What Is Corporate Social Responsibility?

Consumer attitudes are shifting?here is a growing desire for companies to not only sell products but also give back to their communities and introduce sustainable practices to help the environment.

To many buyers, a company's values are as important as any goods or services. Many companies have begun adopting more responsible business practices and have taken more of a stewardship role in their communities and globally.

What Is Corporate Social Responsibility?

Corporate social responsibility is a catch-all name for ethical behavior and business practices that reflect environmental responsibility.

One of the defining features of CSR initiatives is that they need to be self-regulated. Socially responsible companies need to act on their own, not just because governmental regulation is making them.

These actions can come in the form of switching to a more sustainable business model, choosing fair-trade suppliers, and introducing renewable energy to reduce their environmental impact.

An emerging tool that companies are using to gather metrics around their CSR strategies is the triple bottom line (TBL). Unlike a traditional bottom line which focuses solely on profits, the TBL measures environmental, societal, and economic impact. Although business leaders still want to make a profit, there is a new focus on corporate citizenship.

Examples of CSR

Some examples of CSR practices include:

• promoting a focus on sustainability and reducing carbon footprint and greenhouse gas emissions in production
• encouraging employees to engage in volunteer work
• donating proceeds to social causes, such as climate change relief funds or refugee services
• forming partnerships with nonprofits for fundraising efforts
• engaging in efforts to provide economic support to both global and local communities

Types of Corporate Social Responsibility

Although there are many different ways that companies can have a positive impact on their communities and the planet, they all fit within four main types of CSR initiatives.

Environmental Responsibility

One of the most popular types of CSR is environmental responsibility. Many companies start with sustainable development efforts involving establishing an ethical supply chain and trying to reduce their overall carbon footprint. Some companies have begun trying to replace single-use plastics that harm wildlife. The consumer side isn't the only way companies are working to improve their environmental performance.

Corporate sustainability heavily involves changing business operations to reduce greenhouse gas emissions. Factories and warehouses are switching to use more renewable energy sources in production, such as solar and wind.

Ethical Responsibility

Another component of CSR is the ethical treatment of all stakeholders. Stakeholders are people who own even a small part of a company. This can be anyone from the business leaders to customers.

Using fair trade suppliers to make sure that human rights are being supported in every stage of production is one common way that companies are keeping their stakeholders' well-being in mind.

Companies also are investing more in employee engagement with added benefits like offering healthcare and more.

Philanthropic Responsibility

Although fair trade production methods are a great way to promote human rights, companies that are trying to engage in CSR efforts also need to include efforts to give back to their communities through charities and other nonprofit efforts.

Beyond the environmental impact, many companies are also putting a renewed focus on social impact. In addition to leading fundraising efforts for other philanthropic organizations, some companies have begun establishing their nonprofit efforts.

Economic Responsibility

The final type of CSR is economic responsibility. Economic responsibility is directly related to all of the other CSR efforts because it is the mindset of companies that their profits aren't the only goal they should have. This business strategy is heavily influenced by the Triple Bottom Line which suggests that companies's success is measured beyond money.

Benefits of Corporate Social Responsibility

CSR activities might seem like they are just about giving, but there are several benefits of CSR for companies adopting these policies.

Focusing more on the environment and philanthropic efforts has begun to provide a competitive advantage. Millennial and Gen-Z consumers are more likely to buy from companies they feel have a positive environmental and social impact.

Having a clear CSR strategy also helps to attract employees since American workers are showing more and more how much they want to be valued by their employers. Companies that give back to their local communities and offer benefit packages have better hiring rates and retention.

Are All CSR Programs Genuine?

Sadly, some of the corporate advantages of CSR initiatives entice business owners to practice them for the wrong reasons. There are some companies that either exaggerate the extent of their CSR efforts or, in some extreme cases, blatantly lie about ethical efforts in their supply chain or environmental efforts.

Fortunately, most CSR efforts are undertaken for the right reasons as people with more environmental and socially minded business practices start businesses or assume leadership roles in established companies.

Do Colleges Teach Corporate Responsibility in Business Degree Programs?

Not only are companies adopting CSR efforts, but many business degree programs have begun including classes about CSR and ethics in their curriculums. Some schools even offer MBAs with a focus on CSR.

Even if your business degree program didn't include designated CSR-related courses, there are multiple online certifications that you can pursue to expand your knowledge of sustainability.