What is corporate social responsibility

Corporate Social Responsibility (CSR)

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.

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.”

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:

What Is Corporate Social Responsibility?

Businesses that practice corporate social responsibility aim to improve their communities, the economy or the environment.

The definition of business success goes beyond profitability, growth rate and brand recognition. In today’s world, customers, employees and other stakeholders judge a company by how its activity impacts the community, economy, environment and society at large. In other words, by whether it cares about the greater good and not only greater profit. Corporate social responsibility practices are a way to demonstrate your business’s stance on the matter.

What is corporate social responsibility?

Corporate social responsibility is a type of business self-regulation with the aim of social accountability and making a positive impact on society. Some ways that a company can embrace CSR include being environmentally friendly and eco-conscious; promoting equality, diversity, and inclusion in the workplace; treating employees with respect; giving back to the community; and ensuring business decisions are ethical.

CSR evolved from the voluntary choices of individual companies to mandatory regulations at regional, national and international levels. However, many companies choose to go beyond the legal requirements and embed the idea of “doing good” into their business models.

There is no one way a company can embrace CSR, but one thing is certain – to be perceived as genuine, the company’s practices need to be integrated into its culture and business operations. In today’s socially conscious environment, employees and customers place a premium on working for and spending their money on businesses that prioritize CSR. They can detect corporate hypocrisy.

To ensure CSR authenticity, a company should look at its values, business mission and core issues and determine which initiatives best align with the business’s goals and culture. The business can do this internally or hire a third party to conduct an assessment.

Reviewing the United Nations 17 Sustainable Development Goals is a good place to start. While goals like Good Health and Well-Being or Gender Equality can apply to most businesses, specific goals like Life Below Water or Affordable and Clean Energy may be relevant to select industries like water technology or energy providers.

Why CSR is important

There are many reasons for a company to embrace CSR practices.

1. It improves customers’ perception of your brand.

It’s increasingly important for companies to have a socially conscious image. Consumers, employees, and stakeholders prioritize CSR when choosing a brand or company, and they hold corporations accountable for effecting social change with their beliefs, practices, and profits.

“What the public thinks of your company is critical to its success,” said Katie Schmidt, founder and lead designer of Passion Lilie. “By building a positive image that you believe in, you can make a name for your company as being socially conscious.”

To stand out among the competition, your company needs to prove to the public that it is a force for good. Advocating and raising awareness for socially important causes is an excellent way for your business to stay top-of-mind and increase brand value.

The Kantar Purpose 2020 study demonstrated a direct correlation between perceived positive impact and brand value growth. Companies that the public considers highly impactful demonstrated a brand value growth of 175% over 12 years, while businesses with a low positive impact showed only 70% growth.

Schmidt also said that sustainable development could help a business financially. For example, using less packaging and less energy can reduce production costs.

Key takeaway: CSR practices play a crucial role in attracting new customers, whose purchasing decisions are strongly influenced by the company’s values, reputation, and social and environmental activism.

2. It attracts and retains employees.

Consumers aren’t the only ones drawn to businesses that give back. Susan Cooney, head of global diversity and inclusion at Symantec, said that sustainability strategy is a big factor in where today’s top talent chooses to work.

“The next generation of employees is seeking out employers that are focused on the triple bottom line: people, planet and revenue,” she said. “Coming out of the recession, corporate revenue has been getting stronger. Companies are encouraged to put that increased profit into programs that give back.”

According to Deloitte’s 2021 Millennial and Gen Z Survey, the modern workforce prioritizes culture, diversity, and high impact over financial benefits. An estimated 44% of millennials and 49% of Gen Zers rely on their personal ethics in determining the type of work and companies they’d join. The respondents of the Porter Novelli Purpose Tracker 2021 report go even further, with 70% saying they wouldn’t work for a company without a strong purpose.

What’s more, employees that share the company’s values and can relate to its CSR initiatives are much more likely to stay. Deloitte’s 2020 Global Marketing Trends Report shows that purpose-driven companies retain talent up to 40% more than their competitors. Considering that the estimated cost of losing an employee averages 40% of their annual salary, according to a report by the Washington Center for Equitable Growth, offering your team a sense of purpose and meaning in their work is worth the effort.

3. It increases your appeal to investors.

By demonstrating a developed CSR program and initiatives, your company is bound to become more appealing to both current and future investors. CECP’s influential 2021 Giving in Numbers report shows that investors play a growing role as key stakeholders in corporate social responsibility. Almost 80% of surveyed businesses were open to providing them with data and considering their perspectives on sustainability. Just like customers, investors are holding businesses accountable when it comes to social responsibility.

At the same time, a company that takes CSR seriously signals to both investors and partners that it’s interested in long-term as well as short-term gain. CSR goes hand in hand with environmental, social, and governance (ESG) metrics that help external analysts quantify the company’s social efforts, and becomes a key factor for investors’ consideration and continued interest.

Tip: Don’t wait until investors ask you to provide social impact data. Get ahead of current trends by sharing ESG scores, sustainability reports and CSR metrics.

4 types of corporate responsibility your business can practice

In recognition of how important socially responsible efforts are to their customers, employees and stakeholders, many companies focus on four broad CSR categories.

Building a socially responsible business

While startups and small companies don’t have the deep financial pockets that enterprises have, their efforts can have a significant impact, especially in their local communities.

“Even 5%, though it might not sound like a lot, can add up to make a difference,” Schmidt said. “When thinking of ways to donate and give back, start local, and then move from there.”

When identifying and launching a CSR initiative, involve your employees in the decision-making process. Create an internal team to spearhead the efforts and identify organizations or causes related to your business or that employees feel strongly about. You’ll increase engagement and success when you contribute to something that matters to your employees. Involving your employees in the decision-making process can also bring clarity and assurance to your team.

“If decisions [about CSR] are made behind closed doors, people will wonder if there are strings attached and if the donations are really going where they say,” Cooney said. “Engage your employees [and consumers] in giving back. Let them feel like they have a voice.”

Whichever strategies you use for sustainable development, be vocal. Let your consumers know what you are doing to be socially conscious. [Related read: PayPal’s Mission for Corporate Social Responsibility]

“Consumers deserve to share in the good feelings associated with doing the right thing, and many surveys have found that consumers are inclined to purchase a sustainable product over a conventional alternative,” Cooney said. “Announcing these benefits is a win-win from both a commercial and sustainability perspective.”

Tip: Make your employees and team part of the decision-making process for your social responsibility efforts.

What to avoid when creating a socially responsible business model

Becoming a socially responsible business can be simple, but there are a few caveats.

1. Don’t choose unrelated initiatives.

Avoid participating in charitable efforts that are not related to your core business focus or that violate your company’s ethical standards in any way. Instead of blindly sending money to a completely unrelated organization, find a nonprofit that your company believes in or invest in a project in your community.

2. Don’t use CSR as a marketing scheme.

Don’t use CSR opportunities solely for marketing purposes. Schmidt said running a corporate responsibility campaign as a quick marketing scheme can backfire if your business doesn’t follow through. Instead of trying a one-time stunt, adopt socially responsible business practices over time. Schmidt said employees and consumers react positively to companies that embrace long-term social responsibility.

3. Don’t wait for the industry to catch up.

If you are considering sustainable activities that aren’t legally required yet, don’t wait. By adopting socially responsible norms early on, you set the bar for your industry and refine your process. [Related read: 14 Examples of Socially Responsible Businesses]

Undertaking CSR initiatives is a win for everyone involved. The impact of your actions will not only appeal to socially conscious consumers and employees, but can also make a real difference in the world.

CSR certifications

While many companies self-assess their CSR efforts, often the most practical and trusted way to prove your company’s social accountability to the public is to undergo a third-party social impact assessment.

These three corporate social responsibility certifications can help you achieve public recognition for your sustainability and CSR efforts.

B-corp certification

Certified B corporations, or B-corps, are companies verified by B Lab to meet high standards of social and environmental performance, accountability, and transparency. To become a B-corp, a company must undergo a rigorous and holistic verification process every three years, integrate B-corp commitments to all stakeholders (rather than only shareholders) into its governing documents, and pay a sales-based annual fee.

While B-corp status is mainly associated with multinationals like Patagonia or Ben & Jerry’s, small businesses and startups that strive for social and environmental excellence can also receive this CSR certification. The first step is to complete the free and confidential B Impact Assessment on the B Lab website and receive a minimum score of 80. If you meet the baseline, you can submit the impact assessment for review and start the verification process.

Did you know? The world’s most searched-for B corporation is the Australia-based educational platform Moodle. Its mission is to “empower educators to improve our world.”

ISEAL code compliance

ISEAL Alliance is a global membership organization for credible sustainability standards whose members include Fairtrade International, Gold Standard, Alliance for Water Stewardship and more. An assessment from ISEAL is carried out by an independent third-party verification provider that determines whether a business meets Codes of Good Practice and can be deemed ISEAL Code Compliant. This assessment offers a reputable seal of approval for companies that emphasize sustainability.

In some circumstances, verifications from ISEAL members can directly impact business continuity. For example, the absence of a certification from the Roundtable for Sustainable Palm Oil can effectively close down a supply chain for some consumer brands.

SASB standards

The Sustainability Accounting Standards Board is one of the most established environmental, social, and governance (ESG) guidance frameworks, providing standards for disclosing the financial impact of a company’s sustainability efforts. In other words, it allows businesses to communicate the financial outcomes of their CSR and ESG measures to investors and other stakeholders.

SASB Standards are evidence-based, cost-effective, market-informed, and industry-specific, covering 77 industries. These standards help produce structured, comparable, and standardized data that is perfect for both internal and external communications of CSR and ESG impacts.

Examples of CSR companies

If you’re looking for CSR inspiration for your business, here are six companies practicing corporate social responsibility on a large scale.

Key takeaway: No matter the size of your company, socially responsible practices can not only benefit your business, but also make a positive impact on the world.

Corporate social responsibility FAQs

Corporate social responsibility is a modern approach to running a business. Here are some of the most frequently asked questions about it.

What is corporate social responsibility (CSR)?

Corporate social responsibility is a way of describing how companies measure and control their impact on society. This includes a company’s contributions – both positive and negative – to the economy, environment and greater community.

Who is CSR for?

Businesses of all sizes can choose to introduce a comprehensive CSR program or selected initiatives and reap the associated benefits. No matter the size or maturity of your business, an investment in ethical behavior and sustainable practices can improve your brand value, build customer trust, grow your company, and improve the bottom line.

What are the benefits of CSR for companies?

CSR can be beneficial to a company in several ways. The first is by improving its brand image. When customers or clients see evidence that a business is socially responsible, they tend to respond positively.

The second benefit is improving employee morale. Morale tends to be higher at companies that invest effort and resources into ethical and socially responsible behavior.

The third involves appealing to new talent. Modern employees often choose purpose-driven and environmentally conscious companies over financial benefits.

Lastly, CSR-active companies attract investors and partners. A company that is willing to invest in long-term policies and improvements offers security to potential investors.

What are examples of CSR initiatives?

Some examples of CSR components are reducing carbon footprint and energy consumption, engaging in wildlife conservation initiatives, encouraging charity and volunteer work, supporting local communities, improving labor policies, ensuring diversity and equality in the workplace, investing in nonprofit organizations, and guaranteeing ethically sourced materials.

Whichever practices you employ, make sure they are authentic and match your corporate values. Otherwise, your business might be accused of greenwashing.

How do you monitor CSR?

There are a few key ways to measure CSR. The first is to break CSR goals into categories, such as philanthropy, labor practices, and environmental efforts.

To track the success of these investments, look for measurable key performance indicators. How much has your company’s carbon footprint changed? How many people did you reach with a charitable effort? Monitor new developments and keep a pulse on general public perception of issues associated with your company’s social causes.

Skye Schooley, Nicole Fallon and Sammi Caramela contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

What is corporate social responsibility (CSR)?

Corporate social responsibility (CSR for short) is the internationally regarded concept for responsible corporate behavior – although it is not clearly defined. In a nutshell, CSR refers to the moral and ethical obligations of a company with regards to their employees, the environment, their competitors, the economy and a number of other areas of life that its business affects.

