Corporate Social Responsibility (CSR):

Concept, definitions, evolution and

significances
 Corporate Social Responsibility

• Corporate Social Responsibility is a management concept whereby  companies

integrate social and environmental concerns in their business  operations and
interactions with their stakeholders.

• Corporate social responsibility (CSR) is a self-regulating business model that helps a

company be socially accountable to itself, its stakeholders, and the public. 

• By practicing corporate social responsibility, also called corporate citizenship,

companies can be conscious of the kind of impact they are having on all aspects of
society, including economic, social, and environmental.

• To engage in CSR means that, in the ordinary course of business, a company is

operating in ways that enhance society and the environment instead of contributing
negatively to them.
 Understanding CSR
• The concept of Corporate Social Responsibility (CSR) is generally understood to mean that
corporations have a degree of responsibility not only for the economic consequences of their
activities, but also for the social and environmental implications.

• Various terms are used to describe CSR initiatives, including ‘Corporate Responsibility,’
‘Corporate Accountability’, ‘Corporate Citizenship’ and ‘Sustainability.’

• Corporate social responsibility is a gesture of showing the company’s concern &

commitment towards society’s sustainability & development.

• CSR is the ethical behavior of a company towards society.

• WBCSD (World Business Council for Sustainable Development) “The continuing commitment
by business to behave ethically and contribute to sustainable economic development while
improving the quality of life of the workforce and their families as well as of the local
community and society.”
Dimensions of CSR Definitions
 Core characteristics of CSR
• Voluntary
• The views of government and other stakeholders in all developing countries emphasize this
characteristic
• Many companies are by now familiar and more willing to consider responsibilities beyond
the legal minimum, and in fact the development of self-regulatory
• CSR initiatives from corporate bodies is often seen as a way of reducing or avoiding
additional regulation through compliance with societal moral norms
• Internalizing or managing externalities
• Externalities in CSR refers to all sort of factors that has impact on different stakeholders
rights are not directly taken care of in the decision making process of a business
organization
• Environmental degradation is typically regarded as an externality since the general public
feel the impact of the production process.
• Regulation can force firms to internalize the cost of the externalities, such as pollution
fines, but CSR remain as a viable discretionary approach of managing externalities like
taking more safety measures and reduction of pollution by going green.
• Multiple stakeholder orientation
• CSR involves considering a range of interests and impacts among a variety of
different stakeholders other than just shareholders.
• Alignment of social and economic responsibilities
• This feature has prompted much attention to the “business case for CSR‟ – namely,
how firms can benefit economically from being socially responsible.
• Practices and values
• CSR is clearly about a particular set of business practices and strategies that deal
with social issues, but for many people it is also about something more than that –
namely a philosophy or set of values that underpins these practices.
• Beyond philanthropy
• CSR extends beyond philanthropy because of its viability to be instrumental or
strategic in satisfying stakeholder expectations and its potential capability to
achievement of organizational objectives
 Types of Corporate Social Responsibility
• Corporate social responsibility is traditionally broken into four
categories:
1. Environmental,

2. Philanthropic,

3. Ethical, and

4. Economic responsibility.
Environmental Responsibility
• Environmental responsibility refers to the belief that organizations should behave in
as environmentally friendly a way as possible.

• It’s one of the most common forms of corporate social responsibility. Some
companies use the term “environmental stewardship” to refer to such initiatives.

• Companies that seek to embrace environmental responsibility can do so in several

ways:

• Reducing pollution, greenhouse gas emissions, the use of single-use plastics, water
consumption, and general waste
• Increasing reliance on renewable energy, sustainable resources, and recycled or partially
recycled materials
• Offsetting negative environmental impact; for example, by planting trees, funding research,
and donating to related causes
Ethical Responsibility
• Ethical responsibility is concerned with ensuring an organization is operating in a fair
and ethical manner.

• Organizations that embrace ethical responsibility aim to achieve fair treatment of all
stakeholders, including leadership, investors, employees, suppliers, and customers.

• Firms can embrace ethical responsibility in different ways. For example, a business
might set its own, higher minimum wage if the one mandated by the state
government doesn’t constitute a “livable wage.”

• Likewise, a business might require that products, ingredients, materials, or

components be sourced according to free trade standards.
Philanthropic Responsibility
• Philanthropic responsibility refers to a business’s aim to actively make the world
and society a better place.

• In addition to acting as ethically and environmentally friendly as possible,

organizations driven by philanthropic responsibility often dedicate a portion of
their earnings.

• While many firms donate to charities and nonprofits that align with their guiding
missions, others donate to worthy causes that don’t directly relate to their
business.

• Others go so far as to create their own charitable trust or organization to give

back.
Economic Responsibility
• Economic responsibility is the practice of a firm backing all of its
financial decisions in its commitment to do good in the areas listed
above.

• The end goal is not to simply maximize profits, but positively impact
the environment, people, and society.
Business Benefits of CSR
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 equity.

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 bodies can help to reduce a firm’s regulatory

burden.
Why Should a Company Implement CSR?
• Many companies view CSR as an integral part of their brand image,
believing that customers will be more likely to do business with
brands that they perceive to be more ethical.

• In this sense, CSR activities can be an important component of

corporate public relations.

• At the same time, some company founders are also motivated to

engage in CSR due to their principles.
What Is the Impact of CSR?
The movement toward CSR has had an impact in several domains.
• For example, many companies have taken steps to improve the
environmental sustainability of their operations, through measures such as
installing renewable energy sources or purchasing carbon offsets.

• In managing supply chains, efforts have also been taken to eliminate

reliance on unethical labor practices, such as child labor and slavery.

• Although CSR programs have generally been most common among large
corporations, small businesses also participate in CSR through smaller-scale
programs, such as donating to local charities and sponsoring local events.
 Example of Corporate Social Responsibility

• Starbucks has long been known for its keen sense of corporate social responsibility and commitment
to sustainability and community welfare.
• According to the company, Starbucks has achieved many of its CSR milestones since it opened its
doors.
• According to its 2020 Global Social Impact Report, these milestones include reaching 100% of
ethically sourced coffee, creating a global network of farmers and providing them with 100 million
trees by 2025, pioneering green building throughout its stores, contributing millions of hours of
community service, and creating a groundbreaking college program for its employees.
• Starbucks' goals for 2021 and beyond include hiring 5,000 veterans and 10,000 refugees, reducing
the environmental impact of its cups, and engaging its employees in environmental leadership.
• The 2020 report also mentioned how Starbucks planned to help the world navigate the coronavirus
pandemic. The company's response to the pandemic focuses on three essential elements:
• Prioritizing the health of its customers and employees
• Supporting health and government officials in their attempts to mitigate the effects of the pandemic
• Showing up for communities through responsible and positive actions.