Small to medium enterprises (SMEs) can derive a significant competitive advantage provided they can better demonstrate their credentials in responsible business practice. The role of the SMEs in the economic development is very significant that is reflected in the sector contribution to the GDP, employment and exports of any country. However, in the face of various challenges faced by SMEs, it is imperative to promote this sector for inclusive growth of the region and nation at large by improving operation efficiency, resource optimization and compliance leading in terms of economic, environmental and social performance(Triple-Bottom-Line- Approach). Therefore, SMEs should be encouraged to adopt the CSR practices.
Responsible business practice is the recognition of and response to the interconnectedness and interdependence of business within our world of which the global financial crisis and climate change are consequences.
Responsible Business (RB) and corporate social responsibility (CSR) has focused on large companies to date. Although CSR is mainly discussed in the context of larger enterprises, it also is a strategic tool to enhance the competitiveness of SMEs. Especially, after the impact of the global financial crisis, climate change, increased consumer awareness, supply chain pressures, changing societal values etc. Now SMEs are giving much needed importance on business reputation, attraction of skilled workers and the increasing regulatory framework.
CSR has various dimensions encompassing all stakeholders that are directly and indirectly related with the business and the local environment in which it operates. The elements of the CSR cal be classified into following dimensions:
Environmental - the direct or indirect impact of the business operations, their products and services including that of suppliers on the local environmental and globally at large.
Community/Social - the impact of an organisation’s operations, projects, products, services or investments on the community at a local or global level.
Workplace Practices - including human rights issues, respectful treatment of employees, diversity and equal opportunity, work/life balance, professional development and progression, managing redundancies and full entitlement to employment rights.
Marketplace & Business Conduct – responsible behaviour in developing or producing, purchasing, selling and marketing products and services that are safe and reliable.
Ethical Governance - from board level and throughout an organisation: transparency; risk management; due diligence; effective codes of conduct and ethics.
Implementation CSR is the voluntary decision of the owner or the company.
The various activities that can be undertaken while implementing CSR practices under the different dimensions are as follows:
Environment: Company may begin with an efficient use of resources, reduction of waste and pollution levels, designing environment friendly products, defining environment policy, ensuring regional and national compliances. Company may also apply an “ecologic assessment” on the suppliers that help understand the environmental standards followed by the supplier. Also by informing business partners, customers or the society on environmental issues and resolving them through collaborative efforts.
Society/community: The activities under this dimension entails activities like improvement of the local infrastructure (like roads, parks etc), cash or in-kind donations to local community institutions (like schools, hospitals, cultural organisations, etc.), labour market integration at community level, support to society in the development issues (like poverty, unemployment, education, health etc.)
Work place: This is the dimension a company may start with in order to fulfil their commitment for responsible business. The activities includes improving working conditions at work place (incl. health and safety at work) and job satisfaction, allowing work/life balance, equal opportunities and diversity, training and staff development, communication/information of employees and participation in company decisions, responsible and fair remuneration or financial support of employees (e.g. pension systems, interest-free loans)
Marketplace & Business Conduct: Activities may include improving quality or safety of products, provision of voluntary services to the clients, fair pricing, ethical advertising, on time payment to suppliers or business partners, contracting local partners in supply chain and deriving standards in the supply chain.
Ethical Governance: In SMEs, the existing values and principles of the company are generally a reflection of the values of the owner/manager. Therefore companies may define their values into a code of conduct, a statement of good business practice or even a set of simple rules articulating the company’s vision, values, responsibilities and ambitions. This may be followed by effective communication and dialogue with all internal and external stakeholders.
There is an array of global standards/ declaration/ guidelines available to strengthen stakeholder dialogue and the sharing best practices that include: