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 practicesBusiness EthicsTo keep it simple, business ethics are the moral principles that act as guidelines for the way a business conducts itself and its transactions (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 equityBrand EquityIn marketing, brand equity refers to the value of a brand and is determined by the consumer’s perception of the brand. Brand equity can be positive or.
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 bodiesSecurities and Exchange Commission (SEC)The US Securities and Exchange Commission, or SEC, is an independent agency of the US federal government that is responsible for implementing federal securities laws and proposing securities rules. It is also in charge of maintaining the securities industry and stock and options exchanges can help to reduce a firm’s regulatory burden.
Example of CSR in Canada
In Canada, mining companiesMining Industry PrimerThe mining industry is involved with the extraction of precious minerals and other geological materials. The extracted materials are transformed into a mineralized form that serves an economic benefit to the prospector or miner. Typical activities in the mining industry include metals production 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.
- Cameco Corporation oversees education programs directed toward northern and Aboriginal peoples through their northern Saskatchewan five-pillar strategy.
- Goldcorp Inc. strives to make a positive impact on its communities by supporting education and health initiatives and sponsorship of special events.
- Softrock Minerals Ltd. contributes money for festivals, schools, and projects.
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.”
Starbucks’ CSR initiatives include:
- Starbucks Youth Action Grants: Awarding grants to inspire and support youth action
- Ethos Water Fund: Raising clean water awareness and providing children with access to clean water
- Ethical Sourcing: Commitment to buying and serving ethically traded coffee
- Green Building: Using the U.S. Green Building Council’s LEED certification program to create energy and water-efficient store designs
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:
- Corporate DevelopmentCorporate DevelopmentCorporate development is the group at a corporation responsible for strategic decisions to grow and restructure its business, establish strategic partnerships,
- Employee MoraleSoft SkillsSoft skills are critical in finance and accounting careers, yet often overlooked. Explore CFI’s guides to develop your soft skills and move up the ladder by having good communication skills, interpersonal skills, listening skills, leadership, humility, and other important soft skills that are required
- A Sense of Purpose at WorkSoft SkillsSoft skills are critical in finance and accounting careers, yet often overlooked. Explore CFI’s guides to develop your soft skills and move up the ladder by having good communication skills, interpersonal skills, listening skills, leadership, humility, and other important soft skills that are required
- Soft Skills at Work