Corporate social responsibility (CSR) may be defined because the concern of a business for society as an entire that goes beyond contractual or legal obligations. Many firms today are taking over CSR initiatives because, although they will not appear to assist the company’s bottom line within the short term, they often coincide with long-term sustainability and profitability.
Areas for Corporate Social Responsibility
CSR covers a good range of issues, including, but not limited to the subsequent areas:
Unfair Business Practices. Firms will adhere to fair selling tactics, produce quality products, and price their products fairly. They will obey laws regarding business practices.
Workplace and Employee Issues. This includes upholding the rights of employees’ individual freedoms, civil right employment, and protecting employees from molestation. It also involves paying employees fair wages, adhering to legal employment statutes, and ensuring employee safety. Firms may attempt to promote a balance of family life and work for workers by offering family leave, flexible hours, or day care services.
Organizational Governance. As outlined earlier, it’s necessary that the firm be governed ethically. Leadership must be ethical and spread the message of ethics from the highest down.
Environmental Impact. Firms must make sure that their impact on the environment is at a minimum. This includes using environmentally sound manufacturing processes and producing products that do not damage the environment. Many companies have found that they can be successful financially while also being ecologically sound.
Marketplace and Consumer Issues. This involves ensuring consumer safety with the products that are produced and will involve monitoring and responding to consumer complaints. it’s going to also involve ensuring fairness within the marketplace, giving consumers a choice, and pricing products fairly.
Social Development. Companies can aid the social development of communities by creating jobs and contributing resources.
Corporate social responsibility also involves becoming active within the communities where the corporate operates. Activities may include funding local charitable organizations, sponsoring cultural events, or having volunteer days for workers to travel into the community and participate in community service projects. a corporation may choose to create its own philanthropic arm, like the Gap Corporation’s Gap Foundation, which matches employee giving to philanthropic organizations.
Another term used frequently is corporate citizenship, the concept of companies holding to high ethical standards, demonstrating environmental responsibility, providing safe and reliable products, and working to enhance conditions within the community. Corporate citizenship encompasses business ethics, but also has part that goes above and beyond the legal and contractual obligations, like CSR.
A theory that has been cropping up recently is named the “triple bottom line.” the idea of this theory is that companies should be working even as hard at increasing their social and environmental worth as they are doing with their financial results. The three bottom lines are society, economy, and environment, and therefore the lines are interdependent.
But how can working hard at social and environmental worth benefit a company’s bottom line financially?
Benefits of Corporate Citizenship
According to the planet Economic Forum white book The Business Case for Corporate Citizenship, there are eight areas where corporations can get pleasure from good governance and company citizenship:
- Reputation management. Companies can avoid a damaged reputation by adhering to moral practices.
- Risk profile and risk management. Companies that adhere to more stringent policies (environmental, for example) are less likely to pose the maximum amount risk for investors because they’re not taking chances with their reputations.
- Employee recruitment, motivation, and retention. Companies that are better corporate citizens are more attractive to potential employees; companies whose reputations are tarnished may have much difficulty recruiting new employees.
- Investor relations and access to capital. Recent studies have shown that companies with sound environmental policies and environmentally safe products are able to increase their earnings per share and are more likely to win contracts.
- Learning and innovation. Adopting corporate citizenship principles can cause creativity and employee innovation because it requires finding solutions to problems while enhancing the company’s bottom line.
- Competitiveness and market positioning. Today, consumers are very concerned about trusting companies and their products. Being an honest corporate citizen will make a corporation more competitive and can help its position within the market.
- Operational efficiency. Becoming more environmentally efficient often means reducing material use and waste, which reinforces a company’s bottom line.
- License to work. Companies that are good citizens are more likely to incline a second chance just in case of a slipup than companies that have a negative image within the minds of citizens.