Corporate social responsibility (CSR) is an approach and a vision of business accountability that revolves around the idea that organizations are accountable to the societal and environmental impacts of their operations. This is in response to the changing expectations among today’s sociallyconscious consumers.
CSR and sustainability
Numerous definitions have been given to the concept of CSR. Financial Times, for instance, defines it as a “business approach that contributes to sustainable development by driving economic, social and environmental benefits for all stakeholders.” While it is a broad concept that encompasses a variety of topics—including human rights and environmental effects—its main purpose is to drive change towards sustainability.
The European Commission, on the other hand, believes that CSR is the responsibility of enterprises for their impact on society. This definition explicitly puts the responsibility on companies, though public authorities may contribute in the form of voluntary policy measures and complementary regulation. According to the commission, a company can be considered socially responsible if they follow the law and integrate social, environmental, ethical, consumer and human rights concerns into their business strategy and operations.
Other than an approach and a responsibility, the
One thing to note is that these definitions almost make the concept of CSR synonymous with sustainability; however, this is not the case. Unlike CSR, which focuses on striking the right balance among stakeholder interests, sustainability is about balancing resource usage in a way that enables future generations to have an adequate supply of resources.
The CSR Pyramid
Dr. Archie B. Caroll, a business management author and professor, illustrated the main areas of a business’s duties to its stakeholders in the form of a CSR pyramid. In his article, “The Pyramid of Corporate Social Responsibility”, he identified four areas making up a CSR pyramid: economic, legal, ethical and philanthropic. Both economic and legal responsibilities are required by the society, while ethical responsibilities are expected by society. Philanthropic responsibilities are the ones desired by society.
All four areas are interconnected. The economic and legal responsibility merely outlines how businesses are expected to be profitable and to obey society’s set of laws, respectively. The ethical responsibility,
Though this model has been created more than decades ago, the pyramid of corporate social responsibility remains relevant in today’s environment. While it is in the form of a pyramid, this does not mean that the responsibilities enumerated above are to be fulfilled in a hierarchal fashion: on the contrary, businesses are expected to fulfill these simultaneously.
What are the benefits of CSR?
Apart from the societal benefits these activities can bring, CSR can benefit businesses as well.
- Positive brand image. Most companies originally embraced CSR in the hopes of distinguishing itself from others. Yet, as the demand for openness and transparency among businesses grew, businesses can utilize CSR to position themselves as a leader and a trusted authority in their own community. By doing good to the society, businesses can show themselves in a more positive light. This, in turn, can be turned into a company’s competitive advantage.
- Higher trust among a higher number of consumers. A positive brand image will yield higher returns in terms of profit. This is easier said than done, though, now that an increasing number of consumers are looking at businesses to drive social and environmental change. To illustrate this, a 2017 study by Cone Communications found that 87 percent of consumers will purchase a product if the company advocates for an issue they’re passionate about. On the flip side, 76 percent of these consumers will refuse to buy a company’s products or services if it supports an issue contrary to their beliefs.
- Bigger cost savings. Companies can also view CSR activities as a sustainable way to reduce their overhead costs. Regardless of what activity they implement, be it lessening the use of energy or paper, the savings from these actions can add up rather quickly. At the same time, businesses are doing a favor to the environment by reducing their use of resources.
- Better employee engagement and productivity. Employees benefit from CSR activities as well. Companies are now placing a bigger emphasis on taking care of their workers in the form of competitive salaries and helpful healthcare benefits. Employees, in turn, will feel valued by their employers, and will, therefore, be encouraged to boost their productivity.
How can a business practice CSR?
Given the abundance of easily accessible information, consumers are now becoming more conscious of their purchasing decisions. More than the quality of products and services, these consumers are now considering a brand’s impact on society and the environment. This is the concept of CSR at work: today’s consumers expect companies to take responsibility for the societal and environmental impacts created by their business operations.
For companies around the world, implementing CSR is no longer a question of why, but how. After all, there is a growing number of evidence proving how vital CSR activities can be in boosting a company’s bottom line. Other businesses even view CSR as an integral aspect to their overall strategies that can help address a number of key business issues.
Once a business realizes the role of incorporating social responsibility into its core competencies, it can then shift its efforts into implementing and participating in a number of CSR activities. These activities are often placed under these broad categories.
- Environmental efforts. Businesses can begin with activities or measures that reduce their carbon footprint. By introducing these measures, businesses can make significant contributions to the worldwide efforts of achieving zero-carbon emissions by 2030.
- They can also opt to donate money, products, or services to organizations with a particular thrust on social causes. This is often the case with larger companies: they provide resources for the benefit of charities worldwide.
- Nothing shows a company’s concern towards a particular cause more than doing good deeds without expecting anything in return. Volunteerism is the best way for companies to express their sincere concern for specific issues hounding the society.
- Ethical labor. Social responsibility means treating employees with fairness and humanity. This activity, however, will ultimately depend on a country’s specific set of labor laws.
Experts have been reiterating the importance of making CSR a central component of any business strategy. This concept has been introduced back in 2002 at the World Economic Forum, where 36 chief executives from global brands agreed that “[t]he frameworks we adopt for being a responsible business must move beyond philanthropy and be integrated into core business strategy and practice.” It also challenged those at the top of the organization to ensure that these goals are fully realized.
While it might be tempting to rest easy knowing that your business had already done its part in philanthropy, keep in mind that CSR is more than doing good: it’s about finding better and more creative ways to address significant issues facing businesses and society as a whole. It will require a lot of work and a long-term commitment, but the rewards will surely be worth all the effort.
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