Corporate Social Responsibility For Businesses in Singapore
Whether you are a business owner, an employer or an employee, you may have come across the term ‘Corporate Social Responsibility’ (CSR). This may be in light of companies coming under scrutiny and receiving backlash for socio-environmental scandals, including issues about waste production, dangerous chemical use, child labour, and poor working conditions, just to name a few.
As companies have the potential to cause significant impacts on our environment and society, particularly with mass production, more emphasis is being placed on companies to be socially and environmentally conscious and responsible. Implementing CSR can be a business’ way of giving back to society and doing its part to protect its stakeholders and the environment.
This article will elaborate on what CSR is and what CSR practices your business can implement. It will cover:
What is Corporate Social Responsibility?
CSR is a management concept applied internationally and is an umbrella term for corporations’ various efforts to promote social economic and environmental change.
Simply put, CSR is a self-regulating model a company can put in place to ensure that its economic growth is beneficial to society and minimises its impact on the planet. The principle behind this is that for an organisation to be sustainable, it must be financially secure, minimise (or ideally eliminate) its negative environmental impacts and act in conformity with societal expectations.
What does Corporate Social Responsibility Entail?
A company may practise CSR through initiatives and instil practices that are socially and environmentally responsible. CSR is traditionally broken into four categories:
1) Environmental impact
This entails being conscious of the environment, producing less waste and reducing negative environmental impacts caused by your company. Practices your business can consider include reducing the use of plastic packaging and implementing measures to reduce the production of greenhouse gases in the manufacturing process.
2) Ethical responsibility
Your company should provide safe working conditions and abide by ethical labour standards, complying with the requisite legal requirements. For example, it is recommended that employees work up to 8 hours a day (or 44 hours a week), if working 5 days (or more) a week. If your employee is required to work overtime, they should be compensated.
3) Philanthropic endeavours
Dedicating a portion of your company’s earnings to charity or a cause is a common CSR practice. There are charities that also welcome corporate sponsorship and team volunteering. You may find such opportunities on Giving.sg, a one-stop platform in Singapore for companies to donate to registered charities and is backed by the Ministry of Culture, Community & Youth.
4) Financial responsibilities
This refers to businesses having a practice of making financial decisions based on a commitment to doing good. For example, your company can consider directing current or future investments to alternative energy sources, education and community support groups.
Other key issues include social equity, gender balance, upholding human rights and anti-corruption measures. Promoting diversity by establishing an inclusive hiring practice and embracing different cultures and backgrounds is also part of CSR and practises your company should consider implementing.
Examples of Corporate Social Responsibility Practices
CSR initiatives that have been implemented by Singapore companies include:
- Promoting inclusiveness by making technology accessible and easy to use for the elderly
- Creating jobs for the disabled
- Encouraging volunteerism by giving employees paid time off to volunteer
- No single-use plastic in their efforts to be environmentally conscious
- Donating meals to non-profit organisations
Benefits of Corporate Social Responsibility
Implementing CSR practices is an opportunity for your business to establish itself as a responsible business. Increasingly, investors and consumers prefer to support businesses that have responsible policies and ethical practices. This is especially with regard to environmental impacts as well as labour standards.
With climate change becoming a pressing issue in today’s world, investors and consumers are becoming more conscious of not supporting brands that disregard its impact on the environment. As such, they tend to support businesses that are environmentally and socially conscious.
Companies may additionally find that they are able to save on costs by being environmentally conscious when reducing resource use, waste and emissions. They may also find that it would be easier to recruit and retain talented staff, with better employment policies and working standards. Employees may be more motivated to stay in a company if the company’s goals and values to be environmentally and socially conscious align with their personal ones.
Corporate Social Responsibility vs Environmental, Social & Governance
Environmental, Social & Governance (ESG) refers to a set of standards for a company’s behaviour to help socially conscious investors and consumers understand a company’s practices and values in deciding potential investments.
The standards for CSR and ESG have the same genesis – the adoption of practices and policies by corporations that are intended to have a positive influence on the world. Both terms relate to the social responsibilities of businesses. While CSR holds businesses accountable for their social commitments in a qualitative manner, ESG builds on CSR to establish a concrete set of numbers to help measure or quantify such social efforts.
