What is corporate citizenship?

Broadly speaking, corporate citizenship is about doing the right thing. For businesses, that extends beyond merely turning a profit and promotes a deeper sense of purpose that focuses on social, environmental, and ethical responsibility. Think of it as a happy medium between driving business success and helping the community. 

In practice, that can translate to a myriad of initiatives, like charity work or switching to renewable energy sources. Essentially, it’s about giving something back and, in turn, strengthening your organisation.

In this blog, we explain corporate citizenship in detail and explore why it’s important for businesses to embrace it. We also examine the benefits of corporate citizenship for small businesses.

What is corporate citizenship?

Corporate citizenship is an umbrella term for a company’s social, environmental, and ethical responsibilities. In other words, it’s about being a good citizen who adopts positive policies to benefit the internal organisation as well as the wider community.

As well as individual actions you take, corporate citizenship stresses the importance of reporting your activities and being transparent about your values, goals, progress, and policies. Some organisations issue dedicated corporate citizenship reports, some publish trust badges that represent their achievements, and some integrate their ethical beliefs into their marketing campaigns, for example. 

In addition, practising corporate citizenship is a group effort, a shared success. As opposed to a business prioritising shareholder profits, it’s more concerned about stakeholder engagement. This means that clients, employees, suppliers, investors, and anyone else who has an interest in your company should strategically work together to integrate positive measures into the business mission, thus strengthening the organisation for the long term. 

Examples

There are many ways that you can practice corporate citizenship in the workplace. It’s not about doing everything, but rather committing to to a good cause that personally matters to your business and drives its success. Here are some examples of what corporate citizenship can look like:

• Using renewable energy
• Reducing waste
• Adopting clean technologies
• Using sustainable ingredients
• Building an inclusive, diverse, and gender-balanced workforce
• Looking after your employees’ well-being
• Developing a company culture that promotes corporate citizenship
• Encouraging staff to support a good cause outside of work 
• Supporting local charities and encouraging staff to participate in volunteering
• Working with ethical and sustainable suppliers
• Collaborating with and supporting other businesses that practice corporate citizenship
• Running internal fundraising events
• Securing certifications and awards that represent your corporate citizenship activities
• Running thorough impact assessments regularly to identify improvement opportunities
• Fostering transparency and accountability for corporate citizenship

No matter your company size, there’s always something you can do to embrace corporate citizenship. For a small business, resources are generally limited, especially funds, but there are plenty of ways to get involved.

Why it matters

Now more than ever, people are paying close attention to companies’ ethical practices before choosing to work or shop with them. Especially since the pandemic, there’s magnified attention on the social, economic, and environmental challenges the world faces, and more and more people are not only taking action themselves but shaping their decisions around their moral stances.

Take Deloitte’s 2023 Sustainable Consumer study, for instance. It found a significant increase in the number of consumers adopting more sustainable behaviours. These behaviours very much feed into their purchase decisions, meaning they actively search for responsible and biodiverse brands. 

Crucially, the study also found that a quarter of shoppers are willing to pay more for sustainable products and packaging, and will choose suppliers who commit to ethical working practices over those that don’t. 

It’s no different for employees. There’s no doubt that their salaries are important to them, but workers tend to be more ethically driven nowadays.

Blue Beyond Consulting discovered that more than half of workers are willing to quit their jobs if company values don’t align with their own. In addition, nearly 80% expect their employer to be a force for good in society. 

But that’s not all. If you’re a small business owner seeking funding, you should know that environmental, social, and governance (ESG) investing is on the rise – and has been for some time. That’s right, investors care more about where their money is going. One poll found that over half of investors had planned to make a sustainable investment this year, showcasing a “fundamental shift” in lenders’ mindsets. 

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Just from these few examples, it’s clear just how important corporate citizenship is and that it can affect your business from every angle. Your customers, staff, and financial backers are just some of the groups expecting you to do your bit for society. 

With that in mind, we must address the fact that, as a business leader, you are in a powerful position to drive genuine change and encourage others to follow in your footsteps. And by practising corporate citizenship, you’re not sacrificing your company’s success to achieve this. This holistic approach allows you to look after your business while running a sustainable, positive, and responsible company that inspires outsiders. 

Corporate citizenship vs corporate social responsibility

The term ‘corporate citizenship’ is often used synonymously with ‘corporate social responsibility’ (CSR). While both terms are ethically conscious, they have some distinct differences.

CSR can be considered a stepping stone towards corporate citizenship. It’s more about companies meeting their legal obligations regarding social responsibility. Meanwhile, corporate citizenship is about exceeding those obligations to proactively help your community, embed positive ethical values in your core business mission, and engage key stakeholder groups in this collective success. 

