Corporate social responsibility (CSR) is a business management concept that encourages executive leadership to contribute to societal goals. Here's how organizations should put it into practice.
Corporate social responsibility matters now more than ever. Modern customers look beyond what an organization offers to focus on what the company stands for. In fact, a 2019 Aflac CSR survey shows that 77% of customers are motivated to buy from businesses that strive to make the world a better place.
Beyond mentioning corporate social responsibility in their mission and vision statements, organizations must let CSR inform board governance. Read on to discover the true meaning of corporate social responsibility, and why it matters.
What Does Corporate Social Responsibility Mean?
Corporate social responsibility refers to the idea that environmental and social impacts should guide a company’s actions. A CSR-driven organization benefits the community, whether through donating profits, using its platform for good, or allowing employees to take time off to volunteer.
Social responsibility isn’t just for nonprofits. A concept called the triple bottom line (profit, people, and the planet) guides organizations on how to be socially responsible while still running a profitable business — doing well by doing good.
Engaging in CSR means making the world a better place, and consumers and shareholders are on the lookout for companies that embrace CSR.
Types of Corporate Social Responsibility
Learn more about the 4 types of corporate social responsibility.
1. Environmental Responsibility
Environmental responsibility means a company considers its impact on the environment, which can be achieved through:
- Reducing energy use by putting lights and HVAC systems on timers, swapping traditional light bulbs for LEDs, or even installing solar panels.
- Recycling and composting at your place of business.
- Limiting the amount of packaging on any products you produce or sell.
According to Forrester research, 68% of consumers plan to seek out brands that reduce environmental impact.
2. Economic Responsibility
Economic responsibility refers to a company making financial decisions that prioritize doing good. That means the organization’s goal is not to simply make a profit, but to positively impact society, people, and the environment. For example, an economically responsible business may decide to only work with suppliers that use sustainable materials even if it means paying more.
Demonstrating economic responsibility can help you attract and retain top talent in your industry. A 2021 report reveals 88% of employees believe it is no longer acceptable for companies just to make money; they must positively impact society as well.
3. Philanthropic Responsibility
Philanthropic responsibility refers to a company’s focus on actively changing society and the world for the greater good, often demonstrated through the donation of money, time, skills, or experience.
Philanthropic organizations may donate to nonprofits and charities aligned with their missions, or just to causes they feel strongly about. Some businesses even build their own charitable trusts or foundations to give back to the community.
4. Ethical Responsibility
Ethical responsibility involves an organization operating ethically and fairly. Companies that practice ethical responsibility treat all stakeholders fairly, including employees, customers, suppliers, leadership, and investors.
There are several ways to embrace ethical responsibility in your organization, from setting a higher minimum wage to sourcing products and materials through fair trade standards.
Benefits of Corporate Social Responsibility
Most organizations embrace corporate social responsibility because they believe it’s the right thing to do, but CSR also yields benefits. For example, customers and investors often prefer socially responsible companies.
In addition, CSR initiatives can boost employee satisfaction and engagement. Research shows 90% of executives believe a sense of collective purpose in business drives employee satisfaction.
Since CSR initiatives focus on improving social accountability, they force an executive director or business leader to examine and streamline operations. The initiatives make an organization more conscious of how they source raw materials, hire and manage workers, and deliver the highest value to customers. This can result in innovative and record-breaking solutions that take the organization to the next level.
Corporate Social Responsibility Examples
Gain inspiration from these corporate social responsibility examples.
In 2020, Glossier, a brand in the beauty industry, donated $500K to companies fighting racial injustice in the U.S., and pledged an additional $500K as grants to Black-owned businesses in the beauty industry.
Lego, a reputable company that focuses on helping children grow through creativity and play, is committed to sustainability. By 2025, Lego plans to use environmentally friendly raw materials to make all its core products and packaging materials.
In 2018, the company abandoned petroleum-based plastic and introduced products made from sustainably sourced sugarcane.
Deliver Board Excellence With OnBoard
By implementing CSR strategies into their business operations, companies help their communities and the planet.
As your board strives to improve CSR strategies, a powerful board portal platform like OnBoard can help digitize operations (less waste) and streamline board meetings, leaving you with more time to discuss what matters. Robust features like minutes builder, engagement analytics, and agenda time management drive board intelligence and collaboration.
About The Author
- At OnBoard, we believe board meetings should be informed, effective, and uncomplicated. That’s why we give boards and leadership teams an elegant solution that simplifies governance. With customers in higher education, nonprofit, health care systems, government, and corporate enterprise business, OnBoard is the leading board management provider.
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