Corporate social responsibility (CSR) refers to business practices involving initiatives that benefit society. A business's CSR can encompass a wide variety of tactics, from giving away a portion of a company's proceeds to charity, to implementing "greener" business operations.
There are a few broad categories of social responsibility that many of today's businesses are practicing:
- Environmental efforts: One primary focus of corporate social responsibility is the environment. Businesses regardless of size have a large carbon footprint. Any steps they can take to reduce those footprints are considered both good for the company and society as a whole.
- Philanthropy: Businesses also practice social responsibility by donating to national and local charities. Businesses have a lot of resources that can benefit charities and local community programs.
- Ethical labor practices: By treating employees fairly and ethically, companies can also demonstrate their corporate social responsibility. This is especially true of businesses that operate in international locations with labor laws that differ from those in the United States.
- Volunteering: Attending volunteer events says a lot about a company's sincerity. By doing good deeds without expecting anything in return, companies are able to express their concern for specific issues and support for certain organizations.
Why CSR matters
Liz Maw, CEO of nonprofit organization Net Impact, noted that CSR is becoming more mainstream as forward-thinking companies embed sustainability into the core of their business operations to create shared value for business and society.
"Sustainability isn't just important for people and the planet, but also is vital for business success," said Maw, whose company connects students and professionals who want to use business skills to do social good. "Communities are grappling with problems that are global in scope and structurally multifaceted — Ebola, persistent poverty, climate change. The business case for engaging in corporate social responsibility is clear and unmistakable."
"More practically, [CSR] often represents the policies, practices and initiatives a company commits to in order to govern themselves with honesty and transparency and have a positive impact on social and environmental wellbeing," added Susan Hunt Stevens, founder and CEO of employee engagement platform WeSpire.
As consumers' awareness about global social issues continues to grow, so does the importance these customers place on CSR when choosing where to shop. But consumers aren't the only ones who are drawn to businesses that give back. Susan Cooney, founder of crowdfunding philanthropy platform Givelocity, said that a company's CSR 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," Cooney told Business News Daily. "Coming out of the recession, corporate revenue has been getting stronger. Companies are encouraged to put that increased profit into programs that give back."[See Related Story: Social Responsibility Tips for Your Business]
Examples of corporate social responsibility
While many companies now practice some form of social responsibility, some are making it a core of their operations. Ben and Jerry's, for instance, uses only fair trade ingredients and has developed a sustainability program for dairy farms in its home state of Vermont. Starbucks has created its C.A.F.E. Practices guidelines, which are designed to ensure the company sources sustainably grown and processed coffee by evaluating the economic, social and environmental aspects of coffee production. Tom's Shoes, another notable example of a company with CSR at its core, donates one pair of shoes to a child in need for every pair a customer purchases.
However, Stevens said companies need to really understand what their core social purpose is and how that aligns with their stated mission, to create a cohesive CSR strategy.
For example, Stevens said that Kashi, a Kellogg's brand, wants to increase organic farming and is one of the few certified organic cereals. Since only 1 percent of U.S. farmland is actually organic, the breakfast brand worked with Quality Insurance International to help certify new organic farmers across the nation.
Practicing what you preach
Undertaking socially responsible initiatives is truly a win-win situation. Not only will your company appeal to socially conscious consumers and employees, but you'll also make a real difference in the world. Keep in mind that in CSR, transparency and honesty about what you're doing are paramount to earning the public's trust, Givelocity's Cooney said.
"If decisions [about social responsibility] 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."
Stevens, of WeSpire, reminded business owners that the corporate world has more power than many realize, and using that power to improve the world can bring people of all backgrounds, ages and interests together.
"Given their power and sheer size, corporations can solve big social problems and have a huge impact," she said.
Additional reporting by Chad Brooks and Nicole Fallon Taylor. Some source interviews were conducted for a previous version of this article.