CSR is often understood as a voluntary commitment to certain company rules i.e. beyond state laws and standards. This means that companies that operate responsibly and morally can often use their CSR for PR purposes as well. If it becomes known that a company voluntarily commits itself to a good cause, this improves their public image.

For this reason, however, the concept of corporate social responsibility is repeatedly criticized: many companies do not embrace CSR as a result of genuine altruism, but rather to develop their own image. In this article we explain in detail what CSR is, how it has developed, and how CSR is borne out in some companies today.

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Corporate social responsibility (CSR) refers to the self-imposed responsibility of companies to society in areas such as the environment, the economy, employee well-being, and competition ethics. Many companies use internal CSR regulation as a form of moral compass to positively influence the ethical development of their business. Positive corporate social responsibility can also offer economic benefits.

Developed and detailed definition of corporate social responsibility

The concept of companies acting responsibly is not new, but through the term “corporate social responsibility” (CSR) it has taken on a modern meaning. Even centuries ago people were occupied with the question of whether the economic activity of a business should be used for good rather than to simply make a profit. In the middle ages there was a concept of the “honest merchant” who would operate according to a code of values and thereby influence other traders to bring benefits to society as a whole by complying with certain rules of conduct.

For bigger companies, corporate responsibility won a greater meaning during industrialization, as firms would build housing for their employees and harsh working conditions prompted a growth of the issue in the collective consciousness. Companies slowly began to accept social responsibility for their employees and their families, although when decisive improvements were made it has only as a result of nationwide implementation and state legislation. An environmental ethic simply did not exist in most companies at that time.

The modern concept of company responsibility as we know it today arose in the 1950s in the US. At that time, many public discussions were being held on the topic and the first scientific findings were being published. Howard R. Bowen in his article “Social Responsibilities of the Businessman” described corporate responsibility as the logical consequence of the social accountability of individuals within the company. Thereby, it would have to orient itself according to these rules and thereafter enforce them. At the time, most companies did not feel obliged to work towards a more moral business focus: the defining outlook was that economic growth remained the determiner of everyday working life.

From the 1970s, socially active institutions that could have a positive influence on the moral outlook of society were increasingly recognized by companies. Society and business were in constant interaction and it was believed that through this there could be a consolidation of social norms within the capitalist economy. Corporate social responsibility existed before the century’s end, although perhaps more so as a hopeful ideal than as a behavior-changing act.

In recent years, with the growing focus on environmentalism and questions of ethics within a globalized world, CSR has begun to take on a stronger meaning. The rising importance of the internet meant that companies who behaved irresponsibly were quickly derided and suffered a serious blow to their public image when operational scandals, abuses, and grievances were publicized on social networks. From this, corporate social responsibility developed from an ideal to an important field of work for many companies.

Corporate social responsibility (CSR) and «corporate citizenship» are also often used synonymously. The confusion of terms shows, on the one hand, that CSR is a broad field and covers many sub-areas, while on the other hand, that the term itself is misleading. This is because «responsibility» implies an externally imposed principle and emphasizes the less voluntary nature of CSR.

These days, large companies cannot afford to not take CSR seriously. Some employ CSR specialists who help to not only formulate the companies’ moral code but also to monitor its implementation. This can often have added economic benefit if the positive corporate social responsibility can be used for marketing and PR use; everyone involved benefits from well-implemented CSR.

Companies are sometimes accused of driving their CSR efforts in the hope of having a positive advertising effect and increasing profits, and not for moral motives. Critics therefore simply equate CSR with marketing. On the other hand, there is also a widespread opinion that the intention behind corporate social responsibility is not so important, as long as it is ultimately benefitting people.

The three core focuses of corporate social responsibility

Corporate social responsibility is a somewhat unclear concept, and consequently there are several ways of understanding the underlying concept. A relatively popular model is the responsibility model mapped out by Stefanie Hiss. She separates CSR into three core areas, which are each named according to the nature of their work:

Corporate social responsibility can be broken into three main areas according to Hiss.

Internal responsibility

The internal area of responsibility includes all internal processes that affect the corporate strategy itself. The internal area of responsibility is usually the responsibility of company executives and influences important decisions, e.g. which business partners are acquired, one’s own responsibility to the market with regard to monopolies, fair and realistic growth planning, and healthy profitability.

In the ideal case, the moral compass of the company plays an important role in decision-making, however, it is usually difficult to judge from the outside to what extent a company takes its internal area of responsibility seriously. CSR management that is visible to the outside world is at least an indication that the internal strategy also takes moral principles into account.

Middle area of responsibility

The middle area of responsibility includes all those actions of a company whose effects on the environment and society can be measured more or less directly. This includes CO2 emissions and air pollution as well as working conditions for employees. This also includes responsible supply chain management, because cooperation with morally questionable companies ultimately supports their corporate policy.

Corporate social responsibility (CSR) in the middle area of responsibility is the most difficult to coordinate for many large corporations, but has gained considerable importance – precisely because it is in this area that the most damage can occur. This applies not only to the environment and society, but also to a company’s own employees, stakeholders, and reputation.

Stakeholders: Stefanie Hiss suggests that the middle area of responsibility mainly refers to stakeholders. Generally speaking, stakeholders are people who have an increased interest in processes, working conditions and, in most cases, the success of the company. The following groups of people form important stakeholders:

Employees

Companies have a duty to their employees to ensure a pleasant working environment and, in addition, to make information sufficiently transparent in terms of career opportunities and hierarchies. This also includes the issue of fair payment and profit sharing as well as the limitation of the term of contracts.

Another fundamental element for healthy CSR in this area is the constructive interaction with trade unions when they operate within the company. In extreme cases, there can be strikes if companies do not take their social responsibility towards their employees seriously. Unacceptable working conditions sometimes even call human rights organizations or state institutions into question. Frequently employees will make these grievances public, meaning that the news can spread like wildfire across social media and cause considerable image damage.

Equity and debt capital providers

Investors have a clear interest not only in the success of the company, but also in fair cooperation. Above all, listed companies are threatened with considerable damage if their dealings with business partners and investors are morally questionable or dishonest.

Clients

Companies that supply products should not deceive their customers. Especially in the case of consumer goods such as food, a company has the responsibility to correctly inform the customer about the preparation and composition of the product. Knowing the origin of the product and the raw materials used is also important to many customers. If a company presents itself to the outside world as environmentally friendly, but uses eggs from caged production or components from environmentally harmful production plants in the manufacturing of a product, this can lead to the loss of a considerable customer base.

