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What is corporate social responsibility

Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of public interest into corporate decision-making, which is the core business of the company or firm, and the honoring of a triple bottom line: people, planet, profit.

The term "corporate social responsibility" came in to common use in the late 1960's and early 1970's, after many multinational corporations formed. The term stakeholder, meaning those on whom an organization's activities have an impact, was used to describe corporate owners beyond shareholders as a result of an influential book by R. Edward Freeman, Strategic management: a stakeholder approach in 1984. Proponents argue that corporations make more long term profits by operating with a perspective, while critics argue that CSR distracts from the economic role of businesses. Others argue CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations.

CSR is titled to aid an organization's mission as well as a guide to what the company stands for and will uphold to its consumers. Development business ethics is one of the forms of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. ISO 26000 is the recognized international standard for CSR (currently a Draft International Standard). Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles but with no formal act of legislation. The UN has developed the Principles for Responsible Investment as guidelines for investing entities.

 

Corporate social responsibility and your business

Corporate social responsibility (CSR) can cut across almost everything you do and everyone you deal with. You need to think about:

The suppliers you choose and the way you deal with them. For example, trading with suppliers who pollute the environment could be as irresponsible as doing so yourself.

How you treat your employees. For the responsible business, this means doing more than simply complying with legal requirements.

How your business affects your local community and whether you should be actively involved.

How what you do affects the environment and what you can do to use resources more efficiently and reduce pollution and waste.

This doesn't mean that you can't run a profitable business. In fact, CSR can help you improve your business performance. By looking ahead, you're ready to cope with new laws and restrictions. You avoid costs such as wasted energy or paying unnecessary waste fees. Perhaps most importantly, you can keep winning business from increasingly demanding customers.

The business benefits of corporate social responsibility

Corporate social responsibility (CSR) isn't just about doing the right thing. It means behaving responsibly, and also dealing with suppliers who do the same. It also offers direct business benefits.

Building a reputation as a responsible business sets you apart. Companies often favor suppliers who demonstrate responsible policies, as this can have a positive impact on how they are perceived by customers.

Some customers don't just prefer to deal with responsible companies, but insist on it. The Co-operative Group, for instance, place a strong emphasis on its corporate social responsibility and publishes detailed 'warts and all' reports on its performance on a wide range of criteria - from animal welfare to salt levels in its pizzas. 

Reducing resource use, waste and emissions doesn't just help the environment - it saves you money too. It's not difficult to cut utility bills and waste disposal costs and you can bring immediate cash benefits.

There are other benefits too:

A good reputation makes it easier to recruit employees.

Employees may stay longer, reducing the costs and disruption of recruitment and         retraining.

Employees are better motivated and more productive.

CSR helps ensure you comply with regulatory requirements.

Activities such as involvement with the local community are ideal opportunities to generate positive press coverage.

Good relationships with local authorities make doing business easier.

Understanding the wider impact of your business can help you develop new products and services.

CSR can make you more competitive and reduces the risk of sudden damage to your reputation (and

sales). Investors recognize this and are more willing to finance you.

 

Understand the environmental impact of your business

Your business affects many different people - employees, customers, suppliers and the local community. It also has a wider impact on the environment.

Even the simplest energy efficiency measures, like switching off lights and equipment when they aren't needed, makes a real difference. Reducing the use of water also directly cuts your costs.

Minimizing waste can also make a big difference. Simple steps like reducing the amount of paper you waste can immediately cut costs. You can save even more by thinking about waste implications when you design new products and production processes.

Caring about the environment can increase revenue too. Many customers prefer to buy from responsible companies.

There are all sorts of ways in which you can reduce the environmental impact of your business. For example:

creating recyclable products

sourcing responsibly (e.g. using recycled materials and sustainable timber)

minimizing packaging

buying locally to save fuel costs

creating an efficient (and fuel-efficient) distribution network

working with suppliers and distributors who take steps to minimize their environmental impact

You could reduce the environmental impact of your business by using environmental assessment techniques such as lifecycle assessment and setting up an environmental management system.

Deal responsibly with customers and suppliers

By working with your customers and suppliers in a responsible way your business can reap substantial rewards.

Some actions you can take when dealing with customers are:

Make sure brochures are written in plain English, telling the truth without hiding anything in the 'small print'.

Be open and honest about your products and services. Tell customers what they want to know, including what

steps you take to be socially responsible.

