of water waste. Using business analytics, denim manufacturers can gain insights into how much material they use, how much waste they produce and how expensive it could be to change their processes — potentially leading to a more efficiently made, environmentally friendly product.
Also, denim manufacturers that use recycled or upcycled denim may have an edge over manufacturers that fail to innovate.
Inclusive Corporate Social Responsibility
Diversity and inclusion are corporate aims — in large part because companies recognize that talent and innovation thrive in inclusive environments.
Business analytics can tap into company hiring and firing practices, giving corporate leaders insight into ways their organizations can do better to support people from all backgrounds.
“Employee expectations have gone up,” human resources expert and author David Green recently told McKinsey & Company.
When asked why business analytics are important for understanding attrition, Green reflected: “[Analytics] can help organizations understand if they actually have a problem with attrition and, if so, where, what job families, what locations?”
Volunteerism and Corporate Social Responsibility
Corporate volunteerism is when companies support social causes. Businesses can do this by giving employees resources and incentives to volunteer, such as paid time off (PTO).
Businesses can support volunteerism in many different ways, such as paying for workers to participate in a walk to raise money for Parkinson’s research or offering PTO for employees to participate in companywide efforts to clean up a local park.
Why do business analytics matter for volunteerism? Business analysts can conduct internal investigations to learn about:
- Employee satisfaction among those who participate in volunteer initiatives
- Employee pride regarding a company’s involvement in volunteerism projects
- Employee excitement or enthusiasm for future CSR initiatives (which can help companies choose which CSR volunteer projects to try next)
Additionally, business analytics can inform a company about the efficacy of its volunteer efforts. The number of people reached and the number of projects completed through corporate volunteer efforts are quantitative metrics that business analysts can measure and report.
Organizations do not want to invest time and efforts in vain; analytics can provide a “reality check” on current efforts and give companies much-needed info about whether to change efforts or stay the course.
Philanthropic Corporate Social Responsibility
Another major way that organizations can promote corporate social responsibility is through philanthropy.
Similar to its role in supporting effective and efficient volunteerism, business analytics can enable companies to conduct philanthropic work that provides targeted support for populations and causes that companies care about.
Business analysts can support philanthropic CSR initiatives by:
- Assessing the business impact of philanthropic activities (based on types of donations given and value of assets donated)
- Studying trends in employee donations over time (to indirectly measure employee interest and pride in philanthropic projects)
- Visualizing philanthropic data in an understandable form for employees, shareholders and corporate leaders
Plus, companies can support social causes best when they can determine how their philanthropic donations actually impact target groups. Business analysts can partner with community organizations and nonprofit organizations to learn where their philanthropic donations are going and what the recipient organizations are doing with their funds.
A Look at Some Corporate Social Responsibility Examples
Some CSR initiatives have been famously successful. Coca-Cola, Visa and Lego, for example, have integrated social responsibility practices into their business strategies. These examples of corporate social responsibility demonstrate the value business analytics can provide to organizations seeking to implement more socially conscious strategies.
Coca-Cola faced serious allegations of environmental degradation through its use of plastic bottles. As early as 1991, the company shifted to recyclable materials. Some of the key principles of Coca-Cola’s CSR approach today include:
- Reducing plastic packaging
- Minimizing its carbon footprint
- Replenishing water sources and encouraging healthy watersheds
- Minimizing waste
Coca-Cola uses business analysis to set and measure progress toward its recycling goals. In its 2021 Business and Environmental, Social and Governance (ESG) Impact Report, Coca-Cola aimed to make 100% of its packaging recyclable globally by 2025 (and reported that it is already 90% there).
The company also reported it avoided around half a million tons of virgin plastics through renewable material efforts in 2021. From there, Coca-Cola predicts it can reach a goal of reducing its use of virgin plastic derived from non-renewable resources by 3 million metric tons by 2025.
The lesson to learn from Coca-Cola? Business analysts can supply corporate leaders with concrete facts and figures regarding where a company currently stands on these environmental issues, where a company’s growth points are and what efforts are actually working. Leaders can use these benchmarks to set achievable sustainability goals.
In 2020, Visa responded to urgent calls for racial and social justice by setting goals to diversify its workforce. “We are on a journey to be completely inclusive and diverse,” Visa expressed in its 2020 Corporate Responsibility and Sustainability Report. “While we have made progress, we recognize there is more to do.”
Visa says it will use business analytics to “hold [itself] accountable and track progress” on improving inclusion and increasing diversity in the coming years.To achieve this aim, the company implemented a three-pronged effort to encourage racial and social equity within its organization and in the community. Some of its specific social justice commitments include:
- Increasing the number of individuals from underrepresented groups at the VP level and above in the U.S. by 50% by 2023
- Increasing the number of “underrepresented Visa colleagues” in the U.S. by 50% by 2025
- Offering double-matching of employee donations to organizations that support racial justice, including the NAACP Legal Defense and Educational Fund and the ACLU Foundation
What others can learn from Visa is to set specific, measurable CSR goals which business analysts can use to track progress over time.
Lego Group takes sustainability seriously and has committed to reducing its carbon footprint by improving its operations. The business is investing billions to build carbon-neutral factories driven by solar energy. The sites will minimize energy consumption and reduce the use of nonrenewable resources.
In addition to building more environmentally friendly facilities in the future, Lego is investing in renewable technologies in its existing operations. According to its 2021 Sustainability Progress report, the Lego Group took the following actions:
- Installed 20,682 new solar panels at factories globally (marking a 98% increase in solar panel capacity companywide)
- Reduced its facilities’ water consumption by 8.8% and set a new goal of reducing water usage by a total of 10% by the end of 2022 (compared with its 2019 baseline)
- Reduced landfill waste by 70% compared with 2020 and reported on its progress toward its zero-waste goal (eliminating all landfilled waste from LEGO factories, offices or stores by 2025)
LEGO Group’s data-driven approach to environmental efficiency is an inspiration for companies looking to use business analytics to revamp their operations toward greater sustainability.
Business analytics can also reveal whether a company’s CSR efforts are positively affecting its reputation. According to RepTrak, a third-party company that conducts reputation analyses, the LEGO Group is one of only two companies to consistently rank among the top 10 most reputable companies.
Answer the Call to Do Good
Corporate social responsibility can encourage win-win situations between companies and the communities they operate in. It can promote resource reduction and therefore reduce material costs as products and operations become more efficient.
Also, customers and shareholders care about company reputations regarding social responsibility issues, including environmental impact and workforce diversity, so improving CSR metrics can lead to improved sales and a stronger company valuation. As a result, corporate social responsibility is critical to a company’s success.
But to know where they stand on CSR issues, companies need to understand their own data. Business analysts play the key role of collecting, interpreting and presenting CSR data to drive corporate decision-making. Businesses use their data to set benchmarks for social responsibility metrics. They track a company’s progress toward its aims and help companies set new, measurable CSR goals. In this way, business analytics plays a critical role in helping organizations advance socially and environmentally responsible business practices.
Interested in using business analytics to promote social change? Explore UNR’s online Master of Science in Business Analytics program, where students learn cutting-edge applications of business analytics tools. Take the next step in your business career today.
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