Unlike CSR, corporate citizenship is a long-term perspective that aims to create a sustainable business strategy that benefits both the company and the community. 

Is corporate citizenship a legal requirement for small companies?

Corporate citizenship is not a legal requirement for small private companies. Some relevant mandatory laws apply to larger companies, but small businesses are generally self-regulated. 

However, all companies in the UK are subject to more general obligations in terms of promoting company success, which corporate citizenship is relevant to. As per section 172 of the Companies Act 2006, company directors must act in the company’s best interest by:

• Considering the long-term effects of decisions
• Considering employees’ interests
• Fostering strong stakeholder relationships
• Evaluating the company’s operational impact on the community and the environment
• Assist in maintaining high company standards and reputation
• Promote fairness between the company’s shareholders

If you practice corporate citizenship, you may also wish to implement certain internal policies and regulations for internal stakeholders to follow. However, there are no specific laws on this concept for small private companies. 

Benefits of corporate citizenship

The most obvious benefit of corporate citizenship is helping your community and looking after our planet. But what are the wider benefits of businesses – particularly small businesses – embracing corporate citizenship? Let’s take a look at how this concept can transform your company. 

Enhance your brand image

One of the main challenges you’ll face as a new company is getting your brand name out there and building a reputation for yourself. Corporate citizenship can significantly boost your credibility, attract new customers, and encourage existing ones to stay.

By putting corporate citizenship at the heart of your business mission, you’ll demonstrate to your audience that your company is a force for good, that your priorities extend far beyond making money, and that you’re interested in long-term prosperity. As a result, people will view your business as more trustworthy and be happy to support you. 

Attract investors

Financing is another significant hurdle for a small business. Whether you’re looking for private investors or applying for a traditional bank loan, all types of lenders will be happy to see that your business has a corporate citizenship focus. 

We discussed earlier that ESG investing is rising. Lenders want to support projects that mean something to them and make a difference in the world. Therefore, corporate citizenship can set your business apart and inspire the right investors to support you. 

Gain a competitive advantage

The world is incredibly advanced. It’s hard to come up with ground-breaking ideas that’ll set your small business apart in a congested market. 

Nowadays, it takes more than competitive pricing and unique products to win over customers – these are still important, but as we discovered earlier, people actually want to pay more for products and services that make a positive difference in the world. 

If you want to stand out from the competition, you’ll need to demonstrate that your business is ethically focused by embracing corporate citizenship. This will help you build personal connections with potential customers and inspire them to choose your brand over others.

Improve business performance

Corporate citizenship benefits not only the community but also your business performance. For example, you can reduce your expenses by implementing energy efficiency, boost profits by attracting more customers, and increase funding by appealing to investors. 

Strengthen stakeholder relationships

For corporate citizenship to work, everyone needs to do their bit. This includes yourself, the business owner, shareholders, directors, managers, and employees. By working towards a common goal, you can strengthen all these key stakeholder relationships and create long-term, meaningful partnerships that will bolster your business. 

Find top talent

If you’re getting ready to recruit for the first time, you might be wondering how you can find top talent. How can you make your job listing stand out from a sea of similar job ads, and how can you make sure that you’re attracting the right people that’ll fit into your company culture?

Corporate citizenship can help. Workers want an employer that stands for something positive. They want to work for companies that match their personal values and join a workplace that allows and encourages them to get involved in a cause that matters to them. 

If your company practices corporate citizenship, be sure to shout about it in your recruitment process. Make it a prominent feature in your job adverts, explain how the company gets employees involved in corporate citizenship, and discuss these matters with candidates during interviews. This will help you bond with recruits and find the best people to enrich your business.

Boost employee morale

If you have an existing team, you can boost morale by adopting corporate citizenship. For example, running staff volunteering days is a great way to get your staff involved in a good cause. It’s also an excellent team bonding opportunity, giving people a chance to step away from the typical office environment and get to know each other better over a common goal. 

Employees generally feel happier, more engaged in their work, and more connected to the business by giving back to their communities. Meaningful work can also increase staff loyalty and motivation to excel in their roles. 

Conclusion

Corporate citizenship means conducting business with integrity. Rather than simply ticking a box, it’s about proactively enforcing social, ethical, and environmental values into your core business outlook and empowering others to make a difference. 

Businesses that embrace corporate citizenship are a force for good and can generate increased commercial success. 

We hope this blog inspires you to act if you aren’t currently practising corporate citizenship. Remember that there are plenty of ways for a small business to be resourceful and find achievable ways to support the community whilst growing the company. Start small, and you can always expand your impact as you evolve.