Corporate Social Responsibility Csr Definition Examples

There are four main types of corporate social responsibility – environmental, ethical, philanthropic, and economical. CSR is extremely important now as consumers know about the negative externalities caused by production activities. Common CSR initiatives include donating to charity, providing disaster relief, promoting renewable energy, encouraging gender equality, addressing racial discrimination, etc.

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Key Takeaways

Corporate social responsibility is a business strategy currently used by many companies that attaches a social aspect to them.The public and businesses are subject to the many benefits of corporate social responsibility. First, it benefits society, as companies contribute a part of their revenue. Secondly, the company gains by earning a reputation and thus, making profits.Firms make it a point to heavily publicize their CSR initiatives, as making customers aware of it is equally important as doing good to society.

Corporate social responsibility is a very prominent approach adopted by most businesses. Some popular examples of corporate social responsibility include Starbucks, Apple, and Levi Strauss, among others.

The benefits of CSR extend to both society and the company. Thus it is necessary to carefully weigh the impacts of CSR initiatives and design them to maximize the positive effects.

For this, companies have to define their purpose and goals. Then, they can revisit their mission and vision. Next, by conducting a SWOT analysis, they can identify the best opportunity and decide on the type of CSR approach. Then, they must communicate with their stakeholders and divide responsibilities.

Social responsibility should be made a part of corporate governance and followed religiously. Finally, it is important to measure the impact and publicize it. Also, studies should be carried out at regular intervals and corrections introduced.

Types of CSR

There are four important types of corporate social responsibility:

Environmental CSR – Companies focus on environmental protection and conservation in this category. They launch initiatives to reduce pollution or emission, offset carbon footprint, recycle waste, and use renewable energy sources.Ethical CSR – The ethical responsibility of a business has to do with the moral values and ethical beliefs of organizations. It usually covers all the stakeholders of the company – employees, suppliers, and investors. Issues like gender equality, reasonable working hours, high minimum wage, etc., fall under ethical CSR.Philanthropic CSR – Businesses’ donations and contributions made to charity are considered philanthropy. Helping malnourished children or rescuing people in war-torn regions come under this.Economical CSR – The last type of social responsibility focuses on the financial aspects of environmental, ethical, philanthropic, and social initiatives. A company should not just make profits but also practice fair measures like paying taxes responsibly to support the economy.

Example #1

Let’s begin with a simple example. Firm PQR sells electronic devices and appliances. Due to the mounting concern about e-waste management, PQR has decided to introduce an e-waste collection program. Through this program, individuals who own a PQR product can collect and sell any e-waste to their nearest PQR store by weight.

That is, customers can sell 1 pound of e-waste for $5. Also, customers selling e-waste from PQR products will get an additional $3 per pound. The firm will recycle the collected e-waste. Customers will be able to visit their PQR membership account and check the contributions made by them and others. They can also view the total quantity of e-waste recycled, recycling videos, etc.

Through this program, PQR sells itself. For example, only those individuals who own a PQR product can participate in this program, encouraging others to buy from the company. Also, it has a good image among the public for addressing a significant issue. Further, the company can segregate the components and sell them as scrap.

Example #2

Here are the recent examples of two electric power distribution companies, Duke Energy Corporation and Southern Company. Following a United States Supreme Court ruling on June 30, 2022, which restricted the authority of the Environmental Protection Agency (EPA) to control and regulate emissions by power plants run on coal and gas; the two companies have decided to closely work with their stakeholders to reduce emissions and work towards decelerating climate change.

Many investors are already extremely conscious about investing in companies. With the rising popularity of impact investing and Environmental, Social, and Governance (ESG) investing, firms have been pressured to limit the negative effects on society and the environment. Duke Energy has decided to retire from operating its coal-powered plant by 2035, while Southern Co. is on its transition to net zero emissions by 2050.

Importance

CSR in today’s world is a huge part of corporate governance and a company’s ethics. Even if not mandatory, every company has a social responsibility. However, it should not be considered an expenditure but an investment for better long-lasting gains.

CSR is important because it can increase the reputation and project an ethical image of the firm. Hence, people are generally motivated to buy from such firms, as they too want to be a part of their contribution to society. Moreover, it creates a bond between the company and the people, thus ensuring customer loyalty.

Often, governments provide subsidies to such firms, as they are contributing to the fulfillment of national goals. The subsidies include tax credits, rebates, and other incentives. These factors help companies improve sales and avail incentives, thus, increasing profits.

Finally, CSR initiatives have the potential to kick-start commercial activity. Usually, in times of crisis, consumers are unable to spend. When companies with corporate social responsibility work together by contributing a part of their profits, customers are in a position to spend money. One activity propels another, and the economy is operating at full efficiency in no time.