What is CSR?

A trusted social media website, Facebook, found themselves having to rebuild their reputation after the unthinkable happened. Through the billions of users on the app, Facebook had a ginormous collection of data about each and every one of them. In 2018, Cambridge Analytica, a British consulting firm, found a way to this personal data and started using it for advertising politics. The data of 87 million profiles became and exposed. Even though Facebook did not have this malicious intent, they lacked the responsibility and protocol need to protect their customers. Corporate Social Responsibility is beginning to become a requirement in all businesses, including Facebook and Cambridge Analytical. Viewing the failures from the past can help create a sense of urgency and change for the present.

General what is it and history then introduce there are four facets:

In the world of business the topic of Corporate Social Responsibility (CSR) has been a hot topic for every company and industry. CSR is the concept that businesses have a responsibility to be aware of the societal and environmental impact of their actions. This is not an emerging topic, but rather a concept that has evolved since the 1930s. The Springer Open Article, A literature review of the history and
evolution of corporate social responsibility takes a deep dive into the aspects that have shifted over time. Efforts in defining the responsibilities began in 1950s, which is still an ongoing conversation today. What are businesses responsibilities towards society and their expectations? We will explore that in this blog post and navigate through the four facets of CSR, environmental, ethical, philantropic, and economical.

Environmental

Environmental Responsibility, when it comes to corporate social responsibility, focuses on mother nature. Preserving the environment has quickly become a major topic within corporations. Concerns with global warming are not just for activist to worry about now. A company has the social responsibility to do what they can to keep the planet clean. On Harvard Business School Online’s website, they have an article, Types of Corporate Social Responsibility to Be Aware of, that does a great job of taking a deeper look into what environmental responsibilities in a corporation look like. The article mentions three specifically: reducing harmful practices, reuglating energy consumption, and offsetting negative environmental impacts. Ways companies have been reducing harmful practices is by decreasing pollution, plastic waste, how much water is being used, greenhouse gas emissions, and other wastes in general. Companies regulate energy consumption by relying more on renewable and sustainable resources as well as using recycled materials. Lastly, companies can offset the negative impact their company may have on the environment by planting trees and donating to research or other environmental organizations.

Ethical

Fairness is a principle for ethical responsibility encompassed in corporate social responsibility. Businesses who embrace ethical responsibility display fairness in every tier of the organization chart of the corporation, competitors, stockholders, and customers. An executive establishes their standard and upholds that for the company, even if that is not seen in the majority of society. An example of this is an executive believing the federal or state minimum wage is not “livable”, so they mandate higher minimum wages for their employees. Ethical CSR is ensuring respect and rights to those you serve.

Philanthropic

Philanthropic social responsibility is how a company acts and contributes to society. How does the company aim to better the world they live in? One main way companies do this is by donating money to their communities and supporting the society. When companies focus on philanthropic responsibility have a better public image than those who do not or do it poorly. Boundless.com gives a great example and says “For example, the local branch of a bank might donate money to fund the purchase of uniforms for a school sports team, or a health care company might donate to the city opera.” Companies also can hold ‘Spirit Nights’ where part of the money made will be given to a particular school or nonprofit. Chick-Fil-A is a good example of having philanthropic responsibility.

Economical

Making sound financial decisions that will benefit the good of others is what economical CSR encourages. More money doesn’t always mean positive impact, which some don’t come to realize without exposure to business leaders who embrace economical CSR. This facet of CSR ties in with other facets because many of the decisions made in a business have a cost. An economically responsible CSR company would pay the higher price to ensure sustainability if faced with a choice between two suppliers; one who employs cheap materials but costs less and the other who uses sustainable materials but costs more. Positive impact trumps large profit every time for those committed to the ethical component to corporate social responsibility.

Corporate Social Responsibility can no longer be ignored and it is urged to take a look at your own workplace and see how your team can have a bigger impact regarding CSR. Without this responsibility, corporations will overtake the world and ultimately destroy it. Your company may be doing one of the four major types of CSR, but the goal is to be doing all of them. Assess how they are helping the environment, ethically treating others, donating to the community, and what their doing economically. Choose where they need to grow and follow the examples given to start off. Many may be thinking, “Why does this matter? Why is it important?”, and these are great questions to be asking. In the next blog post, we will be going deeper into the topic of CSR importance.

