The implementation of CSR in a company is a long-term change process that affects all corporate activities and divisions. To successfully make this change, the support and commitment of the highest supervisory body and the company’s top management are crucial. Social responsibility must be incorporated into the company’s self-image, be part of its vision, mission and strategy. It must be anchored structurally and culturally in day-to-day business, and be implemented anew every day. From the point of view of good and responsible corporate governance, it is also the task of the company’s top management to identify trends and challenges at an early stage and to position the company accordingly. In order to lend weight and emphasis to the corporate decision for CSR in the long term, it makes sense to designate direct responsibilities for its introduction and implementation. Having a member of the top management (ideally the CEO) responsible for the topic ensures that CSR remains on the company’s agenda and receives continuous attention and can be productively implemented. The commitment of the top management to seriously and credibly implement CSR in the company is the first step towards shaping a responsible organization, supports successful transformation and helps ensure that targeted goals can be realized accordingly.

When it comes to dealing with social issues, no company starts from scratch. Every company – more or less consciously and systematically – already has approaches or instruments in place for this purpose, be it a wage system, a regulation on working hours or specifications on occupational safety. What exactly is in place and in what form varies greatly from company to company. Consequently, the prerequisites for entry into CSR management also vary. The analysis starts inside the company and gradually adds to the external corporate environment by involving competitors and other stakeholders. Companies operate in an environment and cannot be viewed in isolation from other companies, the ecological environment or society. Through their activities, they generate internal as well as external effects and are additionally influenced by events outside the company. Therefore, it is necessary not only to analyze the company’s situation internally, but also to consider the external corporate environment. CSR performance takes place on three levels: Principles, Processes and Impacts. The performance of a company on a CSR topic is made up of the principles formulated for this purpose, the objectives, measures, programs, projects/processes derived from these, and the effects achieved as a result. These three levels describe a chain of influence, at the end of which are the effects. As a rule, the impact level is particularly interesting, because it proves whether anything has really changed with regard to the social challenges to be overcome.

The orientation phase begins with an analysis and prioritization of stakeholders and CSR issues. A focus on the essential stakeholders and topics is necessary in order to be able to manage the complexity with limited resources. CSR issues arise from the company’s relationship with its stakeholders. The extent of stakeholder influence, how exactly it is expressed, and which topics it affects are subject to constant change. Two central questions must therefore be answered periodically for the respective situation: Which are the key stakeholder groups? Which CSR topics are important? All companies deal with selected stakeholders such as customers or employees even without CSR management, often without using the terms stakeholder or stakeholder group. Stakeholders include not only people or groups of people who are in direct contact with the company, but also stakeholders of stakeholders who are indirectly connected with the company. For example, family members of employees can be part of the stakeholder groups, as they are affected by working time regulations. In order to deal with each stakeholder group appropriately, it is crucial to identify, rank, characterize and prioritize them.

Building on the identification and characterization of stakeholders, the topics relevant to the company are identified on the basis of a double materiality analysis. CSR topics are always linked to stakeholders and their expectations. In a CSR issue, there may be a gap between an organization’s performance with respect to a societal problem area and stakeholders’ expectations of that performance. In order to select from the various CSR issues those that require strategic attention, the double materiality analysis is crucial. Based on this, the SDGs are prioritized, because they take into account all three dimensions of sustainability (social, environmental and economic) and cover a wide range of sustainability issues that are relevant to every company, thus allowing strategy to be linked to global objectives. These include poverty, health, climate change and environmental damage.

The principle of sustainability must become an attitude of all participants. Therefore, principles are developed in the second part of the orientation phase. These serve as guard rails for the development, implementation and evaluation of strategies on the individual CSR topics. Principles are an umbrella term for statements on the company’s mission, vision and values. They extend from the past to the near future (five to ten years) and are thus intended to provide orientation for action, motivate and create meaning and legitimacy. Companies with principles that are understood and consistently supported by employees and other stakeholders are more successful than those without clearly defined principles. In practice, principles are either formulated by the management team (top down) or developed participatively as a collective effort of the company. A consistent CSR approach requires that the stakeholders and SDGs identified as important by the company are included in the principles.

The strategic anchoring of CSR is a core task during the planning phase. CSR activities are only strategically aligned if it is possible to link the 17 SDGs with corporate success. This is largely determined by the value drivers, the factors that have a positive impact on corporate success (sales, operational efficiency, reputation or access to capital, etc.). Accordingly, strategic CSR management is conceived as the design, management and development of the link between CSR issues, and the success factors of the company. The starting point for strategy development are the SDGs and the principles formulated in the mission statement. Based on this, the internal prerequisites as well as the environment are analyzed for each topic. This way the opportunities and risks of the corporate, functional and theme strategies can be identified. In the context of strategy development, an internal and external analysis regarding environment and competition as well as a benchmarking (comparison with best practice examples) and a SWOT analysis are conducted. In order to develop and implement strategies, strategic goals are formulated. These are usually long-term goals with a time horizon of three to five years. They are important for setting priorities, enabling an evaluation of activities, and planning the allocation of resources.