For many companies, the customer is by far the most important stakeholder. If a company does not take its social responsibility towards its customers seriously, this is often due to poor CSR management (if any).

Local residents

Companies located in cities or at least in the immediate vicinity of settlements also have a responsibility towards local residents. The operation should not have a negative impact on the quality of life of the residents. This applies, for example, to noise and environmental pollution. In many countries, people still suffer from the harsh living conditions as large factories ignore their social responsibility.

In the worst case, companies cause drinking water pollution, unacceptable noise, air pollution, and damage to the surrounding flora and fauna. If such injustices are made public, the company is threatened not only with damage to its image, but also problems with the law and environmental protection organizations.

Governmental agencies

Companies must comply with the laws of the countries they operate within. This also includes smooth and honest cooperation with government organizations such as, for example, health and safety departments and health offices. In production facilities, the quality standards and regulations specified by the legislator must be observed through regular checks and surveys.

Media

The responsibility of the «fourth estate» includes the most complete possible reporting of grievances in companies. The relationship between journalists and business is therefore often two-sided: on the one hand, a company wants to present itself as well as possible, so that the media can help cultivate a positive image of them through their reporting. On the other hand, companies that do not live up to their corporate responsibilities can quickly suffer damage to their image if journalists speak out about it. Media representatives are therefore not welcome on some company premises.

Since corporate social responsibility is not subject to state control, the media often feels obliged to inform the public about corporate misconduct. Good CSR management in principle involves an open and honest dialogue with the media. However, journalists will rarely report on the positive performance of companies and instead focus on incidents of misconduct simply because negative press sells better.

External area of responsibility

As part of their corporate social responsibility, many companies not only concentrate on internal processes, but also assume social responsibility outside their own operations. The external area of responsibility is often equated with the term «corporate citizenship», and these are some examples of what it constitutes:

Contributions

Corporate giving is the most popular means of actively living corporate responsibility. Frequently, however, these donations are also linked to the sale of goods and are thus intended to promote higher sales figures: for example, by promising to donate part of the profit per product sold to a good cause. Many companies also participate in events such as marathons and fundraisers, where employees can participate. Of course, all this brings good publicity to the companies, but it does not diminish the general benefit of these actions. Such charity events are ultimately profitable for all concerned.

Sponsoring

Companies often also fulfil their social responsibility by sponsoring special initiatives or supporting associations that pursue charitable goals. In return, the companies are positively mentioned by these institutions and benefit from being associated with them. Often, this helps companies improve their reputation with local residents – for example, by sponsoring city projects and regional events.

Social activities

Companies are often willing to give employees time off if they want to carry out social activities. Alternatively, paid time for charitable work is regulated in employment contracts: for example, where employees are granted half a working day per quarter for these activities. Many companies are therefore prepared to support and even reward the social contributions of their employees by recording these activities as working time.

Examples of positive implementation of corporate social responsibility

When companies establish foundations, promote social projects, and participate in fundraising galas, CSR is seen. However, CSR must also be assessed in relation to the size and scope of a company. Companies that operate globally but have their headquarters in a rich country should also extend social engagement to the poorer countries where they produce their products.

The ways in which CSR can be fulfilled are multifaceted: a small local company, for example, already acts in a socially responsible manner when it is involved in a particular project; a small financial injection for the local city park can mean that CSR has been positively implemented just as successfully as the company offering assistance in the event of a natural disaster. Below you will find examples of some companies that have excelled in the field of corporate social responsibility.

Ben & Jerry’s

Ben & Jerry’s are known the world over for their iconic labelling and wacky – but delicious – ice cream flavors. Since their humble beginnings in 1977, Ben and Jerry have always done things their own way and maintained a strong sense of economic and social duty in the way they handle their business.

Ben & Jerry’s corporate social responsibility spans all areas of their business. They are committed to using only Fairtrade, non-GMO ingredients in their produce, and support sustainable agricultural practices and ethical treatment of their dairy cows. They have vowed to operate the company in a manner than ensures only sustainable growth is achieved and that it is the development of their employees which is put first. Their social missions are where they have been most visible, however, having supported a number of causes at a local, national, and international level. These include:

Types of Corporate Social Responsibility to Be Aware Of

Until fairly recently, most large businesses were driven almost exclusively with a single goal in mind: profit. Maximizing profits was at the heart of every action taken or initiative pursued.

In the past few decades, however, more business leaders have recognized that they have a responsibility to do more than simply maximize profits for shareholders and executives. Rather, they have a social responsibility to do what’s best not just for their companies, but people, the planet, and society at large.

This realization has led to the emergence of companies that identify as socially responsible. Some even carry designations or seals, such as B Corporations (B Corps), social purpose corporations (SPCs), and low-profit limited liability companies (L3Cs).

But what is corporate social responsibility, and what are the different forms it can take?

What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is the idea that a business has a responsibility to the society that exists around it, according to the online course Sustainable Business Strategy.

Firms that embrace corporate social responsibility are typically organized in a manner that empowers them to be and act in a socially responsible way. It’s a form of self-regulation that can be expressed in initiatives or strategies, depending on an organization’s goals.

Exactly what “socially responsible” means varies from organization to organization. Firms are often guided by a concept known as the triple bottom line, which dictates that a business should be committed to measuring its social and environmental impact, along with its profits. The adage “profit, people, planet” is often used to summarize the driving force behind the triple bottom line.

Check out our video on corporate social responsibility below, and subscribe to our YouTube channel for more explainer content!

Types of Corporate Social Responsibility

Corporate social responsibility is traditionally broken into four categories: environmental, philanthropic, ethical, and economic responsibility.

1. Environmental Responsibility

Environmental responsibility refers to the belief that organizations should behave in as environmentally friendly a way as possible. It’s one of the most common forms of corporate social responsibility. Some companies use the term “environmental stewardship” to refer to such initiatives.

Companies that seek to embrace environmental responsibility can do so in several ways:

2. Ethical Responsibility

Ethical responsibility is concerned with ensuring an organization is operating in a fair and ethical manner. Organizations that embrace ethical responsibility aim to achieve fair treatment of all stakeholders, including leadership, investors, employees, suppliers, and customers.

