CSR Definition

Have you ever considered the reason for the ethical and economical sides of a business? Why do companies follow a specific standard of rule to run the organization? This is all in the name of Corporate Social Responsibility (CSR). As stated in The Role of Corporate Social Responsibility and Corporate Image in Times of Crisis, CSR is described as being how a company manages its industry and takes responsibility for its social impact. CSR is accompanied by numerous attributes such as legal conformity, societal influences, ethical requirement, and economic dependence, claimed by the article given above. It is also essential to the triple bottom line.

Triple Bottom Line Theory

According to a Harvard Business School report, the triple bottom line is “a business concept that posits firms should commit to measuring their social and environmental impact, in addition to their financial performance—rather than solely focusing on generating profit, or the standard ‘bottom line.’” The concept itself is broken into three P’s: planet, people, and profit. The planet subject is summarized to be contributing to a positive impact on the planet. The people subject is minimized to showing a societal impact, while profit is minimized to keeping a good record of financial performance. It also works to maximize profits whilst reducing costs.

CSR History                 

The origins of the social component in corporate behavior can be traced back to the ancient Roman Laws and can be seen in entities such as homes for the poor and old, asylums, hospitals, and orphanages.

It wasn’t until the 1930’s and 40’s when the debate around the social responsibilities of the private sector begun and authors started discussing what were the specific social responsibilities of companies.

In the 1950’s, Howard R. Bowen, an American economist and college president, defined what those responsibilities were by explaining that the social responsibility of business executives was to make decisions based according to the values of society and provided the first academic definition of CSR.

In the 1970’s, the understanding of CSR was influenced by new legislations and social movements. The term CSR became increasingly popular leading to the unrestricted use of the term CSR under different contexts, and by the end of the decade, the concept became unclear and meant something different for everyone.

During the 1980’s, new societal concerns around environmental pollution, human and labor rights, and waste management indirectly influenced the evolution of the concept. In 1980, Thomas M. Jones was the first author to consider CSR as a decision-making process that influences corporate behavior.

In the 1990’s, the creation of international bodies (e.g., the creation of the European Environment Agency in 1990 and the UN summit on the Environment and Development held in Rio de Janeiro which translated in the adoption of Agenda 21 and UNFCCC in 1992) and the adoption of international agreements set higher standards with regards to climate related issues and indirectly to corporate behavior. In 1991, Archie B. Carroll represents the four main responsibilities of companies with Pyramid of CSR and states that companies should be good corporate citizens. Carroll is a a professor emeritus at the Terry College of Business at University of Georgia. 

The definitions of CSR of the 2000’s reflected the belief that corporations had a new role in society in which they need to be responsive to social expectations and should be motivated by the search for sustainability, which meant they would have to make strategic decisions to do so.  

In the early 2010’s, it was believed that businesses can generate shared value while improving the firm’s competitiveness through the implementation of strategic CSR. The Paris Agreement and Sustainable Development Goals adopted in 2015 reflected a new social contract in which corporations are expected to play an important role in the global role to achieve SDGs.  In the same year, Carrol defines CRS as the benchmark and central piece for the socially responsible movement.  In 2018, the EU Directive 2014/ 95/EU requires large companies to disclose non-financial and diversity information on their reports.

The understanding of CSR evolved from being a personal decision of businessmen in the 1950’s to be understood as a decision making process in the 1980’s and to be perceived as  a strategic necessity in the 2000’s. The social responsibilities placed on corporations have evolved over the years from being merely acknowledgeable in the early publications to being explicitly defined. The discussion around what those responsibilities are continues to this day (Latapí Agudelo et al., 2019).