As a business leader, you are likely familiar with the concept of corporate social responsibility (CSR). But do you understand exactly what it means and why it is so important? CSR is far more than just another task on your to-do list–it’s an invaluable part of promoting responsible practices. But what you may not know, is how maintaining a positive impact contributes to a positive impact on the bottom line of our business. In this blog post, we will delve into the different facets of CSR and how they can be incorporated in order to create meaningful change within businesses. With this knowledge, you will be able to ensure that your company is meeting its obligations while also creating economic value. With increasing billion-dollar weather events, a ground war in Europe and the continuing effects of the pandemic on the world supply chains, stakeholders are more savvy than ever.
- Define CSR or Corporate Social Responsibility
- Types of CSR
- CSR and Impact Measurement
- The History and Origin of CSR
- Benefits of Corporate Social Responsibility
- Examples of Corporate Social Responsibility
- What to Avoid When Creating a Socially Responsible Business Model
- Building a Socially Responsible Business
- CSR And Conscious Leadership
- People, Planet and Profit is the New Mantra
- CSR and ESG
- Philanthropic Responsibility Worldwide
- Small & Medium Business Social Responsibility
- What are 3 types of corporate social responsibilities?
- Corporate Social Responsibility Programs
- Are you ready to be sustainable?
- Caveats, disclaimers & csr vs esg
Define CSR or Corporate Social Responsibility
Corporate social responsibility has a broad definition and can take many forms depending on company and industries. For example, CSR can help forge closer bonds between employees and consumers, provide a competitive advantage in the market, and create a community relations role for a company. CSR is also used to promote a business’ image and build its brand. Social responsibility begins with corporate governance.
Types of CSR
Corporate social responsibility can be divided into three main types: CSR 1.0 generally focuses on self-regulation by companies for environmental, philanthropy, ethical sustainability and economic responsibility. These are the cornerstones of CSR and CSR 1.0 should be the foundation of every CSR strategy.
CSR 2.0 stretches beyond what CSR 1.0 can achieve and focuses on deeper relationships between stakeholders and society as a whole, taking into account other issues such as human rights, labour standards, anti-corruption and political processes, amongst others. These would fall under ESG and DEI factors.
CSR 3.0 is like the others, but on steroids, looking at the triple bottom line impact of CSR activities – delivering both financial and social returns.This would include CSR activities where multiple stakeholders are involved in a business activity, for example around CSR tourism or CSR travel.
CSR and Impact Measurement
Almost every industry sector is closely monitoring and analysing how companies are dealing with their main risks and challenges. The expectation is that firms create a plan, use it in CSR reviews, efficiently measure the impacts and show proof of how they are helping the world to develop in a sustainable manner. CSR is about making business viable. CSR activities are carried out through CSR programs where the CSR department of a company monitors how CSR activities are being executed.
The CSR projects must be ethical , transparent, well planned and help balance the triple bottom line – environment, society, financial in order to create economic, environmental and social equity. These can be evaluated through environmental audits, social audits and governance audits.
The History and Origin of CSR
“The Social Responsibility of the Businessman” was released in 1953 by Howard Bowen which shows companies the need for becoming socially and environmentally responsible. CSR is an approach to business that is based on the belief that companies can and should do well by doing good. CSR provides a way for businesses to align their values with their actions. CSR programs have been used by all sorts of organizations across different industries, ranging from educational institutions to sports teams.
Benefits of Corporate Social Responsibility
Most companies are driven to pursue corporate social responsibility because of moral convictions. CSR initiatives can also be beneficial to the company in other ways, such as by increasing brand loyalty, productivity and financial stability. CSR can lead to positive social change (positive production externalities) which is beneficial for society as a whole. CSR strategy has become important because it shows its credibility through good citizenship. On the downside, CSR can also affect public opinion of an organization if not executed properly.
Examples of Corporate Social Responsibility
CSR is evidenced through several types of activity. Most CSR initiatives focus on trying to help out with environmental issues, whether it’s recycling or other initiatives designed to reduce the company’s own carbon footprint. CSR frequently takes shape in philanthropic efforts focused on education, poverty and hunger. CSR can also take the form of support for political causes.
Starbucks was established primarily for its commitment to corporate social responsibility decades ago. For the first time its CSR is on track. For 2030 the company is committed to hiring 10,000 refugees, improving recycling operations and increasing environmental awareness.
What to Avoid When Creating a Socially Responsible Business Model
Businesses should avoid participating in charity projects which are not necessarily related to their focus. For example, CSR for an accounting company might focus on children’s education or mathematics support. Supporting ESL endeavours might not be as good of a tie-in to their core values. But there are many variables when it comes to choosing the types of projects you may do. You want to use your strengths to help and to boost employee morale. Win-win.
Building a Socially Responsible Business
Businesses should focus on CSR being integrated into the core values of the company, through its policies and procedures. The CSR policy needs to be published in the public domain so that stakeholders are aware of the companies efforts. CSR pledges should be renewed on a regular basis to keep CSR fresh in the minds of stakeholders.