In particular, ESG provides quantifiable indicators to measure accountability. It applies numerical figures as to how companies treat their staff, manage supply chains, respond to climate change, increase diversity and inclusion, and build community links.
On the other hand, CSR refers to the variety of internal practices your company can employ and are non-exhaustive. Using the quantifiable indicators under ESG to disclose your company’s sustainability practices and ratings can be considered a CSR practice to ensure transparency with regard to your company’s sustainability rating.
Must Singapore Companies Implement Corporate Social Responsibility Practices?
There is no statute mandating Singapore businesses to implement CSR practices. However, from 2023, all SGX-listed companies are required to prepare sustainability reports of ESG factors. Listing Rule 711A of the SGX Rulebook requires every SGX-listed company to prepare an annual sustainability report, which must describe their sustainability practices with reference to the primary components on a ‘comply or explain’ basis.
SGX-listed companies admitted to the Exchange’s Official List must comply with the listing rules. Failure to do so may subject your company to disciplinary proceedings.
The rationale for mandating sustainability reports of ESG factors is to allow stakeholders to better assess the company’s financial prospects and quality of management.
While there is no such requirement for companies that are not listed on the SGX (non-listed companies), this requirement of ESG sustainability reporting indicates that it is increasingly important for stakeholders to be aware of companies’ policies and commitment to be environmentally and socially conscious. Hence, non-listed companies should still practise CSR in their own ways to communicate their commitment to being environmentally and socially conscious to their stakeholders.
Components of the sustainability report
Generally, the sustainability report requires each company to disclose and determine;
- The ESG factors material to your company’s business
- Climate-related disclosures like current policies related to climate-related issues your company implements
- Policies and targets for the forthcoming year in relation to each material ESG factor identified
- The sustainability reporting framework that your company employs
- Board statement and associated governance structure for sustainability practices to pledge the company’s commitment to manage and monitor sustainability issues
Do note that SGX will be implementing a phased approach to this mandatory sustainability report.
Please refer to SGX’s website for details on the components of the sustainability reporting as well as the requirements your company should comply with according to which industry your company is in.
Should I still implement Corporate Social Responsibility practices if I have to comply with the Sustainability Reporting?
While Sustainability Reporting of ESG factors may be seen as an aspect of CSR, it mainly discloses a company’s current practices and targets, and does not mandate that the company has to implement specific initiatives. Nevertheless, your company is still encouraged to implement CSR practices. Good CSR practices engender sustainable business practices. There are many ways a company can implement CSR practices.
For example, local company Carousell promotes the spirit of inclusiveness by introducing the online marketplace to the elderly and actively sharing tips on how to be safe online. EZ-Link, the first large-scale contactless payment system for Singapore’s public transit network, introduced meaningful community initiatives to help the less privileged in our community through its Passion Cares! Fund, helping 5,000 low-income families.
As mentioned above, there are also many benefits to implementing CSR practices for a business. With more consumers and investors recognising the importance of being environmentally and socially responsible, showing that your company is committed to doing its part for the environment and society may increase support for your business. This may help your company build a reputation as a responsible business, which can in turn lead to a competitive advantage and instil public trust. Ultimately, this can help increase your company’s revenue.
By reducing the use of resources, waste and material expenses will similarly be reduced. Further, by protecting and recognising the rights of your employees, they will be able to work under optimal conditions which may in turn increase productivity and reduce turn-overs.
Finally, there are government initiatives companies can apply to be part of that promote inclusivity and community. Companies may apply to get funding for CSR initiatives, for example, workplace integration efforts. Such initiatives may be found here.
There are many benefits to implementing CSR practices in your company. CSR initiatives are generally encouraged and can help people see your company as a positive force in society. Listed companies should note the mandatory sustainability reporting requirements, and the additional requirements that may apply to their specific sector.
If you require further advice on complying with sustainability reporting obligations, do consult a regulatory compliance lawyer for further assistance. A Singapore corporate secretarial services firm would also be able to provide general advice on implementing CSR practices that will be suitable for your company.
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