What Is Corporate Social Responsibility (CSR)?
Last updated on 10th Oct 2020, Artciles, Blog
Corporate social responsibility (CSR) refers to the efforts made by a company to improve society and contribute towards sustainable development. Also known as corporate conscience or corporate citizenship, CSR describes initiatives run by a business to evaluate and take responsibility for their impact on a number of issues ranging from human rights to the environment.
Corporate social responsibility is a type of self-regulatory business plan, with initiatives focusing on achieving economic, social and environmental benefits for all stakeholders involved (employees, consumers, investors and other groups).
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The purpose of CSR is to encourage businesses to conduct their companies in an ethical manner and work towards having a more positive impact on society through ensuring sustainable growth.
Sustainability is often mentioned with CSR and is usually associated with environmental sustainability. However, sustainability can also apply to many other aspects of a business including procurement, economic, hiring and training for example.
Corporate social responsibility typically refers to lengths taken by businesses that go beyond what is deemed compulsory by law and ethical standards as stated by regulators and environmental associations.
CSR can often result in short-term costs which do not lead to immediate economic gain for the company, however instead support and prioritise social and environmental progress.
The focus of corporate social responsibility is to boost shareholder trust and increase long-term profits in a sustainable and ethical way by taking ownership of corporate decisions and improving them.
Because of this, CSR initiatives are often defined as initiatives that place social improvement before the often short term interests of business financial performance. Corporate social responsibility can take shape in many ways, with common examples including donating money to charities and implementing environmental schemes in the workplace.
Types of Corporate Social Responsibility
There are several different forms of corporate social responsibility, all of which address individual issues.
However, the three main types of CSR are
The Importance of Corporate Social Responsibility
Corporate social responsibility is a valuable way for companies to demonstrate their humanity whilst doing their part for society, the environment and their stakeholders.
Our world, the people and organisations in it are becoming ever more interconnected and CSR is a way to actively manage those connections to benefit a company as well as those people, organisations and communities your are connected to via what you sell, who you hire, who you buy from and so on.
With sustainable development being at the core of CSR, it makes sense for businesses to implement CSR strategies in their business plan not only for the planet, but moreover for the success of the business.
Corporate social responsibility creates a competitive advantage, raises brand awareness and helps businesses develop trust with shareholders, customers and employees. Demonstrating that companies, customers and communities can thrive together is a powerful advantage.
Corporate Social Responsibility Benefits
Besides encouraging companies to re-evaluate their business plans to become more ethical and conscious of their impact on society, corporate social responsibility has a number of other benefits. Whilst costs associated with CSR might seem inhibiting initially, many of them reap valuable long-term benefits.
Benefits of CSR for companies:
- Better company image and customer loyalty – Corporate social responsibility schemes not only increase a brand’s recognition, they moreover contribute to a better public image. It makes sense that consumers want to shop with companies that care about causes and have a sense of social responsibility. Companies that appreciate and respect consumers are favoured, encouraging customer loyalty. Consumers want to be appreciated and support businesses that are ethical.
- Identifying areas for improvement – CSR efforts often lead to businesses reviewing and evaluating their current processes, with many leading to the discovery of ways that the business could be improved. For example, in 2010 PepsiCo found energy saving opportunities worth $60m as part of an energy assessment programme it carried out.
- Increased employee engagement and satisfaction – Naturally, employees want to work for a company involved in positive initiatives and with a strong public image. CSR schemes create a sense of community and bonding amongst employees, engaging them and encouraging positive relations. When stakeholders like employees, customers and even suppliers can have a strong input to areas of impact, CSR becomes a truly powerful influence.
- Attracts talent and investors – Companies that demonstrate a dedication to improving communities through CSR programmes are much more likely to attract valuable and engaged employees.
Likewise, investors want to work with companies who are reputable and have a sense of corporate social responsibility. Businesses with CSR initiatives demonstrate to investors that profit isn’t their only priority, additionally having a concern for worthy causes and the bettering of society.
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