Why is CSR Important?

There are many reasons for a company to embrace CSR practices. Companies implement CSR to improve their connection and idealogy in environment, ethics, philanthropy, and economics. This also enhances the job performance and engagement of staff by boosting customers’ perception of the brand, implementing better hiring strategies, and drawing in investors in search of higher returns. 

Improve customer’s perception of the brand

The first reason why it is important for companies to use Corporate Social Responsibility is that it can give them an opportunity to improve their customers’ perception of their brand. CSR initiatives can help create a favorable image among customers, enhancing customer engagement and improving customer loyalty.

 

• Creates A Good Business Image – Generally, customers have a favorable view of companies that practice corporate social responsibility. The majority of people recognize that businesses with strong CSR values are beneficial to society and their communities. Therefore, companies can reap the rewards of the positive image they create, helping them to promote their products and services more effectively. Thus, allowing them to create a positive corporate brand.
• Better Engagement With Customers – Generally, shoppers are more likely to support companies that are socially conscious. Expanding on the idea that CSR creates a beneficial business persona, firms that have a good reputation allow clients to feel that their ethical principles are acknowledged and acted upon. The more customers identify with organizations that prioritize social responsibility, the more eager they are to form a connection. As a lot of CSR activities involve interacting with the public—including potential and existing customers—this connection fosters better engagement.
• Customers Have a Sense of Contribution – Customers understand they have to play a part in the improvement of this world and, in the process, they feel a connection to socially minded businesses. The more businesses take social responsibility, the greater the support from consumers. Participating in community events or hosting other activities, which benefit society, helps businesses connect with their customers and build their trust in them. Customers can therefore be proud to support socially responsible companies.
• Enhances Customer Loyalty – When a company that is socially reliant on its values aligns with the values of its customers, it will open the door to loyalty and loyalty to its customers. Consumers are more inclined to support businesses that strive to solve a problem that they’re concerned about. In turn, businesses gain an advantage in the field. Their superior brand image helps them to gain consumer confidence.

Businesses with a social conscience draw customers and create more meaningful relationships. Customers feel good knowing that they are helping the environment when they shop with these companies. With these advantages, businesses should take action to gain financial stability and make a difference in the world.

It attracts and contains employees

The second reason why it is important for a company uses CSR can help you attract and retain employees. Companies have to move beyond traditional benefits packages when considering employee hiring and retention. Incorporating a CSR strategy and improving culture helps attract and retain top talent, and improve employee engagement and morale. Improving CSR and company culture will be most successful when change starts at the top. Here are the benefits of why companies use CSR in hiring practices. 

• Increased Organizational Citizenship Behaviors and Employee Relationships – CSR encourages a higher quality and closer relationship between workers. If employees think that their employer “has strong moral standards”, it seems more likely they will follow the “ strong moral standards”. When organizations implement CSR best practices, employees tend to be more cooperative with their colleagues and the organisation.

• Enhanced Employee Identification with the Organization – When employees perceive their business to be socially responsible, they are more likely to identify with it, leading to an improved job satisfaction, and a stronger bond with their work.

• Improved Retention and Organizational Commitment – CSR initiatives enhance employee loyalty and engagement, resulting in more personal investment in the organization, and a sense of their own future being linked to the organization’s success.

•  Improving the company culture to draw in employees – Along with increasing current employees’ commitment, CSR can make organizations look more attractive to applicants and prospective employees. In the age when millennials look to work for “high social impact” organizations, engaging in CSR may help companies to attract top talent over other organizations.

CSR is attractive to Investors

The third reason why it is important for a company to use CSR shows a sign of accountability to investors. Previously, CSR has been used as an afterthought as corporations focused on profit but, but in the 1980s the business plus social areas of interest became parallel to each other to serve the stakeholders. CSR has become in socially responsible investment as transform traditional companies into socially responsible company. It grew in popularity as it provide companies with less risk, better returns, and increase the company’s overall market value. According to a Babson College analysis, a CSR program can raise the market value by 6% while reducing risk by up to 4% Later, the concept of CSR evolved, and after two decades it was considered to be instrumental in all strategic decision-making in a business.