CSR And Conscious Leadership
A CSR conscious leader would place CSR at the top of their agenda, considering sustainability and responsibility needs before anything else. CSR policies and procedures need to drive the company forward, not just be present for show. This is the person who leads rather than manages, who understands how complex human systems are connected to the complexity of the global natural world. Responsible leaders are empathetic to the needs of stakeholders, especially employees.Policies are created by conscious leaders with many intentions in mind, including community well-being and financial gain. CSR conscious leaders keep CSR at the forefront of their thinking, acting as a barometer to measure how initiatives are impacting the people and the world around them.
People, Planet and Profit is the New Mantra
When CSR first started, it was more about doing what’s right than the bottom line. CSR appealed to businesses because it could help them retain their market share as well as build strong ties to communities where they work and operate. Today, CSR has evolved into a best practice that is often expected by the public and shareholders alike. With the emergence of ESG principles, corporations will be held to higher standard of sustainable practices.
It is important to put it all into perspective. Corporate responsibility can no longer be seen as separate from other business initiatives. It should inform the work of every department in the organization as it will affect the company ESG score. CSR isn’t about spending money on philanthropic efforts, it’s about taking a critical look at what kind of impact the business is having on the world around them.
CSR and ESG
With the emergence of Environment, Social and Governance criteria within CSR, a company’s initiatives should be seen as a competitive differentiator. It is a business imperative which must include sustainable ethics and moral obligations. In today’s world, CSR is an integral part of every industry, which is guided by Environmental, Social and Governance factors.
Philanthropic Responsibility Worldwide
Corporate social responsibility is about sustainable development. This includes environmental sustainability, good corporate citizenship and other CSR strategies which make a positive impact. CSR programs should include exhibiting ethical behavior through corporate governance for fair trade practices and environmental responsibility. Some companies work with an international organization on greenhouse gas emissions but ending child labor in developing countries is also a concern.
Small & Medium Business Social Responsibility
Closer to home sponsoring local events or reducing the environmental impact of their carbon footprint can also help. Many companies examine supply chain issues, social welfare and labor practices as a pat of their business model for sustainable practices and maximizing profits.
If business models are concerned about brand image, then the company’s operations and employee morale should be top of mind. The broad concept is to help local charities through local events. These can be initiated through your human resources department and include a CSR performance rating.
What are 3 types of corporate social responsibilities?
Some of the best examples of CSR are companies that donated to disaster relief. CSR is a broad term, but companies can focus on 3 CSR strategies:
1) philanthropy and community building
2) responsible management practices
3) sustainable operations
CSR is required by law in many countries because it ensures corporations are thinking about their stakeholders in the communities they serve when making decisions. Moreover, CSR lays the groundwork for companies to build trust within the community by improving public perceptions of their CSR performance. CSR is just one part of a company’s responsibility to its community and stakeholders, but it can be a powerful way to demonstrate commitment to ethical business practices and long-term success.
Corporate Social Responsibility Programs
Corporate social responsibility programs include initiatives that help local communities and companies. They may include renewable energy, sustainable business practices, local charities support, and corporate culture inclusion. Some examples of CSR programs are reducing carbon footprints, Community volunteering, Improving labor policies, Social and environmental investments, Fair-trade projects, Corporate policies that impact the environment and Causes for children which may include education and poverty reduction.
The structure of business thrives on the bottom line and CSR can improve or impede that growth. So, it is clear that for a business to succeed long-term, the basic economic and social drivers of growth must be addressed. Sustainable development initiatives create value by addressing these two drivers at once – not compromising one for the other.
Are you ready to be sustainable?
The world is changing very quickly. More and more companies are being held accountable for their environmental and social impacts. Customers, clients, investors, employees – everyone wants to know what you’re doing to reduce your carbon footprint and be more sustainable. Those who do not change will eventually find themselves out of business.
The Governance part of an ESG Score is the most important part of ESG reporting because leadership sets the tone of the company which affects all other initiatives. This in turn affects investor and employee confidence, but also affects your supply chain integrity. Get the ESG Frameworks Package today!
You can become a leader in sustainability by using our framework package that includes everything you need to get started on your journey towards becoming sustainable including tools like scorecards, dashboards, templates & checklists as well as access to our online community where you can share best practices with peers from around the world!
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Caveats, disclaimers & csr vs esg
We have covered many topics in this article and want to be clear that any reference to, or mention of corporate social responsibility, environmental sustainability, corporate social responsibility initiatives, socially responsible companies, csr efforts or concerted effort in the context of this article is purely for informational purposes and not to be misconstrued with investment advice or personal opinion. Thank you for reading.
Research & Curation
Dean Emerick is a curator on sustainability issues with ESG The Report, an online resource for professionals focusing on ESG principles. Their primary goal is to provide resources to help middle market companies, SMEs and SMBs transition to a more sustainable future.