corporate responsibility assignment

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What Is Corporate Social Responsibility? 4 Types

• 08 Apr 2021

Until fairly recently, most large businesses were driven almost exclusively with a single goal in mind: maximizing profits.

In the past few decades, however, more business leaders have recognized that they have a responsibility to do more than simply maximize profits for shareholders and executives. Rather, they have a social responsibility to do what’s best—not just for their companies, but people, the planet, and society at large.

This realization has led to the emergence of companies identifying as socially responsible. Some even carry designations or seals, such as B Corporations (B Corps), social purpose corporations (SPCs), and low-profit limited liability companies (L3Cs).

But what is corporate social responsibility, and what are the different forms it can take?

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What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is the idea that a business has a responsibility to the society that exists around it, according to the online course Sustainable Business Strategy .

Firms that embrace CSR are typically organized in a manner that empowers them to act in a socially responsible way to positively impact the world. It’s a form of self-regulation that can be expressed in initiatives or strategies, depending on an organization’s goals. Many organizations communicate these efforts to external and internal stakeholders through corporate social responsibility reports .

There are various examples of what “socially responsible” means from organization to organization. Firms are often guided by a concept known as the triple bottom line , which dictates that a business should be committed to measuring its social and environmental impact, sustainability efforts, and profits. The adage “profit, people, planet,” known as the “three P’s,” is often used to summarize the driving force behind this concept.

Check out our video on corporate social responsibility below, and subscribe to our YouTube channel for more explainer content!

Types of Corporate Social Responsibility

CSR is traditionally broken into four categories: environmental, philanthropic, ethical, and economic responsibility.

1. Environmental Responsibility

Environmental responsibility is the belief that organizations should behave in as environmentally friendly a way as possible. It’s one of the most common forms of CSR. 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 harmful practices: Decreasing pollution, greenhouse gas emissions, the use of single-use plastics, water consumption, and general waste
• Regulating energy consumption: Increasing reliance on renewables, sustainable resources, and recycled or partially recycled materials
• Offsetting negative environmental impact: Planting trees, funding research, and donating to related causes

2. 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 practice ethical behavior through 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 or federal 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.

In this regard, many firms have processes to ensure they’re not purchasing products resulting from slavery or child labor.

3. Philanthropic Responsibility

Philanthropic responsibility refers to a business’s aim to actively make the world and society a better place.

In addition to acting ethically and environmentally friendly, organizations driven by philanthropic responsibility often dedicate a portion of their earnings. While many firms donate to charities and nonprofits that align with their 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 and have a positive impact on society.

4. Economic Responsibility

Economic responsibility is the practice of a firm backing all of its financial decisions in its commitment to do good. The end goal isn’t just to maximize profits, but also to make sure the business operations positively impact the environment, people, and society.

What Are the Benefits of Corporate Social Responsibility?

Most firms embrace CSR due to moral convictions, which can result in several benefits and important social change .

CSR initiatives can, for example, be a powerful marketing tool, helping a company position itself favorably in the eyes of consumers, investors, and regulators. These initiatives can also improve employee engagement and satisfaction—key measures that drive retention. They can even attract potential employees who carry strong personal convictions that match those of the organization.

Finally, CSR initiatives inherently force business leaders to examine hiring and management practices, where and how they source products or components, and the steps they take to deliver value to customers.

This reflection can often lead to innovative and groundbreaking solutions that help a company act in a more socially responsible way and increase profits. For example, reconceptualizing the manufacturing process so that a company consumes less energy and produces less waste allows it to become more environmentally friendly while reducing its energy and materials costs— value that can be reclaimed and shared with both suppliers and customers.

Are you interested in learning how to lead your organization toward positive change? Explore Sustainable Business Strategy —one of our online courses related to business in society —and discover how you can become a purpose-driven leader. Not sure which course is the right fit? Download our free course flowchart to determine which best aligns with your goals.

This post was updated on August 8, 2023. It was originally published on April 8, 2021.

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What Is Corporate Social Responsibility?

Businesses that practice corporate social responsibility aim to improve their communities, the economy or the environment.

Table of Contents

Corporate social responsibility (CSR) is a management concept that describes how a company contributes to the well-being of communities and society through environmental and social measures. CSR plays a crucial role in how brands are perceived by customers and their target audience. It may also help attract employees and investors who prioritize the CSR goals a company has identified.

Learn about the importance of CSR and how it can impact the success of your business below.

What is corporate social responsibility?

Corporate social responsibility is a type of business self-regulation with the aim of social accountability and making a positive impact on society. Some ways that a company can embrace CSR include being environmentally friendly and eco-conscious; promoting equality, diversity, and inclusion in the workplace; treating employees with respect; giving back to the community; and ensuring business decisions are ethical. 