The definition of operational goals, key performance indicators (KPIs) and measures is crucial for the implementation planning of the CSR strategy. This concretization of the strategy is a prerequisite for an efficient review of performance. Operational objectives are concrete, short to medium-term goals. They are derived from the strategic goals, make them measurable or verifiable, and serve as orientation for implementation. The requirement for operational goals is that they are SMART (Specific, Measurable, Accepted, Realistic, and Scheduled). Indicators are defined for the operational targets that are suitable for monitoring the achievement of the goals. The difficulty lies in the fact that the impact of CSR issues cannot be mapped with quantitative indicators. It may also be that a topic has not yet been dealt with sufficiently within the company, so that no effects can yet be expected. When developing CSR topics, we also draw on publicly available lists of indicators. One internationally applied catalog is that of the Global Reporting Initiative (GRI) for sustainability reporting. In order to achieve the operational goals on CSR topics, concrete measures must be developed. This refers to all activities that are carried out with a view to achieving the objectives.

A central task during the implementation phase of CSR topics is the design of suitable structures and a conducive corporate culture. Both are necessary to anchor and implement the principles, strategies, goals and measures in the company. The establishment of structures is an important element in integrating CSR topics in the company. This applies to both the organizational structure and the process structure. The former determines which tasks are to be performed within the framework of CSR management and which persons or organizational units are responsible for them. The description of the organizational structure usually takes the form of organizational charts and task descriptions. In addition, the process structure identifies the processes that are important for CSR management and defines which activities should be performed, and in which order. It usually takes the form of process descriptions, flowcharts, job aids, and operating instructions. However, introducing structures alone is not enough to establish CSR issues. Without the development of a corresponding culture in the company, they often remain ineffective. Culture is often stronger than structures, and it is of little use to develop sophisticated structures and processes if they are not supported by a corresponding culture. To be successful in the long term, strategy, structure and culture must be aligned. In addition to the development of structures, a corporate culture must be established that optimally supports the principles and strategies defined for CSR topics. Culture creates a common horizon of meaning as well as a common background knowledge.

An important aspect of the implementation phase is interaction with stakeholders. This involves addressing their expectations and integrating the insights gained from this into CSR management. Companies have always exchanged views with selected stakeholder groups such as customers, employees or important suppliers. Engaging with stakeholders who are not in the immediate business environment offers opportunities such as identifying conflictual issues early on, preventing criticism and developing new solutions. Therefore, Malloth CSR Consulting recommends establishing comprehensive and professional stakeholder management. Based on the prioritization of the stakeholders, they are prioritized for a specific CSR topic. As a result of the power-interest matrix, a list of those stakeholders is available on which interactions should primarily focus. The next step is to determine which goals should be pursued through interaction with prioritized stakeholders. Depending on the goal, different levels of exchange are recommended: information, consultation, dialog, partnership. The findings from the interactions with the stakeholders should flow into the development of principles, strategies, goals and measures in the company.

The scope of non-financial reporting has grown tremendously over the past decade in line with stakeholder demand. It is important to continuously report and communicate progress in order to understand and meet stakeholder needs. On the road to meaningful and effective reporting, it is necessary to develop systematics that integrate the management of sustainability issues into overall decision-making processes. Effective reporting is much more than just a communication tool for key stakeholders – it builds trust and adds value. Integrated performance management can also be a powerful tool for stimulating internal change and decision-making processes. In addition to formal reporting, companies are increasingly using a variety of communication channels to report on their sustainability strategy and performance and their contributions to the SDGs, and to communicate this to the outside world accordingly. Effective channels for this include company websites, social media channels, events, product and service labelling, and marketing and promotional activities. Originally, sustainability reports were seen as a confidence-building measure and an opportunity to improve the company’s image. They have now become a strategic tool that promotes sustainable decision-making, advancement within the organization, performance enhancement, stakeholder engagement, and attracts investment. For effective reporting and communication, it is important that companies use internationally recognized standards for their sustainability reports, such as the comprehensive Global Reporting Initiative (GRI) standards. The evolution of sustainability reporting over the past 20 years has produced a set of core principles. For example, the GRI-Standards have defined ten principles for the preparation of sustainability reports: Stakeholder Engagement, Sustainability Context, Materiality, Completeness, Accuracy, Balance, Understandability, Comparability, Reliability, and Timeliness. These principles help companies produce high-quality information on material topics for both non-financial reporting and general communications. Some of these principles become more important and easier to implement with the SDGs.

The review of CSR performance and the evaluation are about getting an overview of the performance based on suitable indicators and to check the achievement of objectives. As a final step, management looks back and evaluates the overall management approach to CSR over the latest period of time. Reviewing performance is part of every management cycle. Here, the performance of the developed indicators on the individual CSR topics is reviewed and tracked. Immediately following are questions: Did the performance meets the targets? What deviations occurred, how did they come about, and what measures, if any, need to be initiated? Measuring performance on CSR topics is often very time-consuming, especially if performance is to be measured at the impact level, where it is most meaningful. When comparing target and actual performance, it is necessary to check whether the differences jeopardize the achievement of operational and strategic goals. Once deviations and their causes have been identified, it is possible to design corrective measures. Corrective measures aim to ensure the achievement of objectives. After the review of CSR performance, the second step of the review phase is the overall evaluation of CSR management. The fact that management periodically assesses the effectiveness of the processes and decides on the fundamental direction is a component of all modern, thematically oriented management approaches. Examples from the CSR area are ISO 9001 (quality management), ISO 14001 (environmental management) or ISO 26000 for social responsibility. Appropriate follow-up measures are initiated on the basis of the assessment. These include changes in financial and human resources as well as possible changes in principles, strategies or other elements of CSR management. This performance assessment completes the management cycle for managing CSR issues, and, at the same time, it is again the starting point for a new orientation phase.