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Corporate Social Responsibility (What It Is And How It Works: Explained)

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What Is Corporate Social Responsibility

Corporate social responsibility refers to the concept that a business should not only strive to make profits but also do good in society, give back to its community, bring a positive impact to the world, and act responsibility.

In other words, by implementing socially responsible measures, corporations are to act in a way as to make the world a better place, self-regulate their actions, and remain accountable to their stakeholders and society in general.

Good Corporate Citizenship

Companies adopting corporate responsibility programs are those who are said to act as good corporate citizens.

Acting as a good corporate citizen means that a company will act in good ways in relation to its own stakeholders.

For example, it will make sure that employees have fair and competitive wages, adopts recycling programs, only uses sustainable material in its business, and so on.

Larger companies will take their corporate responsibility to the next level which is to set standards and measures that are socially responsible setting standards in the industry or among their peers.

For example, larger corporations may actively fund specific charitable organizations and send employees volunteering for the cause on a regular basis.

Not only the company is acting in a socially responsible way is good for society, but it also helps companies create bonds between their employees, deepen their relationship with the community, and generate significant brand awareness.

Corporate Social Responsibility Definition

How do you define corporate social responsibility?

According to Investopedia, corporate social responsibility is defined as:

Corporate social responsibility is a business model by which companies make a concerted effort to operate in ways that enhance rather than degrade society and the environment

As you can see from this definition, corporate responsibility is a method implemented by companies intended to have them become and remain socially accountable to others in society.

International Organization for Standardization (ISO)

The International Organization for Standardization, or ISO, implemented the ISO 26000 in 2010 providing guidance as to what corporate social responsibility means.

In essence, ISO 26000 helps companies define and understand what is corporate responsibility and how companies can take measures in implementing them.

What’s interesting with the ISO 26000 guidelines is that any company around the world and of any size can implement different measures to act in a socially responsible manner.

Why Corporate Social Responsible

In today’s business landscape, companies need to find ways to be competitive in the market but also act as good corporate citizens.

Companies engaging in “corporate social responsibility” can actually increase their competitiveness in the market by attracting more talent, creating a positive culture for their employees, enhancing their brand image, and actually generating more business.

According to the Kantar Purpose 2020 study, it’s been shown that there is a very strong correlation between the perceived positive impact and brand value growth.

In addition, companies having a perceived positive impact have seen a 175% increase in brand value over a 12-year period while companies with low positive impact saw a 70% growth.

Also, according to the Millennial and Gen Z Survey done by Deloitte in 2021, the younger workforce prioritizes culture, diversity, and ethical behavior over business profits.

They have found that 44% of millennials and 49% of the Gen Z choose the type of company to work for based on their personal ethics.

When a company actively volunteers in the community, makes regular charitable donations, and adopts socially responsible measures, people notice and respect that.

By helping the society, the community, different causes, and bringing good and positive to the world, customers, employees, and business stakeholders will respect the company that much more and will want to be associated with that company even further.

Competing in business is not just about making the most money possible but also giving back to the community, acting for the greater good, and striving to make the world a better place for all.

Companies that understand and recognize that can not only improve their bottom line but will also earn the trust and respect of their employees, suppliers, customers, and stakeholders.

Implementing Corporate Social Responsibility

How do you implement socially responsible measures in your company?

Implementing socially responsible measures is great for business, brand awareness, and building trust with your clients, suppliers, and business stakeholders.

Define Initiatives

The first step in implementing corporate social responsibility measures is to define what are the programs and initiatives that you want to focus on.

It’s great for companies to get their employees involved in making such decisions so that the decision-making process is collaborative and has the buy-in of all employees.

Define Logistics And Costs

Then, you’ll need to create internal teams tasked to define the logistics to effectively define the corporate social responsibility plan and costs.

Once the cost is determined, you should allocate a budget relating to how much your company will want to invest in such measures.

The budget should consider both the hard costs associated with the initiative along with the internal costs such as employee time and resources utilized to implement the initiatives.


Once the plan is defined, employees are fully charged, and the budget is in place, it’s time to execute the plan.

Executing your corporate social responsibility should be done in a way that will minimize its impact on your business operations and result in higher employee satisfaction.

Things To Avoid

There are a few things you should keep in mind when creating and implementing corporate responsibility programs.