CSR evolved from the voluntary choices of individual companies to mandatory regulations at regional, national and international levels. However, many companies choose to go beyond the legal requirements and embed the idea of “doing good” into their business models. 

There is no one way a company can embrace CSR, but one thing is certain – to be perceived as genuine, the company’s practices need to be integrated into its culture and business operations. In today’s socially conscious environment, employees and customers place a premium on working for and spending their money on businesses that prioritize CSR. They can detect corporate hypocrisy. 

To ensure CSR authenticity, a company should look at its values, business mission and core issues and determine which initiatives best align with the business’s goals and culture. The business can do this internally or hire a third party to conduct an assessment. 

Reviewing the United Nations 17 Sustainable Development Goals is a good place to start. While goals like Good Health and Well-Being or Gender Equality can apply to most businesses, specific goals like Life Below Water or Affordable and Clean Energy may be relevant to select industries like water technology or energy providers.

Why CSR is important

There are many reasons for a company to embrace CSR practices. 

1. It improves customers’ perception of your brand.

It’s increasingly important for companies to have a socially conscious image. Consumers, employees, and stakeholders prioritize CSR when choosing a brand or company, and they hold corporations accountable for effecting social change with their beliefs, practices, and profits. 

“What the public thinks of your company is critical to its success,” said Katie Schmidt, founder and lead designer of Passion Lilie. “By building a positive image that you believe in, you can make a name for your company as being socially conscious.”

To stand out among the competition, your company needs to prove to the public that it is a force for good. Advocating and raising awareness for socially important causes is an excellent way for your business to stay top-of-mind and increase brand value. 

The Kantar Purpose 2020 study demonstrated a direct correlation between perceived positive impact and brand value growth . Companies that the public considers highly impactful demonstrated a brand value growth of 175% over 12 years, while businesses with a low positive impact showed only 70% growth.

Schmidt also said that sustainable development could help a business financially. For example, using less packaging and less energy can reduce production costs.

2. It attracts and retains employees.

Consumers aren’t the only ones drawn to businesses that give back. Susan Cooney, head of global diversity and inclusion at Symantec, said that sustainability 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,” she said. “Coming out of the recession, corporate revenue has been getting stronger. Companies are encouraged to put that increased profit into programs that give back.” 

According to Deloitte’s 2021 Millennial and Gen Z Survey , the modern workforce prioritizes culture, diversity, and high impact over financial benefits. An estimated 44% of millennials and 49% of Gen Zers rely on their personal ethics in determining the type of work and companies they’d join. The respondents of the Porter Novelli Purpose Tracker 2021 report go even further, with 70% saying they wouldn’t work for a company without a strong purpose. 

What’s more, employees that share the company’s values and can relate to its CSR initiatives are much more likely to stay. Deloitte’s 2020 Global Marketing Trends Report shows that purpose-driven companies retain talent up to 40% more than their competitors. Considering that the estimated cost of losing an employee averages 40% of their annual salary, according to a report by the Washington Center for Equitable Growth, offering your team a sense of purpose and meaning in their work is worth the effort.

3. It increases your appeal to investors.

By demonstrating a developed CSR program and initiatives, your company is bound to become more appealing to both current and future investors. CECP’s influential 2021 Giving in Numbers report shows that investors play a growing role as key stakeholders in corporate social responsibility. Almost 80% of surveyed businesses were open to providing them with data and considering their perspectives on sustainability. Just like customers, investors are holding businesses accountable when it comes to social responsibility. 

At the same time, a company that takes CSR seriously signals to both investors and partners that it’s interested in long-term as well as short-term gain. CSR goes hand in hand with environmental, social, and governance (ESG) metrics that help external analysts quantify the company’s social efforts, and becomes a key factor for investors’ consideration and continued interest.

4 types of corporate responsibility your business can practice

In recognition of how important socially responsible efforts are to their customers, employees and stakeholders, many companies focus on four broad CSR categories. 

• Environmental efforts: One primary focus of CSR is the environment. Businesses have large carbon footprints, regardless of size. Any steps a company can take to reduce its footprint is considered good for both the company and society.
• Philanthropy: Businesses can practice social responsibility by donating money, products or services to social causes and nonprofits. Larger companies tend to have plentiful resources that can benefit charities and local community programs; however, even as a small business, your efforts can make a difference. If you have a specific charity or program in mind, reach out to the organization. Ask them about their specific needs and whether a donation of money, time or your company’s products would best help them.
• Ethical labor practices: Companies can demonstrate CSR by treating employees fairly and ethically . This is especially true of businesses that operate in international locations with labor laws that differ from those in the U. S.
• Volunteering: Participating in local causes or volunteering your time (and your staff’s time) to community events says a lot about your company’s sincerity. When your company does good deeds without expecting anything in return, you express concern (and support) for specific issues and social causes.

