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What Is Corporate Social Responsibility?

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Not all businesses are driven solely by profit. Whether their goal is to gain rapport with consumers, lessen their impact on the environment, give their employees something to care about other than the bottom line, or support causes that align with their industry, some companies choose to structure their business around corporate social responsibility (CSR).

There are no regulations, formulas, or set standards for CSR, and every company that chooses to incorporate CSR into its business does so in its own unique way.

Let’s take a look at some of the benefits, motivations, and applications of CSR in the economy today and see if adding it to your business model is the right move for you.

Understanding Corporate Social Responsibility

So what is corporate social responsibility? CSR is a set of ethical practices some companies choose to incorporate into their business model that helps make the world a better place. It’s a commitment to the triple bottom line: profit, people, and the planet. Companies choose to focus on doing good in addition to making a profit for a variety of reasons and choose to implement those practices in different ways.

The four main types of CSR are:

  1. Environmental: These companies prioritize decreasing their carbon footprints through environmentally-friendly business practices: for example, using solar energy, manufacturing with recycled substances, or choosing to use less packing materials.
  2. Philanthropy: This practice involves donating money to a specific cause or organization. Whatever cause the company chooses should be relevant to their industry; it makes more sense for a diaper company to donate to an organization that helps single moms than it does for them to work with a charity that gives professional clothing to people who are homeless and applying for jobs.
  3. Volunteering: Some companies choose to create a program where their employees, instead of working for the day, will go out and volunteer for a specific organization in the community. This type of CSR can also include a company volunteering their services or product to an organization. For example, an accounting company could donate its tax professionals’ time to help low-income families file their taxes for free, or a clothing company could donate its out-of-season fashions to a women’s shelter.
  4. Ethical Labor Practices: This type of CSR especially applies to companies that use international labor. Since labor practices and laws are different outside of the United States, it’s important to these companies that everyone along the production process gets treated fairly in their wages and in their work environment. This practice can also involve ethical sourcing of materials and can overlap with the environmental category: i.e. using sustainable dyes to color clothes.

What Is Corporate Social Responsibility

The Benefits of the Social Responsibility

Hopefully, the answer to whether or not a company implements CSR is simply “because it’s the right thing to do.” Beyond the benefit of choosing to use your influence and power as a company to make the world a better place, there are other quantitative and qualitative incentives as well.

Using responsible practices improves your brand’s image and helps you stand out from the crowd. If you’re authentically helping people, rather than just doing surface-level work for clout, potential consumers are more likely to look favorably upon your business. 60% of consumers hope that companies choose to practice CSR of their own volition, rather than waiting for the government to regulate the practice. 90% said they would purchase from companies that support causes they care about, while 75% said they would actively avoid purchasing from somewhere that supports a cause that goes against their personal convictions.

CSR will not only improve the look of your company in the eyes of your consumers but in your employees as well. Job seekers are more likely to pick a company that they believe has a vision and purpose beyond just dollar signs. Once they’re employed, they’ll have an external motivation and sense of purpose behind their work. Their productivity not just impacts their personal performance, but can help the company ultimately do more good in the community. If a company donates a percentage of its profits to a cause the employee cares about, they’re likely to be more interested in the company’s output.

Each of the four principles of CSR also come with their own unique benefits.

  • Environmental: If you choose to use less packaging, you not only create less waste, but you don’t have to waste as much money on unnecessary materials. While there may be an upfront cost for implementing renewable energy sources, such as paying for solar panels, you’ll eventually recoup those costs in energy savings. If your company chooses to implement more sustainable practices before they’re legally required, you become viewed as a visionary in your industry.
  • Philanthropy: Donating to a particular charity helps you build a relationship with that organization. You then receive the positive associations that people feel towards that charity, and those who support that specific organization will more than likely be happy to support you. If someone knows that 15% of the proceeds from your organization go to saving the rainforest, they’ll be more likely to purchase hiking equipment from you, knowing that part of their purchase goes towards a cause they care about. That’s why it’s especially important to choose a charity that aligns with your industry.
  • Volunteering: If volunteering is facilitated correctly, your employees get time set aside for them to help a cause they care about. If you decide to implement this kind of program, it’s important to pursue a cause your employees care about, as they’re the ones that will be out onsite doing the work. If it’s not an organization they like, you’re going to wind up with some very disgruntled employees. However, if they get to support a cause they have a real passion for, they can feel invigorated and purposeful once they finish their volunteering hours.
  • Ethical Labor Practices: Consumers are becoming more and more conscious about choosing companies that make products through ethical means. If a company is exposed as exploiting workers abroad just to make cheap shirts, consumers will find out, and it will take a large toll on the company’s brand. People using your product can do so with more peace of mind when they know that no one was exploited along the supply chain. Ten Thousand Villages does this successfully; all their items are fair trade, and part of a lot of people’s love for that organization comes from the fact that they know their purchase helped an international artisan support themselves with a livable wage.

Small Businesses Can Have a Big Impact

While it may seem hard to compete with the $10 million Patagonia donated to fight climate change, don’t underestimate the power small businesses have within their communities. Large organizations are likely to tackle large issues; small businesses have the perfect opportunity to create a positive impact with smaller organizations in the local community with their CSR initiatives. The social impact of helping a local shelter or a family in the community who experienced hardship is just as valid and important a form of corporate citizenship.

Sarah Margaret Henry
Published in Business, Featured Articles

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