What are the common elements of the definition of corporate social responsibility?

A business’s measure of success goes beyond the bottom line. In today’s world, how a company gives back to its community, positively impacts the environment, and acts for the greater good—not just a greater profit—is critical. That’s where the corporate social responsibility of a business comes in.

What is corporate responsibility? Corporate social responsibility, also known as CSR, is the concept that a business has a responsibility to do good. CSR means that a company should self-regulate its actions and be socially accountable to its customers, stakeholders, and the world at large. But what does this really mean in practice?

Read on to discover the four types of corporate social responsibility of business and how they look in action.

Environmental Responsibility

For companies committed to CSR, it’s important for businesses to engage in environmentally friendly practices. Corporations can be significant contributors to greenhouse gas emissions, pollution, waste, and natural resource depletion—but by committing to environmental responsibility, a business takes ownership over its impact on the environment.

Depending on a business’s size and industry, environmental responsibility can take many different forms. For some companies, it means using alternative energy sources and sustainable materials. For others, it means enacting a company-wide recycling program or donating to and volunteering for local environment-focused organizations.

Ethical Responsibility

Being ethically responsible means ensuring a business engages in fair business practices across the board—including treating all employees, stakeholders, and customers ethically and with respect.

This type of CSR can also take a lot of different forms. Some common examples of ethical responsibility include setting a higher minimum wage, guaranteeing all materials are ethically sourced, and ensuring that all employees receive competitive pay and comprehensive benefits as well as treated with respect.

Philanthropic Responsibility

In today’s world, it’s almost expected for businesses to give back to the communities they exist in and donate to causes that align with their company mission. When businesses do this, they’re following through with their philanthropic responsibility.

This philanthropic responsibility can be as small scale as sponsoring a local nonprofit’s annual fundraiser or as large-scale as donating a percentage of a business’s annual earnings to a prominent cause.

Economic Responsibility

When a business is acting with economic responsibility in mind, it is making financial decisions that prioritize doing good, not just making more money. This means that this type of CSR is intertwined with the other types above.

For example, this could mean that a business signs a contract with a supplier that uses sustainable materials—even if it costs more. Another example of economic responsibility is when a company commits to a transparent salary system that fairly compensates all employees and makes up for past gender and race pay gaps.

The Benefits of CSR

When a business commits to socially responsible practices, it positively impacts its employee satisfaction and retention. It’s also great for brand identity because CSR initiatives help bolster customer trust and public respect.

And, of course, the CSR initiatives themselves have a ripple effect of positive good. With every new sustainable business practice and every company committed to fair pay and ethical employee treatment, more positivity is brought into the world.

Here at Pacific Oaks, we believe that the measure of a successful business goes beyond the profit that it makes. If you’re interested in becoming a business leader that drives innovation and socially responsible missions, explore Pacific Oaks College’s B.S. in Business Administration or its M.A. in Organizational Leadership and Management programs. Learn more about our Leadership Scholarship available to students in these programs.

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Corporate governance strategies employed by firms that are ethical, societally friendly, and beneficial to its community

What is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) refers to strategies that companies put into action as part of corporate governance that are designed to ensure the company’s operations are ethical and beneficial for society.

Categories of CSR

Although corporate social responsibility is a very broad concept that is understood and implemented differently by each firm, the underlying idea of CSR is to operate in an economically, socially, and environmentally sustainable manner.

Generally, corporate social responsibility initiatives are categorized as follows:

1. Environmental responsibility

Environmental responsibility initiatives aim to reduce pollution and greenhouse gas emissions and the sustainable use of natural resources.

2. Human rights responsibility

Human rights responsibility initiatives involve providing fair labor practices (e.g., equal pay for equal work) and fair trade practices, and disavowing child labor.

3. Philanthropic responsibility

Philanthropic responsibility can include things such as funding educational programs, supporting health initiatives, donating to causes, and supporting community beautification projects.

4. Economic responsibility

Economic responsibility initiatives involve improving the firm’s business operation while participating in sustainable practices – for example, using a new manufacturing process to minimize wastage.

Business Benefits of CSR

In a way, corporate social responsibility can be seen as a public relations effort. However, it goes beyond that, as corporate social responsibility can also boost a firm’s competitiveness. The business benefits of corporate social responsibility include the following:

1. Stronger brand image, recognition, and reputation

CSR adds value to firms by establishing and maintaining a good corporate reputation and/or brand equity.

2. Increased customer loyalty and sales

Customers of a firm that practices CSR feel that they are helping the firm support good causes.

3. Operational cost savings

Investing in operational efficiencies results in operational cost savings as well as reduced environmental impact.

4. Retaining key and talented employees

Employees often stay longer and are more committed to their firm knowing that they are working for a business that practices CSR.

5. Easier access to funding

Many investors are more willing to support a business that practices CSR.

6. Reduced regulatory burden

Strong relationships with regulatory bodies can help to reduce a firm’s regulatory burden.

Example of CSR in Canada

In Canada, mining companies often engage with Aboriginal communities and groups. Converting land sites into mines can cause a significant environmental impact on the Aboriginal communities living near the sites. Several Canadian mining companies engage in corporate social responsibility with local communities to ensure that the adverse effects are minimized.

For example:

• Cameco Corporation oversees education programs directed toward northern and Aboriginal peoples through their northern Saskatchewan five-pillar strategy.
• Goldcorp Inc. strives to make a positive impact on its communities by supporting education and health initiatives and sponsorship of special events.
• Softrock Minerals Ltd. contributes money for festivals, schools, and projects.

CSR of Starbucks

Starbucks is a well-known firm that practices corporate social responsibility. As indicated by the company: “Starbucks’ social corporate responsibility and sustainability is about being responsible and doing things that are good for the planet and each other.”

Starbucks’ CSR initiatives include:

• Starbucks Youth Action Grants: Awarding grants to inspire and support youth action
• Ethos Water Fund: Raising clean water awareness and providing children with access to clean water
• Ethical Sourcing: Commitment to buying and serving ethically traded coffee
• Green Building: Using the U.S. Green Building Council’s LEED certification program to create energy and water-efficient store designs

Related Readings

This has been CFI’s guide to return on Corporate Social Responsibility. To keep learning and advancing your career, the following CFI resources will be helpful:

• Free Introduction to ESG Course
• Corporate Development
• Employee Morale
• A Sense of Purpose at Work
• Soft Skills at Work