CSR applies to small businesses too

by Elizabeth Start, Policy Development Officer for European Affairs

The first word of the phrase Corporate Social Responsibility suggests it has no relevance to the small businessman and only applies to large companies. But this is a misconception and a recent proposal for legislation from the European Union means that Corporate Social Responsibility (CSR) is increasingly an issue that affects all businesses, whatever their size or sector.

The European Commission would like businesses to produce formal reports on their CSR activities, in the same way that they have to produce annual audited accounts. Fortunately, recent indications from Brussels suggest that this will remain voluntary for small firms. But if the proposed legislation is passed requiring large companies to have CSR reports, one possible consequence is that these large companies insist that their small business suppliers also produce CSR statements, allowing them to claim that they only trade with ethical companies. Small firms may also feel this supply chain pressure when they tender for contracts from local authorities and government, the largest procurers of goods and services.

Many small businesses are already involved with Corporate Social Responsibility but don’t like using the jargon. Small firms are embedded in and serve their local community, they are locally owned, often employ from smaller catchment areas and trade in a smaller radius than their corporate counterparts. So, small businesses that operate in deprived or rural areas are, by their very existence, encouraging regeneration and social inclusion. Moreover they are often engaged in activities that fall under the CSR umbrella without having a formal CSR policy.

If the small business perspective is ignored there is a danger that the European Commission will come up with an over – prescriptive model that does not suit particular markets or business sectors. Corporate Social Responsibility needs to be all embracing but also recognise the diversity of the small business community and its ability to contribute to the CSR agenda.

The move towards compulsory Corporate Social Responsibility audits, reports and formal statements should be abandoned and other methods adopted to promote CSR. For instance the Federation of Small Businesses (FSB) and other UK business organisations have joined forces in the Small Business Consortium to promote CSR. It aims to create a database of best practice and use this to develop alternative schemes to engage small businesses. Sharing best practice and providing guidance to businesses on how to identify and adopt socially and environmentally friendly practices will achieve the same, if not better, results than overburdening small business with yet more regulations.

Elizabeth Start

Policy Development Officer for European Affairs

Federation of Small Businesses

The Federation of Small Businesses is Britain’s biggest business organisation with 180,000 members. It exists to protect and promote the interests of the self employed and all those who run their own business. Further information is at: www.fsb.org.uk.

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie