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Everything You Need to Know about Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) is now a buzzword. It has become the norm for both small and big businesses alike because of widespread consumer awareness and demand. .
Most people are more keen to purchase a product or service, or work for a company, if that company demonstrates that it cares about more than revenues. In reality, most people will even pay more for a product or service if the seller has a good social image.
That’s why CSR has become necessary for businesses. 80 percent of Fortune 500 and S&P companies publish reports on their CSR, for employees, investors and the public to evaluate how they measure up.
Corporate social responsibility, in reality, is many things, and it is important for both companies and nonprofits to understand. It is the driving factor behind how a company decides on whom they are going to focus philanthropic funding and corporate volunteering. Here is everything you need to know about CSR and how it may apply to you as a nonprofit manager or executive.
What is CSR?
Corporate social responsibility is a diverse concept. It has evolved over the past few decades as consumers started to demand greater responsibility from companies. If companies only acted to make money, we would live in an unsustainable world.
CSR is widely accepted, and hinges on the concept that companies have ethical and economic imperatives to act within a context that creates a viable ecosystem for their products and/or services. Most importantly, the core of corporate social responsibility is the principle that consumers, workers, and communities are stakeholders.
Listening to and responding to the needs of those stakeholders will drive sales. Hence, CSR is necessary to achieving company goals, and needs to be integrated carefully within the company vision.
5 Types of Corporate Social Responsibility
Generally, we can define 4 types of CSR - Ethical, Environmental, Philanthropic, and Financial. We can also consider Volunteering as its own category.
Companies have both unwritten social contracts to act in a certain way, behind certain principles guided by society, and also legal responsibilities to ensure certain codes of behavior are met. Often, boards of directors, executives, and other leaders write additional codes of ethics to guide their companies, per their own standards.
Some examples of ethical responsibility include:
- Fair treatment of all employees and consumers, including new measures to include Diversity, Equity, Inclusion, and Belonging (DEIB) within company policies. Some of these measures are protected by law, and other companies make pledges on top of that legal responsibility.
- Codes for honest disclosure of problems within operations.
- Support of vendors from situations of disadvantage, beyond what is mandated by the community or by legal statutes.
Most people demand environmental responsibility from companies, and many statutes are now requiring environmental CSR in regards to water use, climate emissions, and waste reports. Companies can meet their internal and external environmental goals in many ways, including:
- Planting trees or supporting other offsets for greenhouse gas emissions.
- Committing to recycling at or beyond community standards to promote reuse of natural resources.
- Pledging to use green packing and supply chains. Many companies are reducing or eliminating one-off plastics consumption, for instance.
This is anything a company does to give back, monetarily or through goods, to its community. Companies will base their donation systems on their CSR goals for philanthropy.
It's important for charities to understand how they fit within a company’s CSR if they are aiming for a donation or for an event sponsorship. Some companies want to give back entirely to children, for instance, or to a different beneficiary group. If you’re a charity, you can research what a company’s priorities are, and how you can help them fulfill their desired impact. Often, corporations have separate foundations with guidelines for their giving towards that end.
Companies have to make specific financial decisions to be ethical, philanthropic, and environmental. To go green, they might have to invest some of their profits in new product lines or packaging systems. Or to be truly philanthropic and meet their impact goals, they might have to give a higher percentage of their earnings back to the community than what might be mandated by tax law or benefit systems.
Some corporations might consider corporate volunteering a form of financial responsibility or a form of philanthropy. It can be seen as a method to fulfill those goals. More and more, however, corporations see volunteering as an integral component of an overall CSR strategy that goes beyond the other pillars.
Employees in many cases are demanding that they have time to pursue social and/or environmental impact. They are happy to use their skills to serve the company, but only in exchange for some paid time off to pursue social and environmental impact. Salesforce, for instance, provides employees a full week of paid time off for volunteering.
This goes beyond meeting the general CSR impact goals of the company. In this case, volunteering time is its own CSR metric. The human capital is what is being “counted” within the CSR reports.
What are the Benefits of CSR to Corporations?
It might already be obvious that CSR helps communities and makes working a better experience for employees. CSR also has many benefits to companies themselves.
Transparency regarding environmental and social impact boosts a product or service’s brand. A recent Nielsen marketing study (2022) found that two thirds of shoppers would switch brands simply because another is more transparent about their social and environmental impact. It is not enough to say you’re green or help the community. A company has to show, in a convincing and detailed way, that their claims are true.