If something goes wrong, you should acknowledge the problem and deal with it.

In return, you can expect customers to reward you with their loyalty. Listening to your consumers can also help you improve the products and services you offer them.

Choosing your suppliers carefully can be an important part of your approach to corporate social responsibility (CSR). For example, you might try to use local suppliers as much as possible. This helps you support your community and also reduces the energy wasted and carbon emissions from deliveries.

When selecting suppliers you should also examine their employment, health and safety and environmental practices. Customers are increasingly concerned about the wider impact of supply chains, for example on local work forces and environments. Your reputation can be damaged by being associated with businesses that abuse the rights of their own workers or their local environment.  

Larger organizations often audit their suppliers to ensure that they follow responsible working practices. You could do something similar - simply asking them about their attitudes to CSR might be revealing.

You should also treat your suppliers fairly, particularly smaller businesses that rely on you. For example, being paid on time can make a big difference to them.

Work with the local community

Working with your local community brings a wide range of benefits. For many businesses, local customers are an important source of sales. By improving your reputation, you may find it easier to recruit employees. A good relationship with local authorities can also make your life easier. For example, some local authorities prefer to award contracts to businesses with a record of community involvement.

There are many ways to get involved. Some businesses choose to support a local charity, or sponsor a local event. It makes commercial sense to get involved in an activity related to your product. This lets you use your expertise as well as showing the human face of your business. For example, some restaurants provide food to local homeless groups, while builders may give free labor and materials to community projects.

Look for opportunities that will directly benefit you - for example, by generating publicity, or improving the neighborhood around your premises.

Many businesses involve their employees in working with the local community. For example, you might support charities chosen by employees. Some businesses encourage employees to volunteer for community activities and also give them paid time off for this. As well as improving your community relations, this can help motivate employees and can help develop their interpersonal and team participation skills.

You could also give your employees the option of making regular charitable donations which are deduced 'at source' from their pay.

Community Justice Projects

The government's community justice initiative helps businesses work with local agencies to improve the quality of life in their local area. This can benefit your business in a number of ways. For example, if your business is suffering because of damage to your property or the surrounding area, the community justice team can work with you to address this.

Your business could take a pro-active approach to dealing with local crime by supporting recent offenders or your local community justice team. You could:

offer offenders work experience or training as part of a sentence or on a voluntary basis

provide financial or practical resources to the local community justice team

get involved with local regeneration projects

support staff who volunteer in the criminal justice system, e.g. as mentors, special constables, youth offender,

panel members, or in victim and witness support

 

Measure the effectiveness of your corporate social responsibility

Corporate social responsibility (CSR) can help you cut costs and boost sales. However, there are other significant benefits which businesses sometime forget about, as they are slightly harder to measure.

Benefits such as improved reputation, stronger customer loyalty and motivated employees should not be overlooked, and can in fact be measured. For example, improved motivation could lead to reduced absenteeism and reduced staff turnover. Similarly, customer loyalty could increase levels of repeat purchasing.

Identifying and measuring indicators of success

You can benchmark your business against others. 

Some of the UK's largest companies publish CSR reports online. 

You can use key performance indicators (KPIs) to measure your environmental performance.

It's worth remembering that measurements will probably only show the immediate impact of CSR. The biggest benefit can be the long-term improvement in your Benefit from corporate social responsibility

Make the most of your corporate social responsibility (CSR) activities by publicizing them. Ensure that customers, suppliers and the local community know what you are doing. CSR lends itself to good news stories.

Publicity like this can be a key part of using CSR to win contracts. People want to buy from businesses they respect. CSR can be particularly effective for targeting ethical companies, the public sector and not-for-profit organizations.

At the same time, you should see CSR as part of a continuing process of building long-term value. Everything you do should help improve your reputation and encourage customers and other stakeholders to stay involved with you. A business that buys recycled paper - but exploits its customers and ignores the community - has missed the point.

You could consider working towards a management standard which you can then use to publicize your ethical, environmental or social responsibility. For example, many businesses have already achieved the environmental management standard ISO 14001.  

Effective CSR like this helps you continue to differentiate yourself. Even with dozens of competitors, a real commitment to CSR lets you stand out. As well as affecting the way you behave, CSR can lead to new products and services that reflect your values and those of your stakeholders. Over time, it can all add up to a powerful brand - and a winning business.