The first thing to avoid is to make sure that you are not participating in charitable efforts that have little or no connection to your core business focus.

The idea is to support causes that are good for society and relate to your business.

The second important point is that corporate social responsibility measures should be implemented because you truly value those measures not because you are looking for a different way to spend your marketing dollars.

If you are using socially responsible measures as a means to spend your marketing dollars and your organization or employees are not devoted to that cause, you may actually end up hurting your brand image.

Thirdly, if your company is dedicated to a cause or wants to do good, don’t wait until your competitors start doing something before you implement measures.

Stay proactive, define your own initiatives, and if you believe in it, then move forward with it.

Corporate Social Responsibility Types

What are the different types of corporate social responsibility?

Essentially, there are four types of corporate social responsibility, namely, environmental responsibility, ethical responsibility, philanthropic responsibility, and economic responsibility.

Let’s break them down to better understand what they mean.

Environmental Responsibility 

Environmental responsibility is the concept that companies should act in environmentally-friendly ways.

For example, companies can take measures to reduce their carbon dioxide emissions, generate less pollution, reduce waste, and take measures that are environmentally responsible.

The idea is for a corporation to recognize the impact of its business operations on the environment and attempt to reduce such impact.

It could also mean for the company to take positive measures to help the environment in general such as implementing recycling programs or donating to environment-focused organizations.

Ethical Responsibility

Ethical responsibility is the concept that companies should act fairly and adopt business practices that promote ethical conduct and principles.

For example, a corporation can take specific measures to ensure that men and women are paid equally, the minimum wage it pays it employees are higher, ensure that it purchases goods and services from companies who adopt socially responsible corporate measures, and so on.

The concept of ethical corporate responsibility can effectively take many forms depending on the company and what values are important to the company.

Philanthropic Responsibility

Philanthropic responsibility is the concept that corporations are to give back to society.

Giving back to society can be done in many different ways, such as making donations to specific types of charitable organizations, having their employees volunteer with causes that are consistent with the company’s values, participating in fundraising events, or adopting other measures to give back to society.

Many large companies have philanthropic responsibility plans where they donate a specific percentage of their earnings to various charitable organizations or causes.

No matter how big or how small, companies who are good corporate citizens giving back to society are putting into practice their philanthropic responsibility.

Economic Responsibility

Economic responsibility is a more general concept that corporations will make financial decisions based on the overall positive economic impact on society.

For example, a company may choose to work with suppliers that adopt social corporate responsibility measures themselves, work with companies that use sustainable materials, work with minority-owned businesses, and so on.

The idea here is that a company’s financial decisions should promote society’s economic interests as well as the company’s interests for profits.

Corporate Social Responsibility Examples

What are some examples of corporate social responsibility so we can better understand the concept?

Business social responsibility or company social responsibility can take many forms.

To illustrate the point, let’s look at how Starbucks has implemented socially responsible measures by giving back to society.

One measure Starbucks takes is to make sure that it only uses ethically sourced coffee.

Starbucks gives back to society by having its employees contribute millions of hours in community service, participate in volunteering programs, and actively support the community.

Lego is another company that invests significant sums of money in supporting organizations and causes addressing climate change, waste reduction, and sustainable development

Johnson & Johnson is another corporate social responsibility company engaging in practices intended to reduce the impact of its business on the environment and find alternative energy sources.

Pfizer helps society by implementing healthcare initiatives helping spread awareness about non-infectious diseases and more.

Corporate Social Responsibility Meaning Takeaways 

So there you have it folks!

What Is Corporate Social Responsibility?

Corporate social responsibility refers to the concept that corporations must act as good corporate citizens, take measures to make the world a better place, be accountable for its actions in society, and implement self-regulating measures to be good and do good.

“Corporate social responsibility” plays an important role in a company’s brand perception and how members of society perceive the company.

There are many ways corporate social responsibility companies can implement measures to positively impact the world, such as charity work, environmental initiatives, volunteering work, ethical labor practices, and more.

In 2019, corporations donated a total of $26 billion to nonprofit organizations and different causes where 28% of that money went to education programs, 25% to health and social services, and 16% to economic development programs.

There are many ways companies can make a difference in the world and help us live in a better place.
Now that you know what corporate social responsibility means and how it works, what measures will you take?

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