Building a socially responsible business

While startups and small companies don’t have the deep financial pockets that enterprises have, their efforts can have a significant impact, especially in their local communities. 

“Even 5%, though it might not sound like a lot, can add up to make a difference,” Schmidt said. “When thinking of ways to donate and give back, start local, and then move from there.” 

When identifying and launching a CSR initiative, involve your employees in the decision-making process. Create an internal team to spearhead the efforts and identify organizations or causes related to your business or that employees feel strongly about. You’ll increase engagement and success when you contribute to something that matters to your employees. Involving your employees in the decision-making process can also bring clarity and assurance to your team. 

“If decisions [about CSR] 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.” 

Whichever strategies you use for sustainable development, be vocal. Let your consumers know what you are doing to be socially conscious. [Related read: PayPal’s Mission for Corporate Social Responsibility ]

“Consumers deserve to share in the good feelings associated with doing the right thing, and many surveys have found that consumers are inclined to purchase a sustainable product over a conventional alternative,” Cooney said. “Announcing these benefits is a win-win from both a commercial and sustainability perspective.”

What to avoid when creating a socially responsible business model

Becoming a socially responsible business can be simple, but there are a few caveats. 

1. Don’t choose unrelated initiatives.

Avoid participating in charitable efforts that are not related to your core business focus or that violate your company’s ethical standards in any way. Instead of blindly sending money to a completely unrelated organization, find a nonprofit that your company believes in or invest in a project in your community . 

2. Don’t use CSR as a marketing scheme.

Don’t use CSR opportunities solely for marketing purposes. Schmidt said running a corporate responsibility campaign as a quick marketing scheme can backfire if your business doesn’t follow through. Instead of trying a one-time stunt, adopt socially responsible business practices over time. Schmidt said employees and consumers react positively to companies that embrace long-term social responsibility. 

That doesn’t mean you shouldn’t promote your corporate social responsibility efforts in marketing materials at all, provided you take the actions necessary to back up your messaging. There’s nothing wrong with letting people know about your CSR efforts on your business website , for example. Just take care to avoid exaggerating your contributions — honesty is key to building trust with your audience. 

3. Don’t wait for the industry to catch up.

If you are considering sustainable activities that aren’t legally required yet, don’t wait. By adopting socially responsible norms early on, you set the bar for your industry and refine your process. [Related read: 14 Examples of Socially Responsible Businesses ]

Undertaking CSR initiatives is a win for everyone involved. The impact of your actions will not only appeal to socially conscious consumers and employees, but can also make a real difference in the world.

CSR certifications

While many companies self-assess their CSR efforts, often the most practical and trusted way to prove your company’s social accountability to the public is to undergo a third-party social impact assessment. 

These three corporate social responsibility certifications can help you achieve public recognition for your sustainability and CSR efforts. 

B-corp certification

Certified B corporations, or B-corps, are companies verified by B Lab to meet high standards of social and environmental performance, accountability, and transparency. To become a B-corp, a company must undergo a rigorous and holistic verification process every three years, integrate B-corp commitments to all stakeholders (rather than only shareholders) into its governing documents, and pay a sales-based annual fee. 

While B-corp status is mainly associated with multinationals like Patagonia or Ben & Jerry’s, small businesses and startups that strive for social and environmental excellence can also receive this CSR certification. The first step is to complete the free and confidential B Impact Assessment on the B Lab website and receive a minimum score of 80. If you meet the baseline, you can submit the impact assessment for review and start the verification process. 

ISEAL code compliance

ISEAL Alliance is a global membership organization for credible sustainability standards whose members include Fairtrade International, Gold Standard, Alliance for Water Stewardship and more. An assessment from ISEAL is carried out by an independent third-party verification provider that determines whether a business meets Codes of Good Practice and can be deemed ISEAL Code Compliant. This assessment offers a reputable seal of approval for companies that emphasize sustainability.

In some circumstances, verifications from ISEAL members can directly impact business continuity. For example, the absence of a certification from the Roundtable for Sustainable Palm Oil can effectively close down a supply chain for some consumer brands. 

SASB standards

The Sustainability Accounting Standards Board is one of the most established environmental, social, and governance (ESG) guidance frameworks, providing standards for disclosing the financial impact of a company’s sustainability efforts. In other words, it allows businesses to communicate the financial outcomes of their CSR and ESG measures to investors and other stakeholders. 

SASB Standards are evidence-based, cost-effective, market-informed, and  industry-specific, covering 77 industries. These standards help produce structured, comparable, and standardized data that is perfect for both internal and external communications of CSR and ESG impacts.

Examples of CSR companies

If you’re looking for CSR inspiration for your business, here are six companies practicing corporate social responsibility on a large scale. 