Corporations that are greener, more ethical, and/or more socially impactful have a higher investment value. They are actually valued at higher stock prices and receive more support.
Employees are more likely to stay with a company, and be happier working with them, if their employer has a positive CSR. Many employees shop around for corporations with better CSR metrics. This means, to attract and to retain top talent, companies now need to have a positive CSR.
Having solid corporate social responsibility goals and policies in place helps corporations avoid problems. They can circumvent discrimination, pollution, and breaking other laws by following ethical principles that go beyond the legal minimum.
Corporate Social Responsibility in Practice
We can trace ethical examples of how corporations form “social contracts” with their stakeholders back over a hundred years. Those first pioneers in the corporate world formed a basis for modern corporations to focus on CSR as part of their brand strategies.
Johnson & Johnson claims that their success over time is from adopting a simple “credo”, that their “first responsibility” is to their consumers and stakeholders, to provide quality products that serve them and advance health outcomes. This strategy dates back to the 1930s, decades before the term “corporate social responsibility” came into use.
On a more modern note, Toms invests an amazing one third of its profits to social good. It relies on its “wear good, share good” message as a brand incentive, attracting customers who not only want a great shoe, but insist on their purchase price going towards meaningful work for society and the environment.
The Best Ways to Incorporate Corporate Social Responsibility
It should be obvious now why exactly a business needs to develop a robust CSR strategy, if you don’t have one already. In short, it will help you keep your customers happy, improve your investments, and promote sustainability in a number of different ways. Here’s a quick guide on how to evaluate and improve upon your current CSR efforts.
- What are you already doing? Even if you do not have a written CSR strategy in play, you likely give back to the community in different ways. Think about what you’re doing, define how effective those strategies are, and what the benefits and costs are to your company.
- Think through your ideal CSR objectives. Now think about what you want to do. What is your ideal impact to the community, and why? If your goal is to improve your environmental impact to meet legal standards and boost your brand to retain and attract more customers, great. This is a good, clear, starting point from which to branch out to priorities.
- Define the priorities. You want to trace impact back from your action points to meeting your objectives. If you want to improve environmental impact, can that be achieved best through volunteering, philanthropy, or financial management? What resources can you apply? Develop a few giving or CSR strategies to achieve the highest impact with what you have available. You might have to research new methods and strategies, such as engaging a volunteer management platform to help. Golden, for instance, can help you establish employee volunteer programs that seamlessly integrate with your CSR goals and link you to potential community partners who already have a track record of serving in your desired impact space.
- Set a plan. If you need help from a resource like Golden, make sure you establish a solid plan to achieve that work objective. Assign a volunteer manager within your organization, allocate necessary time and philanthropy, and help your employee team understand their role.
Other “Frequently Asked Questions” Regarding CSR
You still might be asking yourself questions regarding CSR. That’s okay! Here are more ideas that still may not be clear.
Who is CSR for exactly?
Everyone! When done well, CSR benefits the corporation, the employees, the customers, the shareholders, the community, and the environment. The best strategies revolve around touching on all of these points.
Which CSR Pillar is Best to Start with?
If you are still stuck on how to set objectives and priorities, especially smaller organizations, maybe start with volunteering. A great volunteer management software that integrates the best technology, like Golden, will help you define your priorities and shape your strategy over time. Golden can take your baselines – your current CRM, employee profiles, or other data – and help you track your corporate impact. This way, if your employees have an open opportunity to give back through volunteering or days of service, you can monitor where they are making the largest impact and design your strategy from their collective input.
How Do You Monitor CSR?
Golden helps you track impact over specific metrics or more indirectly through your employee or partner impact. Golden can track your employee’s time logged to a service project, for instance, and then use the nonprofit’s impact measurement to tie back to your desired goals. It will alert you to new opportunities in your impact areas, and help you establish your own events. In turn, you’ll be improving your brand as a community patron!
Corporate Social Responsibility - In Summary
So, what is CSR? In short, it’s the collective measure that a corporation gives back to its stakeholder and community, to improve its own sales but also to make its sales more sustainable in the long run.
Nonprofits need to understand corporate social responsibility to develop strategies to involve companies in volunteering and in giving. At the same time, corporations need to understand CSR to design impactful ways to give back to their communities in ways that their stakeholders both need and desire. Programs like Golden can work wonders to bridge gaps between these two different stakeholder groups, helping organizations working across diverse systems connect on the cloud and understand each other's needs in a way that has never previously been possible.