Firms can embrace ethical responsibility in different ways. For example, a business might set its own, higher minimum wage if the one mandated by the state or federal government doesn’t constitute a “livable wage.” Likewise, a business might require that products, ingredients, materials, or components be sourced according to free trade standards. In this regard, many firms have processes to ensure they’re not purchasing products resulting from slavery or child labor.

3. Philanthropic Responsibility

Philanthropic responsibility refers to a business’s aim to actively make the world and society a better place.

In addition to acting as ethically and environmentally friendly as possible, organizations driven by philanthropic responsibility often dedicate a portion of their earnings. While many firms donate to charities and nonprofits that align with their guiding missions, others donate to worthy causes that don’t directly relate to their business. Others go so far as to create their own charitable trust or organization to give back.

4. Economic Responsibility

Economic responsibility is the practice of a firm backing all of its financial decisions in its commitment to do good in the areas listed above. The end goal is not to simply maximize profits, but positively impact the environment, people, and society.

Benefits of Corporate Social Responsibility

Most firms are driven to embrace corporate social responsibility due to moral convictions, and doing so can bring several benefits.

Corporate social responsibility initiatives can, for example, be a powerful marketing tool, helping a company position itself favorably in the eyes of consumers, investors, and regulators. CSR initiatives can also improve employee engagement and satisfaction—key measures that drive retention. Such initiatives can even attract potential employees who carry strong personal convictions that match those of the organization.

Finally, corporate social responsibility initiatives, by their nature, force business leaders to examine practices related to how they hire and manage employees, source products or components, and deliver value to customers.

This reflection can often lead to innovative and groundbreaking solutions that help a company act in a more socially responsible way and increase profits. Reconceptualizing the manufacturing process so that a company consumes less energy and produces less waste, for example, allows it to become more environmentally friendly while reducing its energy and materials costs—value that can be reclaimed and shared with both suppliers and customers.

Are you interested in learning how to lead your organization toward positive change? Explore Sustainable Business Strategy—one of our online courses related to business in society—and discover how you can become a purpose-driven leader.

Corporate Social Responsibility (CSR): A One-Stop Guide

What is Corporate Social Responsibility?

What is corporate social responsibility (CSR)? As with most business concepts, corporate social responsibility has several definitions, but these broadly coalesce around some core themes. Investopedia ’s definition of corporate social responsibility is “a self-regulating business model that helps a company be socially accountable – to itself, its stakeholders, and the public.”

Harvard Business Review sees CSR’s primary goal as “to align a company’s social and environmental activities with its business purpose and values.” At the same time, the European Commission defines CSR as “the responsibility of enterprises for their impact on society.”

Diligent’s corporate social responsibility definition: CSR is an organization’s obligation to act ethically and to the benefit of the community it is a part of and depends on.

Why Have More Companies Become Concerned About Corporate Social Responsibility in Recent Years?

The importance of corporate social responsibility (CSR) has undoubtedly grown over the last decade. When looking at why CSR is increasingly important, one should consider the impact of CSR on all elements of corporate life.

Alongside the altruistic drivers – the growing recognition of the importance of corporate social responsibility to society – organizations acknowledge the importance of corporate social responsibility in business.

CSR’s impact on a brand’s image has been evident in recent years, with numerous examples of a company’s supply chain, employment practices and environmental performance having the potential to derail its reputation.

So, what is driving this increased significance of corporate social responsibility?

CSR encompasses many different strands: environmental governance, ethical concerns, community and employee relations – and the drivers can differ for each of these strands.

For instance, pressure from the media and investors in recent years has brought environmental sustainability to the top of the board’s agenda. A more proactive approach to corporate social purpose may have been driven by a desire to demonstrate a commitment to social purpose to shareholders and believe that this will impart a competitive edge. This can be cited as a key reason why companies engage in corporate social responsibility.

Importance of Corporate Social Responsibility

The growing public awareness of CSR issues has led to an expectation that the companies we spend money with are “doing the right thing” regarding their social citizenship. The value of corporate social responsibility (CSR) is demonstrated when businesses’ approaches mirror their customers’ priorities.

All too often, though, there remains a mismatch between public preferences and corporate performance. The Telegraph reports that in 2019, while 59% of consumers expected companies to take a stand on climate and environmental issues, only 16% of business leaders cited CSR as their top three business concerns.

When looking at the importance of corporate social responsibility, the other issue to consider is the breadth of CSR and whether, as a term and a concept, it’s specific enough to hone in on the core issues you should be considering. ESG – environmental, social and governance – is a term that is increasingly being used interchangeably with CSR. But strictly speaking, the two are different.

Stakeholder intelligence experts Alva sum this up nicely, noting that:

“Without CSR, there would be no ESG, but the two are far from interchangeable. While CSR aims to make a business accountable, ESG criteria make its efforts measurable.”

In some cases, the potential breadth of issues covered under CSR and the lack of tangible ways to measure CSR efforts have meant that companies’ corporate social responsibility initiatives have failed to achieve their potential. The number of projects that potentially fall under the CSR banner can make it difficult to manage or quantify value.

Enter ESG. While ESG encompasses CSR initiatives, it also provides a clear framework, with a growing number of regulatory imperatives – more of which below – around ESG performance and reporting. Will boards’ efforts in the future move away from CSR and towards ESG? We will have to wait and see.

History of Corporate Social Responsibility

Because it has attracted increasing attention in recent years, it might be assumed that corporate social responsibility is a relatively new concept – but the belief that corporations have a responsibility towards society is not new.

CSR Timeline

1953 Howard R Bowen publishes Social Responsibilities of the Businessman, widely viewed as the first book to comprehensively cover business ethics and social responsibility.

1970 American economist Milton Friedman publishes an article titled The Social Responsibility of Business is to Increase its Profits. The first Earth Day takes place.

1976 Founding members of the “Five Percent Club” – including Dayton Corporation (later Target) and General Mills – commit to using a proportion of their profits for philanthropy.

1984 R. Edward Freeman publishes Strategic Management: A Stakeholder Approach¸ often considered the point at which CSR became part of mainstream management theory.