• LEGO: The toy company has invested millions of dollars into addressing climate change and reducing waste. LEGO’s environmentally conscious efforts include reduced packaging, sustainable materials, and investments in alternative energy .
• TOMS: TOMS donates one-third of its net profits to charities that support physical and mental health as well as educational opportunities. During the pandemic, the brand directed all charitable donations to the TOMS COVID-19 Global Giving Fund.
• Johnson & Johnson: The brand Johnson & Johnson focuses on reducing its environmental impact by investing in alternative energy sources. Globally, Johnson & Johnson also works to provide clean, safe water to communities.
• Starbucks: The global coffee chain has implemented a socially responsible hiring process to diversify its workforce. Its efforts are focused on hiring more veterans, young people looking to start their careers, and refugees.
• Google: Google has demonstrated its commitment to the environment by investing in renewable energy sources and sustainable offices. CEO Sundar Pichai is also known to take stands on certain social issues.
• Pfizer: The pharmaceutical company’s focus on corporate citizenship is reflected in its healthcare initiatives, which include spreading awareness about non-infectious diseases and providing accessible health services to women and children in need. 

Corporate social responsibility FAQs

Corporate social responsibility is a modern approach to running a business. Here are some of the most frequently asked questions about it.

What is corporate social responsibility (CSR)?

Corporate social responsibility is a way of describing how companies measure and control their impact on society. This includes a company’s contributions – both positive and negative – to the economy, environment and greater community. 

Who is CSR for?

Businesses of all sizes can choose to introduce a comprehensive CSR program or selected initiatives and reap the associated benefits. No matter the size or maturity of your business, an investment in ethical behavior and sustainable practices can improve your brand value, build customer trust, grow your company, and improve the bottom line. 

What are the benefits of CSR for companies?

CSR can be beneficial to a company in several ways. The first is by improving its brand image . When customers or clients see evidence that a business is socially responsible, they tend to respond positively. 

The second benefit is improving employee morale . Morale tends to be higher at companies that invest effort and resources into ethical and socially responsible behavior. 

The third involves appealing to new talent. Modern employees often choose purpose-driven and environmentally conscious companies over financial benefits. 

Lastly, CSR-active companies attract investors and partners. A company that is willing to invest in long-term policies and improvements offers security to potential investors. 

What are examples of CSR initiatives?

Some examples of CSR components are reducing carbon footprint and energy consumption, engaging in wildlife conservation initiatives, encouraging charity and volunteer work, supporting local communities, improving labor policies, ensuring diversity and equality in the workplace, investing in nonprofit organizations, and guaranteeing ethically sourced materials. 

Whichever practices you employ, make sure they are authentic and match your corporate values. Otherwise, your business might be accused of greenwashing . 

How do you monitor CSR?

There are a few key ways to measure CSR. The first is to break CSR goals into categories, such as philanthropy, labor practices, and environmental efforts. 

To track the success of these investments, look for measurable key performance indicators. How much has your company’s carbon footprint changed? How many people did you reach with a charitable effort? Monitor new developments and keep a pulse on general public perception of issues associated with your company’s social causes.

Skye Schooley, Nicole Fallon and Sammi Caramela contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

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The Truth About CSR

• V. Kasturi Rangan,
• Lisa Chase,
• Sohel Karim

Despite the widely accepted ideal of “shared value,” research led by Harvard Business School’s Kasturi Rangan suggests that this is not the norm—and that’s OK. Most companies practice a multifaceted version of CSR that spans theaters ranging from pure philanthropy to environmental sustainability to the explicitly strategic. To maximize their impact, companies must ensure that initiatives in the various theaters form a unified platform. Four steps can help them do so:

Pruning and aligning programs within theaters. Companies must examine their existing programs in each theater, reducing or eliminating those that do not address an important social or environmental problem in keeping with the firm’s business purpose and values.

Developing metrics to gauge performance. Just as the goals of programs vary from theater to theater, so do the definitions of success.

Coordinating programs across theaters. This does not mean that all initiatives necessarily address the same problem; it means that they are mutually reinforcing and form a cogent whole.

Developing an interdisciplinary CSR strategy. The range of purposes underlying initiatives in different theaters and the variation in how those initiatives are managed pose major barriers for many firms. Strategy development can be top-down or bottom-up, but ongoing communication is key.

These practices have helped companies including PNC Bank, IKEA, and Ambuja Cements bring discipline and coherence to their CSR portfolios.

Most of these programs aren’t strategic—and that’s OK.

Idea in Brief

The problem.

Many companies’ CSR initiatives are disparate and uncoordinated, run by a variety of managers without the active engagement of the CEO. Such firms cannot maximize their positive impact on the social and environmental systems in which they operate.