• Social Responsibility Matters to Investors – Today investors are concerned about where their money is being invested. Some investors prefer that the business they invest in must have a positive impact on society beyond its profits. While it is not legally required for a company to engage in socially responsible investments (SRI), many companies prioritize it.
• Socially Responsible Companies are More Accountable and Transparent – Every investor investing in a company has one goal. They look for companies with higher investment returns and project higher confidence. When a company and its leaders help its community and society while remaining transparent in its dealings without compromising on finances, it gives investors confidence and increases the company’s value.
• Relationship Between CSR and Capital Market – The capital markets often value corporations with social responsibility. Corporate social responsibility plays an essential role in the capital market since it is crucial in ensuring publicly-traded corporations’ capital market. The capital market is a financial marketplace that enables people to buy and sell long-term debt and equity-backed securities. It is essential for businesses because it facilitates the transfer of funds between two parties. Most investors who are looking for long-term investments prefer a company that follows sustainable business practices.

Implementing CSR in the Workplace

Implementation of CSR in the workplace involves a range of activities and initiatives, depending on the specific needs and values of the company and its involvement with the Environment, society, and its employees. For example, the first step to implementing CSR in any workplace or organization is the strategy of conducting an assessment of the company’s current practices and policies. This assessment can help identify areas where the company can improve its social, environmental, and ethical impact.
Corporate Social Responsibility in the workplace has several potential applications. For instance, consumers want to work with companies that value doing good and care about making a difference in the world. Investors are willing to assist businesses that demonstrate a commitment to their money since they are becoming more and more interested in social responsibility.

Below is a list of strategies we can implement with this material in the workplace; we have listed five but there are many other ways this use CSR in our workplaces:

Establish a business ethics code
A business code of ethics is a collection of principles that govern behavior and judgment within the company. A code of ethics can be compared to a moral compass for employees, providing them with a clear understanding of what is right and wrong. Putting in place a corporate code of ethics offers several benefits, such as enhanced decision-making, more accountability, and boosted employee morale. A code of ethics can also contribute to boosting customer and stakeholder confidence by demonstrating your company’s dedication to ethical business practices. A business’s code of ethics must be put into effect to be socially responsible. You can create a positive workplace culture and position your company as a leader in CSR by establishing clear rules for moral behavior. In the chart below we have laid out some ethical frameworks which can be applied in the workplace.

Protect the health and safety of workers

The primary corporate responsibility of a firm is to maintain a secure and healthy workplace. Employers, employees, and the company all gain from it. A company that prioritizes a safe workplace sends the message to its personnel that the well-being of the workers comes first. This will promote loyalty and encourage positivity. A safe workplace is undoubtedly more productive since workers are less likely to get sidetracked or take time off due to injuries. Last but not least, preserving health and safety can help reduce costs for workers’ compensation and employee health insurance. Companies that create a safe working environment can benefit in several ways, both financially and non-financially.

 

Be Transparent

When implementing CSR in the workplace, companies are responsible and committed to being transparent with their employees and customers at all times. The highest goal in transparency within a company is to have trust in all parties, and this requires OPEN communication and accountability. Employee engagement is heavily affected by transparency in the workplace. And the lack thereof can ultimately drive talent away from the company. BUT if a talent (employee) is satisfied with the company’s open and honest communication there are greater correlations for a happier and more productive workplace.
Communication in the workplace can be defined as the exchange of information, ideas, and thoughts among employees or between employees and management, to achieve common goals and objectives. Transparency in the workplace fosters open communication and accountability amongst the whole organization and team members. Enabling talents to express their opinions without the fear of being outcasted or judged. According to the Society for Human Resource Management, trust in the workplace can increase the likelihood of employees offering ideas and solutions by 23%. (Meinert, 2018) Transparency can enhance confidence and empower individuals to speak up when issues arise.
In an environment that offers transparency, accountability also increases as the talents are aware that their decisions matter and ultimately understand their expectations. Talents are more likely to think rationally before making decisions that could hinder their team’s progress.

