Over the past few years, more and more industry leaders have come to understand the importance of corporate social responsibility, which Harvard Business School defines as “the idea that a business has a responsibility to the society that exists around it.” When companies build and preserve strong relationships with nearby areas, the level of cooperation between the two increases. 

According to Adam Parr, Director of Communications & Public Affairs at sustainable steel manufacturing company Gerdau, “the results can be mutually beneficial. Thriving communities are good for business,” Parr stated. “Our success as a company is directly linked to the health and vitality of our surrounding communities.”

Parr explained the many benefits close relationships can have for both businesses and communities, as well as the dangers that can develop when these connections are neglected.

Benefits for businesses

For Parr, a symbiotic relationship exists between private enterprises and nearby neighborhoods. The first reason for this is that prospective staff often reside in those areas.

“We want to recruit, hire, and retain talented employees from our surrounding communities, and that effort is supported by being viewed favorably,” Parr said. “It’s a competitive job environment, and we want to be known as an employer of choice.”

This collaborative approach also takes on special importance during times of possible conflict. According to Parr, a track record of successful dialogue creates trust and mutual respect. When potential difficulties arise, having this in place helps the business and community negotiate more honestly and effectively. 

“Having established relationships allows us to efficiently address any issues when they do arise,” Parr explained. In consequence, this strategy increases the chance of finding win-win solutions that could go unperceived in a more adversarial context.

Benefits for the community

In return, companies’ involvement means their communities reap many advantages. First and foremost, Parr mentioned the career opportunities local businesses provide for residents. In the steel industry, these jobs are not limited to plants, but rather expand to support positions in other sectors.

“Each job in the steel industry supports seven additional jobs in the broader economy,” Parr said, a statistic backed up by a Deloitte study.

Parr also listed taxes as a benefit to local communities. “There is a significant economic impact associated with steel production,” he said. “The tax revenues generated by our operations support schools and other vital services.”

In addition, many corporations implement the principles of corporate social responsibility by practicing philanthropy and encouraging volunteerism, and Parr’s company presents a textbook example. “We have committed employees who organize hands-on volunteer activities,” he said. “We support food banks, shelters, research organizations, educational institutions, and other non-profits with a particular focus on those aligned with our pillars of housing, recycling, and education.”

Risks for companies that overlook their communities

“Companies that are disconnected and that don’t transform themselves to meet stakeholder needs risk becoming obsolete,” Parr warned.

So, what do stakeholder needs have to do with corporate social responsibility?

“Many people have antiquated perceptions of the steel industry, not realizing how sustainable and innovative it is today,” Parr explained. “If we don’t tell our story to our community stakeholders, those mindsets will persist.”

According to the aforementioned Harvard Business School article, “one of the most common forms of corporate social responsibility” is environmental responsibility, in which companies mitigate the adverse effects of their operations on the planet. They can do this by decreasing pollution, limiting water or energy consumption, or increasing their use of recycled materials, among other things.

“We are an efficient, innovative company,” Parr explained. “In North America, all our production utilizes scrap-based electric arc furnace technology using a feedstock of 100 percent recycled metallics. The company’s carbon emissions per ton of steel are a fraction of the industry’s global average, with many of our locations operating as zero-discharge facilities.”

The most important characteristic

Parr advises other businesses to follow Gerdau’s example and embrace corporate social responsibility. These policies foster an atmosphere of trust, which he names as the most important characteristic of a business’s interactions with others.

“Trust is an essential component of our relationships with all stakeholders, including employees, customers, policymakers, and the general public,” he said. “Gerdau believes in giving back to the communities where we work and live. This is aligned with one of our foundational principles: do what is right.”