1999 The first mainstream sustainable investment indices, The Dow Jones Sustainability Indices (DJSI), are launched.

2000 The United Nations Global Compact, a voluntary initiative based on CEO commitments to implement universal sustainability principles, is launched in front of 44 business CEOs and 20 heads of civil society organizations.

2000 The first full version of the Global Reporting Initiative’s Sustainability Reporting Guidelines is released.

2002 The Johannesburg Stock Exchange becomes the world’s first exchange for requiring listed companies to report on sustainability.

2011 The United Nations issues its Guiding Principles on Business and Human Rights, a global standard aimed at preventing and addressing human rights abuse risk linked to business activity.

2015 The Task Force on Climate-related Financial Disclosures (TCFD) is established to promote climate-related reporting in UK companies’ financial information.

2015 The UN’s Sustainable Development Goals are launched, emphasizing the role of business in achieving the global development agenda.

2017 Gender pay gap reporting becomes mandatory for all companies with more than 250 employees in the UK.

Role and Purpose of CSR

CSR is increasingly becoming embedded in management thinking and corporate practice.

This begs the question: what is the purpose of corporate social responsibility? Is it something that boards should adopt blindly, without questioning the role of corporate social responsibility within their business?

In 2015, Harvard Business Review surveyed 142 managers from Harvard Business School’s CSR executive education program. This research found that “most companies practice a multifaceted version of CSR that runs the gamut from pure philanthropy to environmental sustainability to the active pursuit of shared value.”

Therefore, the role and purpose of corporate social responsibility can be a broad concept. The scope of corporate social responsibility within your organization will depend somewhat on your business’s sector, objectives, and potential impact on the environment and society.

For your business, a CSR priority may be engaging with your local community and providing practical help or financial support to local causes. Or – particularly if your industry is a historic pollutant – you may prioritize environmental performance, reduce your carbon footprint, and minimize your impact. Or you may choose to focus on an issue that’s relevant to your business; diversity, inclusion, ethical supply chains – and channel your efforts into that.

The wide range of themes falling under the CSR umbrella means that you have no shortage of areas to focus your CSR activities.

Challenges Facing CSR

As with all business requirements, particularly those newly adopted or growing in complexity or focus, there are challenges inherent in corporate social responsibility (CSR) strategies. While we’re moving indubitably towards a more CSR-focused business landscape, that doesn’t mean that the road towards CSR is without its bumps.

Key Challenges of Corporate Social Responsibility

1) The Ability To Deliver Clear and Transparent Reporting

Transparency around CSR-related matters is key – whether that’s your D&I strategy, your environmental approach or your human rights policy. Shareholders and stakeholders expect you to act on CSR issues and evidence your achievements candidly. In some cases, as with The UK FCA’s requirements around TCFD, this is mandated in your formal financial reporting.

Increasing numbers of companies will face the challenge of delivering clear, comprehensive reporting on CSR (and wider ESG) objectives as pressure grows to document and communicate their performance.

2) A need To Define Clear Priorities and Goals

This is one of the key challenges facing corporate social responsibility strategies. Long before they can report on their successes, organizations need to identify what CSR means and how they will prioritize key actions. There are so many aspects of corporate social responsibility that this is very much an individual question for each business. There can be dissent over the focus of efforts, even within organizations.

3) Stakeholder Pressure

Sometimes, areas of focus are informed by pressure from investors and other stakeholders. Increasingly, a company’s position on CSR and ESG is a critical factor in investor decisions and customer choices.

As reporting grows ever-more comprehensive, mandated and publicized, it will become easier for potential investors and buyers to make decisions based on CSR performance. Companies will face growing pressure to meet and report on their objectives.

4) Measurement of CSR Activity

When CSR began as a “nice to do,” there was less imperative to have clear and comparable measures of performance. Today, boards need not only track their performance against the CSR objectives they have set but to compare themselves to their peers and competitors.

But accurate information on your own and others’ performance can be hard to pinpoint, especially in areas like executive pay, where companies can closely guard their data. Accessing centralized, consistent and reliable data can be a crucial challenge for companies wanting to measure and track their CSR efforts.

5) Making the Connection Between CSR, Value and Profitability

Businesses may adopt and expedite CSR strategies due to a genuine desire to improve their social purpose. Still, the ability to achieve “social capital” from their achievements cannot be overlooked.

Communicating your ESG strategy to investors and other stakeholders, from the value of current initiatives to the potential of new opportunities, will help to realize the advantages of corporate social responsibility strategies. The effort and cost of monitoring performance across business functions, and the work involved in translating this into business metrics, can be a challenge if you are operating without an integrated approach across all your CSR and ESG programs.

Advantages and Disadvantages of Corporate Social Responsibility

It would be easy to imagine that there are only positives associated with CSR; advocates of corporate social responsibility argue that it only has upsides.

But as with any business strategy, there are many aspects of corporate social responsibility. Each brings implications in terms of resource, cost and other considerations that companies should be alive to. There are arguments for and against corporate social responsibility adoption.

3 Benefits of Corporate Social Responsibility Strategies

1) Improved profitability and value

This should be one of the most welcome advantages of corporate social responsibility from the business’s perspective. Reducing waste and increasing energy efficiency doesn’t just improve the environment and your CSR credentials; it should also deliver a reduction in your costs. Therefore, there are direct benefits to CSR adoption in addition to the obvious altruistic and reputational ones.

As well as lower costs, there are opportunities for greater profits. Customers proactively support businesses that share positive CSR and ESG approaches – and are prepared to pay a premium for doing so. Research from Tilburg University in the Netherlands found that consumers are ready to pay an additional 10% for products they deem socially responsible; there are clear commercial benefits of a more socially responsible strategy.

2) Improved investor relations
As your CSR performance becomes known, you should enjoy improved access to capital, as investors are increasingly confident in your business. Shareholder pressure around companies and corporate social responsibility increase constantly; the expectation that corporates will adopt socially responsible policies is well-documented. It stands to reason that if you’re ahead of the game here, you will have a more harmonious relationship with all your stakeholders.