Participate in community activities 

In the modern world, companies can no longer have the mindset that “cash is gold”. The idea of companies and organizations providing a service to generate revenue is no longer there! It’s expected that they act as good corporate citizens. And how is that achieved? Companies having a philanthropic and community-driven mindset is a way to commit to social responsibilities. Companies that prioritize community engagement can create a positive impact and build relationships with local organizations and residents. For example Target and the Target Foundation committed to investing $100 million through 2025 to help fuel economic prosperity in Black communities across the country. (Target, 2021)

As individuals become more aware of societal issues, talents(i.e employees) want to belong to an organization that is willing to respond without any hesitation. In the workplace, companies that implement successful CSR are allowed to work within their local community. Volunteer opportunities, Charity Events, and Community service days are great ways for anyone in the workplace to commit to making a change to their local community. While donations drive and sponsoring different organizations and nonprofits can help give resources to those that are in need. For instances during the devastating Hurricane Maria, Sonnen, a German energy manufacturing company, assisted Puerto Rico by supplying the island with micro-grids that do not require an initial grid connection to supply power and ultimately have an alternative electricity supply. (Martin, 2017)

It is clear that companies can no longer operate under the model that generating revenue is the sole purpose. Today we as employees, and societal members of our communities expect companies and organizations to act as good corporate citizens and commit to their social responsibilities. And when companies have a mindset that is both philanthropic and community-driven, they can achieve a positive impact and build relations with the local communities. Companies can also attract talented employees who want to work for organizations that respond to societal issues. Additionally, providing employees with opportunities to volunteer and participate in charity events can create a more engaged and motivated workforce. 

 

Diversity and Inclusion

Implementing Diversity and Inclusion(D&I) is a key initiative when it comes to CSR. It’s critical to achieve D&I for the chance of having an equitable workplace. A diverse and inclusive workplace attracts and retains talent from a wide range of backgrounds. This allows companies to improve creativity and innovation throughout all departments. Based on the Mckinsey Diversity Wins report: Studies have revealed a significant correlation between diversity and a company’s achievement. It has been determined that organizations with executive teams in the highest quartile for gender diversity have a 25% higher likelihood of attaining above-average profitability. (Dixon-Fyle et al., 2020)

Implementing D&I in the workplace involves a continuous process from everyone in the organization. And taking the steps to promote diversity and inclusion can create a welcoming and supportive workplace culture. This can be done by recognizing their colleagues’ cultural traditions and holidays. For example, during Ramadan, many organizations are beginning to understand the importance of these holidays to the Islamic religion, and some have taken the initiative to create praying rooms for those that participate in Ramadan. Apart from fostering and understanding the different personal cultures of those that work near them, an organization should provide training and courses to all employees of all levels to increase the understanding and awareness of D&I! Topics of effective communication across different cultures to unconscious biases must be critical topics within these courses. With these programs, companies are ultimately changing the ways talent is being recruited and progressively creating more D&I in the workplace.

Creating a more inclusive workplace culture through the implementation of D&I requires the active involvement and dedication of all employees, as it is an ongoing process. By intentionally taking steps to increase diversity and promote inclusion, companies can establish a more inviting and supportive work environment that benefits everyone on their team.

References

Andrés, M., Agudelo, L., & Jóhannsdóttir, L. (2019, January 22). A literature review of the history and evolution of corporate social responsibility – International Journal of Corporate Social Responsibility. International Journal of Corporate Social Responsibility. Retrieved April 9, 2023, from https://jcsr.springeropen.com/counter/pdf/10.1186/s40991-018-0039-y.pdf

Benevity. (n.d.). The 4 main types of corporate social responsibility your business should consider (and why). Benevity. Retrieved April 17, 2023, from https://benevity.com/resources/types-of-corporate-social-responsibility

Confessore, N. (2018, April 4). Cambridge Analytica and Facebook: The Scandal and the Fallout So Far (Published 2018). The New York Times. Retrieved April 12, 2023, from https://www.nytimes.com/2018/04/04/us/politics/cambridge-analytica-scandal-fallout.html