The Solution

Firms must develop coherent CSR strategies, with activities typically divided among three theaters of practice. Theater one focuses on philanthropy, theater two on improving operational effectiveness, and theater three on transforming the business model to create shared value.

Companies must prune existing programs in each theater to align them with the firm’s purpose and values; develop ways of measuring initiatives’ success; coordinate programs across theaters; and create an interdisciplinary management team to drive CSR strategy.

Most companies have long practiced some form of corporate social and environmental responsibility with the broad goal, simply, of contributing to the well-being of the communities and society they affect and on which they depend. But there is increasing pressure to dress up CSR as a business discipline and demand that every initiative deliver business results. That is asking too much of CSR and distracts from what must be its main goal: to align a company’s social and environmental activities with its business purpose and values. If in doing so CSR activities mitigate risks, enhance reputation, and contribute to business results, that is all to the good. But for many CSR programs, those outcomes should be a spillover, not their reason for being. This article explains why firms must refocus their CSR activities on this fundamental goal and provides a systematic process for bringing coherence and discipline to CSR strategies.

• VR V. Kasturi Rangan is a Baker Foundation Professor at Harvard Business School and a cofounder and cochair of the HBS Social Enterprise Initiative.
• Lisa Chase is a research associate at Harvard Business School and a freelance consultant.
• SK Sohel Karim is a cofounder and the managing director of Socient Associates, a social enterprise consulting firm.

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Module 6: Business Ethics and Corporate Social Responsibility

Assignment: corporate social responsibility, preparation.

Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, or responsible business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and national or international norms. With some models, a firm’s implementation of CSR goes beyond compliance and engages in “actions that appear to further some social good, beyond the interests of the firm and that which is required by law.” The aim is to increase long-term profits and shareholder trust through positive public relations and high ethical standards to reduce business and legal risk by taking responsibility for corporate actions. CSR strategies encourage the company to make a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others.

Every year, Reputation Institute , a private global consulting firm based in New York, invites about 47,000 consumers, across fifteen markets, to participate in a study that ranks the world’s one hundred most reputable companies—all multinational businesses with a global presence. One of their recent studies found that 42 percent of how people feel about a company is based on their perceptions of the firm’s corporate social responsibility (CSR).

• Select a company (domestic or international) that will be the basis for your research.
• Research the company’s record in the area of CSR. Be sure to look at both their domestic and well as international reputation.
• A good place to begin your research is the LibGuide at Rutgers University: http://libguides.rutgers.edu/csr
• A brief (one-paragraph) summary of the business you selected.
• According to your research, how does the company rank with regard to CSR? Be sure to provide a source for this ranking!
• Describe specific examples of corporate actions that resulted in this company’s ranking.
• Does a company’s approach to CSR influence your purchasing decisions? Why or why not?

DO NOT write your paper as a series of answers to these numbered questions. This assignment should follow the written assignment guidelines for the course. Be sure to include APA-formatted citations of the Web sites or other sources you used for your research.

Candela Citations

• Assignment: Corporate Social Responsibility. Authored by : Linda Williams and Lumen Learning. License : CC BY-SA: Attribution-ShareAlike
• Corporate Social Responsibility. Provided by : Wikipedia. Located at : https://en.wikipedia.org/wiki/Corporate_social_responsibility . License : CC BY-SA: Attribution-ShareAlike

Published: 22 December 2023 Contributors: Amanda McGrath, Alexandra Jonker

Corporate social responsibility (CSR) is the idea that businesses should operate according to principles and policies that make a positive impact on society and the environment.

Through CSR, companies make decisions driven by financial gain and profitability, and the impact of their actions on their communities and the world at large. CSR goes beyond legal obligations: by voluntarily adopting ethical, sustainable and responsible business practices, companies seek to deliver benefits to consumers, shareholders, employees and society.

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Often, a company’s business model and practices are built around financial goals. However, CSR programs encourage business leaders to consider corporate citizenship or the larger impact of the business on society when making decisions. Corporate social responsibility helps companies ensure that their operations are ethical, safe and delivering positive impact wherever possible. Through CSR initiatives, companies work to limit environmental impact, contribute to solving societal problems (such as poverty and inequality) and ensure their brand identity reflects their values.

The theory of the “ triple bottom line ” can help organizations as they pursue corporate social responsibility. As a financial framework, the triple bottom line refers to the idea that a company’s business model should revolve around the three P’s: people, planet and profit. By maximizing all three, a company aims to make a positive impact on the world and remove barriers to growth.

Corporate social responsibility initiatives generally fall into four categories: environmental, ethical, philanthropic and economic. Each type of CSR contributes to a company’s overall CSR strategy.

