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Corporate Social Responsibility (CSR)

What Does Corporate Social Responsibility (CSR) Mean?

Corporate social responsibility (CSR) is a term that covers a broad range of social and environmental concerns and the way they integrate into a company’s business operations. It is a concept that is often used to hold corporations accountable for their impact on stakeholders and the public.

CSR encourages organizations to make greater efforts to do business in ways that ameliorate society rather than having a negative effect on it. It can also provide benefits to the corporations themselves by strengthening brand image, raising employee morale, and improving investor confidence.

Safeopedia Explains Corporate Social Responsibility (CSR)

Corporate social responsibility can be divided into three types:

  1. Environmental responsibility – Carrying out corporate operations in ways that minimize harm to the natural environment. This includes reducing energy consumption, implementing tighter controls for handling or transporting chemicals and other environmentally hazardous materials, and making products that are more sustainable.
  2. Ethical responsibility – Corporate policies that ensure fair and ethical treatment of stakeholders, employees, suppliers, and customers. This includes sourcing materials and products that are fair trade certified, instituting a baseline pay above the standard minimum wage, and removing materials that could have adverse health effects from products.
  3. Philanthropic responsibility – Dedicating a portion of corporate earnings to charities and non-profits. Some corporations will also establish their own charitable trusts in order to have a more positive impact on society.

Some definitions of CSR will also include financial responsibility as a fourth type. This entails both making socially responsible investments (such as divesting from fossil fuels or channeling more investments into green technology) and putting some funding behind CSR initiatives to increase their impact while avoiding greenwashing and other types of corporate lip service.

Business Benefits of CSR

The most obvious beneficiaries of CSR are the stakeholders outside of the corporation - the people who are negatively or positively impacted by corporate action. However, it is also beneficial for the companies that engage in responsible business practices.

Some of the benefits include:

  • Employee engagement – Workers are more likely to stay with a company that respects them and has a positive effect on their community. Because of this, good CSR policies make it easier to hire top talent, retain employees, and increase employee engagement and job satisfaction.
  • Investor relations - CSR policies have an impact on how investors perceive an organization. These policies are seen as evidence of long-term planning, big picture thinking, and sustainable practice - all of which increase investor confidence.
  • Brand image – CSR practices are well-received by the public, creating positive associations with the company's brand.
  • Ease of compliance – Strong CSR policies typically exceed the minimum requirements imposed by regulatory bodies. In doing so, they significantly reduce the likelihood of a regulatory violation, which in turn reduces the number of investigations, fines, and claims the company has to deal with.

Viability of CSR for Smaller Businesses

CSR initiatives are often associated with larger corporations, since they have the potential to create a greater impact - whether positive or negative. Their heftier operating budgets also allows them to back bigger, more eye-catching CSR initiatives.

Despite this, small and medium-sized enterprises (SMEs) can still implement CSR policies while remaining economically viable. The CSR program by UNIDO is based on the Triple Bottom Line (TBL) approach (combining economic, environmental, and social imperatives) and has been successfully implemented in developing countries to enable them to meet social and environmental standards without compromising their performance.


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