Dixon-Fyle, S., Dolan, K., Hunt, D. V., & Prince, S. (2020, May 19). How diversity, equity, and inclusion (DE&I) matter. McKinsey. Retrieved April 10, 2023, from https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters

Faust, J. (2023, January 6). 06 Jan Why is Corporate Social Responsibility Important for Your Business? Faust Global Partners. Retrieved April 09, 2023, from https://www.faustglobal.com/why-is-corporate-social-responsibility-important-for-your-business/

Fernando, J. (2022, May 27). Corporate Social Responsibility (CSR) Explained With Examples. Investopedia. Retrieved April 13, 2023, from https://www.investopedia.com/terms/c/corp-social-responsibility.asp

Heyward, C., & Danise, A. (2020, November 18). The Growing Importance Of Social Responsibility In Business. Forbes. Retrieved April 09, 2023, from https://www.forbes.com/sites/forbesbusinesscouncil/2020/11/18/the-growing-importance-of-social-responsibility-in-business/

Jang, A. (n.d.). 10 Corporate Social Responsibility Examples You Should Know. Prowly. Retrieved April 10, 2023, from https://prowly.com/magazine/corporate-social-responsibility-examples/

Kuligowski, K. (2023, February 21). How to Build an Ethically Conscious Business. Business News Daily. Retrieved April 10, 2023, from https://www.businessnewsdaily.com/11240-build-sustainability-business-model.html

Martin, C. (2017, October 2). Puerto Rico to Get Power Relief From German Microgrid Supplier. Bloomberg.com. Retrieved April 12, 2023, from https://www.bloomberg.com/news/articles/2017-10-02/puerto-rico-to-get-power-relief-from-german-microgrid-supplier#xj4y7vzkg

McLean, M. (2019, January 25). Why Corporate Social Responsibility (CSR) and Culture are Crucial to Attracting and Retaining Top Talent. OneDigital. Retrieved April 14, 2023, from https://www.onedigital.com/blog/corporate-social-responsibility-and-culture-are-crucial-to-attracting-and-retaining-top-talent/

Meinert, D. (2018, May 24). Why Trust Matters at Work. SHRM. Retrieved April 07, 2023, from https://www.shrm.org/hr-today/news/hr-magazine/0618/pages/why-trust-matters-at-work.aspx

Murphy, C. B. (2022). The Importance of Social Responsibility for Businesses. Investopedia. Retrieved April 10, 2023, from https://www.investopedia.com/ask/answers/041015/why-social-responsibility-important-business.asp

Pacific Oaks College. (2021, September 23). Breaking Down the 4 Types of Corporate Social Responsibility. Pacific Oaks College. Retrieved April 10, 2023, from https://www.pacificoaks.edu/voices/business/breaking-down-the-4-types-of-corporate-social-responsibility/

Rice, D., & Galbraith, M. (2008, November 16). .,. ., – YouTube. Retrieved April 11, 2023, from https://journals.sagepub.com/doi/full/10.1177/1847979020927547

6 Reasons Why Companies Have a Social Responsibility to Investors. (2023, January 11). The Impact Investor. Retrieved April 10, 2023, from https://theimpactinvestor.com/why-companies-have-a-social-responsibility-to-investors/

6 Ways Corporate Social Responsibility Benefits Your Employees – SOCAP Global SOCAP Global. (2017, August 24). SOCAP Global. Retrieved April 13, 2023, from https://socapglobal.com/2017/08/6-ways-corporate-social-responsibility-benefits-employees/

Stobierski, T. (2021, April 8). Types of Corporate Social Responsibility to Be Aware Of. HBS Online. Retrieved April 12, 2023, from https://online.hbs.edu/blog/post/types-of-corporate-social-responsibility

Target. (2021, October 12). Inside Target’s $100 Million Investment in Black Communities, Our Latest Effort in Our Commitment to Advancing Racial Equity. Target Corporate. Retrieved April 16, 2023, from https://corporate.target.com/article/2021/10/reach-pensole