More companies are assessing their overall environmental impact and engaging in CSR efforts that aim to protect natural resources and minimize any contribution to climate change. CSR encourages sustainability in business through eco-friendly practices, such as by reducing energy consumption, using renewable resources and minimizing waste.

Environmental responsibility hinges on eliminating negative impacts of business operations (primarily through limiting pollution-causing activities) as well as offsetting them through actions such as planting trees and engaging in programs that support biodiversity.

CSR initiatives often focus on social impact and human rights concerns, such as ensuring fair wages, safe working conditions and proper treatment of employees and suppliers. They also encourage accountability both internally and externally. Ethical CSR may include abiding by fair labor practices, ending workplace discrimination and ensuring supply chain transparency.

CSR practices include donating money, resources or time to positive causes and organizations, such as local and national charities, educational programs, disaster relief and more. Businesses who adopt philanthropic CSR engage with the communities where they operate, offering support through volunteer work, sponsoring local events, making contributions to local nonprofits or supporting skills training programs.

Corporate social responsibility involves ensuring that money is not a company’s sole motivator. To demonstrate this, companies enact policies and procedures to make sure their choices align with values, even if the alternatives may save money or boost profitability. Economic CSR also includes efforts to support the economic development and growth of the communities in which a business operates—for example, supporting job training and job creation efforts and forging local partnerships.

The benefits of CSR include:

CSR can have a positive impact on an organization’s brand identity as well as its bottom line. Some CSR efforts, such as improving energy efficiency, can reduce operating costs and might lead to savings in the end. Consumers increasingly prefer brands that share their values, and CSR policies offer ways for organizations to demonstrate those values, building trust and loyalty to fuel a competitive advantage.

CSR can also help attract top talent and drive employee engagement and retention, as more workers seek employers whose values align with their own. Additionally, a proactive approach to ethical and social issues has the potential to prevent legal problems, fines and reputational damage.

CSR initiatives can help people become more responsible consumers, making it easier for them to access products and services that align with their values and educating them on issues of sustainability and ethical consumption. It can encourage companies to prioritize and invest in testing, quality control and safety measures. CSR can also minimize the likelihood of defective or harmful products reaching consumers.

CSR can have a positive impact on the overall health of the planet, as it encourages environmental responsibility and sustainable practices. CSR initiatives can help companies reduce their greenhouse gas emissions or pursue net-zero emissions goals that are key to slowing climate change. They might also help conserve natural resources, reduce pollution and limit disruption of ecosystems. Additionally, a focus on CSR can support investment in research and development of eco-friendly products and practices.

Corporate social responsibility can help support local communities and address societal issues, such as poverty, inequality and environmental concerns. CSR initiatives can fuel economic growth by creating jobs. They can also shape public opinion as companies leading the way inspire others to follow suit, creating a positive ripple effect. A focus on ethical behavior at the corporate level reinforces a broader norm of ethical behavior across other parts of society.

Consumers are increasingly seeking products and services from socially responsible companies. Meanwhile, many investors are prioritizing companies whose values are clear and aligned with their own. To meet these demands, businesses are integrating CSR into their operations. In addition, global expansion and the increasingly interconnected nature of supply chains pushes companies to comply with a growing web of regulatory environments and to better confront the impact of their business on communities around the world.

With increased awareness of environmental issues, labor practices and ethical concerns, combined with better research and communication, CSR is now more central to business strategies. Some companies even have dedicated CSR departments.

Examples of CSR include:

• Donating a percentage of profits to environmental or social causes
• Committing to using recycled and eco-friendly materials
• Sourcing fair-trade materials and ingredients
• Engaging in social activism or fundraising on behalf of social causes
• Using technology such as artificial intelligence (AI) to drive energy efficiency and reduce carbon footprints
• Creating programs for the ethical use and disposal of products, such as electronics recycling programs
• Instituting diversity, equity and inclusion (DEI) programs that support efforts to diversify and grow the workforce in new ways
• Supporting programs that replenish the natural resources, such as water or timber, used for production
• Turning to renewable energy sources and other strategies that help in the pursuit of net-zero or carbon-neutral goals
• Establishing employee well-being programs that support their physical and mental health

Corporate social responsibility is the overall ethos that drives a company to adopt policies and practices that support sustainability, societal and other ethical ends. Environmental, social and governance (ESG) is about the ways in which their impact is measured or quantified. While both CSR and ESG are about reflecting the company’s values, CSR is typically seen as more of an internal framework, while ESG frameworks are often used externally as a way of demonstrating real-world impact.

Because the parameters of corporate social responsibility are continually evolving, there is no single standard by which CSR initiatives are measured or governed. Companies that embrace CSR are guided by local and international laws, including environmental regulations, labor rules and consumer protection standards.