3) Ease of compliance with CSR-focused regulatory requirements

As we mentioned above, CSR and ESG are increasingly in the spotlight regarding corporate reporting. Compliance with the Task Force on Climate-related Financial Disclosures reporting requirements, for instance, will soon be mandatory in the UK and is encouraged elsewhere. A proactive CSR approach will give you a strong story to share and enable you to comply with requirements around CSR reporting.

But it’s important not to downplay the challenges of implementing a CSR strategy.

4 Common Arguments Against Corporate Social Responsibility

1) The cost and challenges of implementation

There’s no getting over that CSR costs money. CSR and wider ESG reporting require dedicated focus, demanding resources and budget. Risk-assessing your CSR approach takes time and can be a challenge. Many boards lack full oversight of the issues they need to consider – the risks faced, the board and senior team’s composition, any conflicts of interests.

Once organizations identify their priorities, they need to operationalize their CSR goals, turning insights into a roadmap for action. While there are tools that can make this easier, businesses shouldn’t underestimate the time and money that an effective CSR strategy entails. For smaller organizations particularly, the resources needed can be a barrier to CSR.

2) The Fear of Opening the Organization To Scrutiny

There can also be a fear of “opening the doors” on CSR, inviting inspection of the company’s ethics, supply chain, environmental performance and philanthropy. CSR is a bit of a double-edged sword, in the sense that organizations need to promote their CSR activity to gain public approbation for it – but in doing so, open themselves up to criticism of their approach. Any communication of your achievements on corporate social responsibility emphasizes the work yet to be done.

Companies may wonder whether the potential reputational damage from negative publicity around CSR is worth the work involved in devising and publicizing a corporate social responsibility strategy.

Amplifying this, shareholders, stakeholders and consumers are increasingly alive to the concept of “greenwashing,” the practice of overstating environmental or other ethical credentials. An organization needs to ensure its CSR reporting is comprehensive, honest and frank about any shortcomings to avoid it being questioned and discredited.

3) Conflicting Priorities and Objectives

We talked above about the cost of implementing new corporate social responsibility approaches. Any company with shareholders has a fiduciary duty to those shareholders to maximize the company’s profits, and the CEOs of commercial enterprises tend to be tasked with improving the company’s financial performance.

You could argue that corporate social responsibility and business objectives are diametrically opposed, that CSR conflicts with the fiduciary duty and CEO role by intentionally introducing costs into the business and reducing profits. Alongside the inherent costs of reporting, CSR can increase costs by requiring ethical supply chains, potentially putting companies that practice it at a commercial disadvantage. There is, then, an argument that CSR creates a conflict of interest between commercial and altruistic imperatives.

4) Limitations of CSR

As we mentioned above, CSR has limitations; its broad definition can make it difficult to put boundaries around what falls under the CSR remit. As a result, it can be hard to create a clear plan to tackle CSR: where do you focus? This can also make CSR achievements difficult to quantify.

These limitations may, for some organizations, provide an excuse to avoid CSR altogether; it falls into the “too difficult” or “too vague” pile and is overlooked in favor of more tangible strategies.

While it’s clear, then, that for boards, the benefits of pursuing a strategy of social responsibility and corporate citizenship are self-evident, there are considerations that need to be born in mind as well.

How To Surpass the Limitations of CSR

Corporate Social Responsibility Best Practices

For any organization aiming for good corporate social responsibility (CSR) practices, there are some recognized best practices to follow. Corporate social responsibility practices might vary from business to business, but some best practices should be universal.

Identify Your Corporate Values and Purpose

There are currently few regulatory imperatives specifically related to CSR. As a result, organizations are fairly free to decide on their own path and priorities based on their own views on the merits of corporate social responsibility.

A first step might be to set some priorities, ensuring that these are in line with the things that matter to your key stakeholders – investors, customers, employees and anyone impacted by your business operations.

In some cases, priorities might be obvious; if your company is a historic polluter, objectives relating to greener performance seem sensible. For other businesses, there isn’t such a direct link between CSR issues and their operations; these organizations have a freer rein when it comes to choosing issues or causes to align with.

Allocate Corporate Social Responsibility Roles and Responsibilities

It’s important to make people answerable for your CSR strategy; this will create accountability and focus attention on your aims. It’s important to make people answerable for your CSR strategy; this will create accountability and focus attention on your aims. Depending on your organization’s size, this might be a dedicated CSR team, or it might simply mean giving key members of your leadership team-specific CSR responsibilities. It’s essential that your board and senior executives have an overview of corporate social responsibility within the business, but equally vital that responsibility should disseminate throughout the organization.

Employees at all levels should have ownership of your approach to CSR and know that they play a key part. Creating a group of “champions” who can drive the CSR message throughout the organization can help here – but ultimately, the buck should stop with specific individuals who are given responsibility for achieving your goals.

Take a Business-Wide Approach

Ad-hoc or unfocused activity, while well-intentioned, won’t cut it when it comes to your corporate approach to social responsibility. One of the merits of corporate social responsibility is exactly that; that it’s corporate. You should focus on harnessing the scale of your organization to create an approach that delivers more than a series of disconnected initiatives.

Communicate Internally and Externally

Shouting about your approach is essential for CSR – both to engender internal buy-in and achieve the reputational benefits of tackling your social obligations. Communicate openly and honestly about your aims and, importantly, any room for improvement.

Equally important: celebrate your successes – don’t be afraid to share any achievements. And be generous with your learnings; CSR, by its very nature, should be for the greater good. If you can join any sector or cross-industry CSR groups to share approaches taken and lessons learned, do.

Benchmark Your Performance

It’s important to measure and compare your performance on CSR both internally between departments and externally with other organizations.

There are some external ratings – third-party ”risk scores,” particularly for the ESG elements of CSR – which investors use to assess a company’s initiatives. You will also want to put in place your own monitoring, something that can be a challenge if your CSR data isn’t on point.

Corporate Social Responsibility Plan/Strategy

We touched in the previous section on the need for strategic corporate social responsibility and an organized, orderly approach rather than one comprised of disparate initiatives.

What should make up this corporate social responsibility plan? CSR plans should encompass all the best practice steps outlined above, adapting them as needed to fit your organization’s circumstances.

Defining your values and purpose; creating a plan that fits with your business’s core competencies; identifying the issues of importance to your stakeholders; communicating your aims and progress, and measuring and reporting on the impact of your efforts – your plan will need to include all these elements.

