Why should you consider the social dimension of sustainability in your business?

In the contemporary corporate landscape, the concept of Corporate Social Responsibility (CSR) has gained increasing importance and is no longer solely an ethical duty; in fact, it is fundamental in multiple aspects: attracting and retaining talent, Creating shared value with the local community and affirm the reputational value of the brand, now no longer tied exclusively to product characteristics. It totals 2 billion 162 million euros spent by large Italian companies on corporate social responsibility activities in 2021 (Socialis Observatory, 2022), with more than half of the companies surveyed saying they will invest in social responsibility activities. We talked about this in the setting of our Tech Park, during the second meeting dedicated to the ESG theme, to explore precisely the Social dimension of sustainability.

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Sustainability and Responsibility: let’s start from the basics

The event opened with a speech by Marco Palamidessi, partner of Nexta Srl and president of FA.B.R.I. (Family Business Resources for Italy). The term “sustainability” comes from the Latin word“sustinere” – “to sustain, to preserve, to care,” and is at the heart of corporate social responsibility. Entrepreneurs are called to “take responsibility” for the consequences of their decisions by orienting business strategies toward ESG criteria. This integrated approach places the social dimension in close correlation with the environmental and organizational dimensions, emphasizing the importance of human capital as a key lever for value creation.

Human Capital at the Center of Social Responsibility

Human capital, including employees (internal), customers (external), suppliers (external) and the extended community (external), is the most valuable resource for the birth, growth and development of the business. Enhancing these elements is essential for conveying corporate values and contributing to organizational strength over time. ESG criteria, in their integrated meaning, have the function of expanding the social dimension in its active and passive relationship. In this context, concepts such as purpose (why the company exists), vision (where the company sees itself in the future), mission (business, goals, and the approach taken to achieve them), and corporate values (style and behaviors in which the company identifies) take on a key role, orienting the company toward socially responsible and sustainable goals. These 4 elements, if well understood especially by the governing body, make it possible to reduce the risk of Social and Green Washing, since the company’s effort will be directed only toward activities that bring both social and economic benefits. Sustainability is no longer perceived as a parallel activity detached from the core business, but rather as an activity intrinsically linked to economic activity.

As a proof of what has just been stated, in recent years we are witnessing a shift in focus within the social dimension: if before there was an involvement of the employee to demonstrate the social responsibility of the company to the outside world (external stakeholders as the subject of the activity, the employee as the “means”), now the focus and arguments are shifting to personnel management: the employee becomes the subject of the activity. The main topics include:

• Balance between work activity and personal activity;
• child support;
• gender equality;
• flexible employment;
• safe working environment;
• training.

The latter gained special attention in the event’s discussion because it was perceived as a challenge of the future: creating a long-life-learning system within companies.

Value for human capital and value for the enterprise

Investing in social sustainability means generating a positive impact on human capital. Among the social policies introduced by companies, welfare (understood as supplementary services aimed at the employee, e.g., subscriptions and insurance) and well-being (understood as policies for the promotion of people’s mental and physical well-being) appear to be the main policies aimed at employees, while the promotion of volunteer activities That aimed at the community, in an effort to co-create value with the local area. A recent study published by Tiresia, a research center of the Milan Polytechnic, monitored the corporate social dimension nationally and internationally, showing that SMEs that invest in higher welfare generate a better social impact on people, increasing youth and female employment. In addition, the positive impact on people is proportional to the increase in productivity and turnover, achieving twice as much in profits as those who have not invested in welfare. U.S. studies show productivity gains ranging from a “minimum” of 15 percent to a maximum of 30 percent. The explanation given by Elga Corricelli, of LifegateWay is that “when people find ways to make their own valuable contribution, to self-actualize within the reality in which they work, to express their potential, they are automatically a better person.”

Regarding this issue, the most critical barrier to the development of corporate social responsibility lies in the managerial view of the social dimension, which often associates it with a cost rather than an investment that returns in the medium/long term.

Legislation and Regulations: A Guide to Social Responsibility

Corporate social responsibility is supported by an evolving regulatory framework, which involves and will involve about 100,000 companies in Italy. Relevant legislation includes the Corporate Social Responsibility Directive (CSRD), the ESRS regulation and the Corporate Sustainability Due Diligence Directive (CSDD). The latter mainly affects textiles, manufacturing, food processing, construction and mining, forcing them to control their entire value chain. Let’s look at a practical example: let’s imagine a company operating in the fashion industry and contracts the production of a garment to China; the company will have to verify and certify that quality and safety standards are met, with operational and legal costs attached. The relevant aspect of clearer and more uniform rules is precisely the addition of key elements in the choice taken by the company: the savings gained from pursuing practices that have a negative impact on the community are balanced by the cost to be incurred for not taking on corporate social responsibility. Does it then become cheaper to produce in Italy or in a country where high quality and safety standards are not guaranteed? These guidelines require companies to adopt sustainable practices throughout the value chain, incentivizing a responsible and transparent approach to business management.

Toward a Sustainable Future: Business as an Engine of Change

The transformation of businesses into socially responsible entities is a key step toward a sustainable future. Taking a social responsibility approach means not only complying with regulatory obligations, but seizing the opportunity to innovate and create a sustainable competitive advantage. Representing this vision, we had concrete testimonies from two Italian companies through the voices of: Maurizio Zordan, president of Zordan s.r.l. Benefit Company and Paola Santini, Marketing Director and co-owner of Santini SPA. Companies that succeed in integrating ESG principles into their corporate strategy and culture demonstrate that they are not only “good” companies but, more importantly, competitive ones.

We thank our partners-Nexta, Locatelli&Partners, Banca Aletti.