Some efforts are also held to industry-specific standards; for example, the Global Reporting Initiative (GRI) provides reporting standards for sustainability. Organizations like the United Nations have introduced global guidance, such as the Sustainable Development Goals (SDGs), which encourage businesses to adopt sustainable practices.

Many companies that embrace CSR will also engage in CSR reporting , through which they document performance of non-financial metrics and provide transparency on social and environmental impact. CSR reporting is typically voluntary; however, some jurisdictions mandate that large organizations disclose social and environmental performance, so that investors and consumers can assess CSR efforts.

Some organizations have designated corporate social responsibility teams that oversee a company's CSR activities. People on these teams plan and run the social and environmental programs that align with the company's values and goals. They work with company leadership to devise the overall CSR strategy and engage stakeholders, including employees, customers, investors and community partners, to help them succeed. They also typically track and report on their progress by using metrics and other methods of assessment, deal with compliance and regulatory issues and manage communication about the company’s CSR efforts both internally and externally.

Simplify the capture, consolidation, management, analysis and reporting of your environmental, social and governance (ESG) data.

CSR reporting is the practice of reporting an organization’s performance of non-financial metrics, providing transparency on the organization’s impact on society and the environment.

Net zero is the point at which greenhouse gases emitted into the atmosphere are balanced by an equivalent amount removed from the atmosphere.

The goal of the CRSD is to provide transparency that will help stakeholders better evaluate EU companies’ sustainability performance as well as the related business impacts and risks.

The triple bottom line (TBL) is a sustainability framework that revolves around the three P’s: people, planet and profit.

Sustainability in business refers to a company's strategy and actions to eliminate the adverse environmental and social impacts caused by business operations.

Decarbonization is a method of climate change mitigation that reduces greenhouse gas (GHG) emissions, as well as removes them from the atmosphere.

Simplify the capture, consolidation, management, analysis and reporting of your environmental, social and governance (ESG) data with IBM Envizi ESG Suite.

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What Is Social Responsibility?

Understanding social responsibility, areas of focus, the bottom line.

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Social responsibility is an ethical focus for individuals and companies that want to take action and be accountable for practices that benefit society. It's become increasingly important to investors and consumers who want to put their money into or purchase products from companies that take steps to contribute to the welfare of society and the environment.

Critics have traditionally argued that the basic nature of business doesn't consider society to be a stakeholder but many investors and consumers are embracing social responsibility and driving change.

Key Takeaways

• Corporate social responsibility (CSR) means that businesses should operate in ways that benefit society in addition to maximizing shareholder value.
• Socially responsible companies adopt policies that promote the well-being of society and the environment while lessening the negative impacts on them.
• Companies can act responsibly in many ways such as by promoting volunteering, making changes that benefit the environment, engaging in ethical labor practices, and engaging in charitable giving.
• Consumers are more actively looking to buy goods and services from socially responsible companies and this impacts their profitability.
• Critics assert that practicing and endorsing CSR standards contradicts the purpose of a business which is to make money.

Michela Buttignol / Investopedia

Social responsibility requires that individuals and companies act in the best interests of the environment and society as a whole. Social responsibility is referred to as “ corporate social responsibility (CSR) ” when it applies to businesses and it's becoming more popular due to shifting social norms. Many companies have made CSR an integral part of their business models without compromising profitability.

A Massachusetts Institute of Technology meta-analysis of 200 surveys over 20 years talked with business leaders in more than 70 countries and there was a high level of interest in the topic. The report called CSR a “halo strategy” and concluded that “by presenting themselves as true believers in CSR (saints), businesses seek to improve the overall corporate image (the halo) and expect broad benefits from diverse stakeholders to follow (the warm glow).”

The crux of CSR is to enact policies that promote an ethical balance between the dual mandates of striving for profitability and benefiting society as a whole. These policies can be enacted by commission such as through donations of money, time, or resources, or by omission practices such as by “going green,” reducing greenhouse gasses, or abiding by U.S. Environmental Protection Agency regulations to limit pollution.

More consciously capitalistic investors and consumers are considering a company’s commitment to CSR practices before making an investment or purchase. Embracing CSR can benefit the prime directive: maximization of shareholder value.

Actions or the lack of them will affect future generations. CSR is good business practice and a failure to execute it can hurt the balance sheet. It can boost company morale, especially when a company can motivate its employees through social causes.

CSR is generally more effective when a company takes it on voluntarily rather than waiting for the government to require it through regulation.

The International Organization for Standardization (ISO) emphasizes that a business’s ability to maintain a balance between pursuing economic performance and adhering to societal and environmental issues is a critical factor in operating efficiently and effectively. A company can embrace CSR through philanthropy, by promoting volunteering, and by committing to ethical labor practices and environmental changes.

Companies that manage their environmental impact might look to reduce their carbon footprint and limit waste. There’s also a responsibility to treat employees ethically, such as by offering a fair wage even when there are limited employee protection laws.