Pursuing a strategy of social responsibility and good corporate practice needs to deliver evidence in terms of its ROI. The issue of reporting on your CSR progress deserves more exploration, so we look at that in more detail in the next section.

Reporting

What is a corporate social responsibility report? It’s a formal report that evaluates the impact of your company’s operations on the external community and environment.

The format of your corporate social responsibility reporting may vary depending on whether it’s being produced for internal use or external scrutiny. CSR reporting might include an assessment of your organization’s economic, environmental, and/or social impacts, depending on the company’s area of operations and areas of CSR focus.

Any corporate social responsibility audit you carry out will provide data on your performance against your stated objectives. The reporting is valuable internally in enabling you to measure the effectiveness of your CSR strategy and identify future priorities, and externally, in presenting your CSR credentials, aims and achievements to the world.

Increasingly, some elements of CSR reporting are mandated by regulation, as with the TCFD reporting requirements we detailed earlier. We are likely to see CSR and ESG reporting becoming more of a regulatory imperative and less of a “nice to have” over time.

Corporate Social Responsibility Policies

Your corporate social responsibility policy is where you set your stall out. Examples of corporate social responsibility policies will differ between organizations, but as a general rule of thumb, your CSR policy should include:

Your purpose: your CSR objectives and values.

The scope of your CSR strategy – what does it encompass?

The elements of your approach and the way you plan to tackle them. This might include a description of the social or environmental issue you are focusing on and the steps you will take. You may want to differentiate your regulatory obligations and any measures you choose to take proactively.

Corporate Social Responsibility Regulations and Compliance

Although it’s sometimes believed that the concept of corporate social responsibility is imposed on corporations by law, generally, this isn’t the case. Instead, it’s external pressures and the organization’s own ethical standards that set expectations around CSR.

Legislation and expectations around corporate social responsibility vary by jurisdiction. Still, there is a consensus that it should be self-policed, an approach proactively led by organizations themselves, rather than something prescribed by regulation. Corporate social responsibility compliance, therefore, is something self-imposed rather than externally mandated.

Investopedia describes CSR as “a self-regulating business model.” Similarly, the European Commission agrees that “it should be company led,” arguing that “EU citizens rightly expect that companies understand their positive and negative impacts on society and the environment. And, therefore, prevent, manage and mitigate any negative impact that they may cause.”

This expectation isn’t confined to Europe; Forbes, describing CSR in the US, says that while CSR ‘”is a form of soft law” and “not required by US statute or regulations,” it is nonetheless “seen as obligatory by most corporations because of consumer expectations and internal norms.”

The Task Force on Climate-Related Financial Disclosures encourages climate-focused reporting in companies’ financial filings, and in the UK, the financial regulator the FCA now requires that companies with premium listings on the London Stock Exchange include a statement in their annual financial report setting out whether their disclosures are consistent with TCFD recommendations and adding an explanation if they are not.

CSR Theories and Models

Many different theories underlie the development and concept of corporate social responsibility.

Milton Friedman

In 1970, American economist Milton Friedman published an essay, The Social Responsibility of Business Is To Increase Its Profits, in the New York Times. In it, Friedman set out his belief that profit must be a priority and a precursor to any social responsibility, stating that:

“there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.»

Friedman’s belief, also known as the shareholder theory of corporate social responsibility, underpins many theories around corporate social responsibility.

Carroll and the Corporate Social Responsibility Pyramid

In 1979, Archie Carroll devised a four-part model of CSR: the pyramid of corporate social responsibility. The four components of the pyramid of corporate social responsibility are economic responsibility, legal responsibility, ethical responsibility and philanthropic responsibility.

True CSR, Carroll posits, requires satisfying all four parts consecutively, stating that “CSR encompasses the economic, legal, ethical and philanthropic expectations placed on organizations by society at a given point in time.”

Carroll believes that profit must come first; the base of the corporate social responsibility pyramid is concerned with economic success. Then comes the need to comply with relevant laws and regulations. The fourth layer of the pyramid is the need for an organization to meet its ethical duties. Then, after these three requirements are satisfied, a business can consider philanthropy.

Gray, Owens and Adams

In 1996, Carol Adams, Rob Gray and Dave Owen published Accounting & Accountability: Changes and Challenges in Corporate Social and Environmental Reporting. They present CSR approaches on a continuum, with “pristine capitalists” at one end and “deep ecologists” at the other, and all points in between representing the position of different stakeholders within an organization.

Benedict Sheehy

More recently, Sheehy, an associate professor at the University of Canberra, has become recognized as an expert on CSR, publishing research into the use of the law to “achieve long term environmental and social sustainability.”

When determining their organization’s approach to CSR, boards may want to consider any or all of these theories to arrive at a CSR strategy that fulfills their corporate obligations as well as their social responsibilities.

Limitations in CSR Approaches
When boards consider how to tackle corporate social responsibility, there’s clearly much to think about.

Among decisions on priorities and approaches, it’s important to consider both the importance of corporate social responsibility and its limits. We touched above on some of CSR’s limitations – particularly, the challenges of defining corporate social responsibility and finding tangible ways to measure any CSR strategy’s success.

The fact that social responsibility should be tailored to each business’s own activity and priorities is not only one of its strengths but can also be its weakness, making definitions and comparisons difficult.

Today’s boards really need to consider ESG – which includes CSR within its auspices – rather than CSR alone. By tackling CSR within an ESG framework, it can be easier to set strategies, pinpoint specific actions, and prescribe success measures.

But delivering on your ESG goals is not without its challenges. Data is the foundation on which your ESG approach is built, informing your objectives, providing the baseline for your achievements and enabling you to operationalize your ESG commitments.

Many businesses, though, struggle to capture this data, leaving them in the dark when it comes to setting goals, monitoring progress and quantifying the impact of their initiatives. As a result, they are unable to capitalize on their ESG strategies’ ability to drive long-term growth and profitability.

Diligent’s ESG Solutions are designed to help board members and executives establish clear ESG goals and operationalize them throughout the organization to ensure that every commitment leads to a measurable and enduring outcome. Take the next ESG step by creating a robust action plan to achieve and measure your goals.