What is Corporate Social Responsibility (CSR) in Modern Business?

What is the CSR business model and how can it improve your brand reputation? Find out how a socially responsible strategy can benefit your business long term.

What%20is%20Corporate%20Social%20Responsibility%20%28CSR%29%20in%20Modern%20Business%3F
source: Pexels

Corporate social responsibility (CSR) is a self-regulating business model in which the companies are trying to improve their impact on the environment, society, and economy. There is no one right way to be a socially responsible business, but the companies which practice CSR are trying to be accountable to themselves, their stakeholders, and the public. 

Not only the businesses are improving society by implementing CSR, but they are also improving their own brands. Implementing CSR can help attract motivated employees, create a stronger bond between the employees and the company, attract new environmentally and socially aware customers, etc.

4 Types of Corporate Social Responsibility 

There are many ways a company can become socially responsible, but all those ways are traditionally placed into four categories - environmental, philanthropic, ethical, and economic social responsibility.

  • Environmental responsibility

Environmental corporate social responsibility means that business organizations should have in mind what kind of environmental or carbon footprint they are leaving behind them and try to reduce it. 

One of the ways companies are trying to reduce their carbon footprints is to enhance their processes so pollution, greenhouse gas emissions, water consumption, general waste, and single-use plastics are reduced. A simple way the companies do that is by having a hybrid workplace model (remote employees and in-office), so less energy is used in commuting and office costs and energy are reduced. Another way is to work on transferring from using fossil fuels to renewable energy sources, as well as use recycled materials and sustainable resources. 

Environmental corporate social responsibility can also be enhanced by working on the improvement of the business’s community by, for example, planting trees, donating to related causes and NGOs, improving children’s playgrounds, funding research, etc.

  • Ethical responsibility

Ethical responsibility means that the company treats all of its stakeholders - employees, investors, leadership, suppliers, subcontractor, and customers - with fair treatment and ethical standards. 

Ethical responsibility can be achieved by using only fair-trade products in a company’s production, ensuring that ingredients, materials, or parts come from companies that use slavery or child labor. Another popular way to be an ethically responsible business is to decide on their own (higher than the one set by the state) minimum wage for their employees so they have a dignified life.

  • Philanthropic responsibility 

Philanthropic responsibility is a way for companies to make the communities around them a better place by dedicating a portion of their earnings to philanthropic causes. 

Companies usually donate money to charities and nonprofits which deal with similar topics as the company’s mission guidelines, or simply donate to causes they believe are important but have nothing to do with their mission. Some companies create their own charitable trust or organization to give back to their communities. 

Philanthropic responsibility can be shown by volunteering efforts, like reading to the blind, or something similar.

  • Economic responsibility

Economic responsibility refers to decision-making processes in which the company makes economic or financial decisions based on what will do good regarding the environment, ethics, and philanthropy. 

The idea isn’t to simply make a profit regardless of what will happen with the community but to positively impact their surroundings.

Economically responsible enterprises are very popular among their employees, but also their customers, so it is a good idea to invest in a responsible strategic marketing plan.

Who drives these corporational social responsibility trends?

A CSR Study by Cone Communications showed that a vast majority (87%) of Americans said they would buy a product because a company advocated for an issue they cared about and 76% would refuse to buy products from companies that supported an issue contrary to their beliefs. Even when a company does take a stand on an issue, 76% of Millennials said they would do the research to find out if the company is being authentic. 

CSR isn’t important to consumers only. 

In the UK, Lego, Ikea, and Microsoft are named the most responsible companies according to the UK CSR RepTrak® 2016 ranking of the 150 most reputable companies in terms of their CSR performance. The research comes from the leading reputation consultancy Reputation Institute and is based on over 50,000 interviews with the UK general public.

"The next generation of employees is seeking out employers that are focused on the triple bottom line: people, planet and revenue," said the head of global diversity, equity, and inclusion at Symantec Susan Cooney for Business News Daily. "Coming out of the recession, corporate revenue has been getting stronger. Companies are encouraged to put that increased profit into programs that give back."

Some of the changes are still led by profit. Using less or sustainable packaging, less energy, swapping to renewable energy sources, reusing the packaging, etc. can reduce production costs in the long run. 

WorldFair’s business program states that the companies which implement CSR can increase their employee retention rates by 25-30%, based on the research from Rensselaer Polytechnic Institute.

CSR Standards

Even though there is no one right way to implement and stick to CSR, there is still a set of voluntary standards released by the International Organization for Standardization (ISO), ISO 26000, that can help companies implement CSR.

ISO 26000 is providing guidance to companies and it doesn’t contain requirements, recommendations, or guidelines, since CSR standards can’t be certified. ISO 26000 standard explains what CSR is, shows principles and practices relating to social responsibility, and can help companies use those principles to create their own CSR practices and actions.

Career opportunities within the CSR strategy

As the socially responsible business models become more and more popular, new career opportunities are starting to open up. Starting a new social enterprise is always a good idea to contribute to the shift towards a greener and more sustainable future.

However, there are still millions of businesses who operate the old-fashioned way, without caring so much about their community or the environment. This is where new job opportunities are beginning to open up.

Sustainability consultant is nowadays a common profession, and more and more businesses are hiring or planning to hire someone on this position. The good thing about it is that it is applicable in every industry - because every single business will soon need a CSR strategy in place.

You can connect environment consultancy with any passion you already have. For example, as one of the career options for book lovers, you can work for a publisher and create plans for printing new editions on recycled paper, partnering with organizations who are working on educating marginalized groups, and many other socially beneficial strategies.