Examples of Socially Responsible Corporations

CSR takes on different meanings within certain industries and companies:

• Starbucks Corp. ( SBUX ) has committed to CSR from the start, including sustainability and community welfare. It purchases Fair Trade Certified ingredients to manufacture products and it actively supports sustainable farming in the regions where ingredients are sourced.
• Ben & Jerry’s Homemade Holdings Inc. has integrated CSR into the core of its operations. Like Starbucks, the company purchases Fair Trade Certified ingredients.
• Salesforce.com Inc. ( CRM ) developed what it calls the “1-1-1 model.” The company dedicates 1% of its equity, 1% of its product, and 1% of its employees’ time back to the community.
• Big-box retailer Target Corp. ( TGT ) is also well known for its social responsibility programs. It's donated money to communities in which the stores operate, including education grants.

Criticism of Corporate Social Responsibility

Not everyone believes that businesses should have a social conscience. Economist Milton Friedman stated that the “‘social responsibilities of business’ are notable for their analytical looseness and lack of rigor.” Friedman believed that only individuals can have a sense of social responsibility. By their very nature, businesses cannot. Some experts believe that CSR defies the very point of being in business: profit above all else.

A conservative backlash to diversity, equity, and inclusion (DEI) policies has appeared and this can affect employment initiatives that are part of CSR. Florida banned the practice in state-funded colleges in May 2023 under the leadership of Governor Ron DeSantis. Phil Lyman, a congressman from Utah, even blamed the catastrophic collapse of Baltimore’s Francis Scott Key Bridge on DEI.

The Wharton School of the University of Pennsylvania noted in its house journal, Knowledge at Wharton, that “DEI is under attack.” It started “the Relationships Across Differences Roundtable (RADs), a coalition of more than 70 academics and industry leaders committed to advancing inclusivity in all its forms—race, gender, ethnicity, religion, ability, neurodiversity, and age. They are partnering to share science-backed insights and best practices, strategize on common problems, and find ways to engage all stakeholders, even the ones who don’t believe in DEI.”

Some CSR policies continue to join the mainstream despite such opposition and they're practiced among a wide range of companies. Generations such as millennials and Gen Z are embracing it and driving change in the workplace and as consumers.

What Are Some Examples of Social Responsibility?

CSR includes companies engaging in environmental preservation efforts, ethical labor practices, philanthropy, and promoting volunteering. A company might change its manufacturing process to reduce carbon emissions.

What Are the Main Benefits of Social Responsibility?

Benefiting society and lessening the negative impacts on the environment are among the main benefits and goals of CSR. Consumers are increasingly looking to buy goods and services from socially responsible companies and this can have a positive impact on their bottom lines.

How Does Social Responsibility Benefit Companies?

Companies that implement social responsibility programs can potentially increase their bottom lines and boost their brand image as well. Social responsibility programs can also have a positive impact on morale among employees.

Companies engaging in CSR benefit the common good in several ways, including making changes that support the environment, engaging in ethical labor practices, and promoting volunteering and philanthropy. The practice can also be said to benefit their bottom lines because consumers are more actively looking to do business with socially responsible companies .

Massachusetts Institute of Technology Sloan Management Review. " Why Companies Practice Corporate Social Responsibility ."

Lu, Hao, et al. " How Do Investors Value Corporate Social Responsibility? Market Valuation and The Firm Specific Contexts ." Journal of Business Research , vol. 125, March 2021, pp. 14-25.

International Organization for Standardization. " Standards ."

International Organization for Standardization. " ISO and Small & Medium Enterprises ."

Starbucks. “ Starbucks Ethical Sourcing of Sustainable Products .”

Starbucks. “ Becoming Resource Positive .”

Ben and Jerry’s. “ Fairtrade .”

Ben and Jerry’s. “ Our Values, Activism and Mission .”

Salesforce. “ How Far Can the 1-1-1 Model Go? This Tech Darling Has a Unique Approach .”

Target. " Offering Debt-Free Degrees to More Than 340,000 Target Team Members? Now That’s a Smart Move ."

Target. “ Sustainability & Governance/People, Planet, Business .”

The New York Times. “ A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits .”

National Public Radio. " Florida Gov. Ron DeSantis Signs a Bill Banning DEI Initiatives in Public Colleges ."

Utah News Dispatch. " Lyman Blames DEI for Baltimore Bridge Collapse, but Admits He Didn’t Write Social Media Post. "

Wharton School of the University of Pennsylvania. " Is DEI Going Away? Here’s What Experts Say ."

Massachusetts Institute of Technology, Sloan School of Management. “ Social Responsibility Matters to Business — A Different View from Milton Friedman from 50 Years Ago .”

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