TYPES OF CORPORATE SOCIAL RESPONSIBILITY
Corporate social responsibility is traditionally broken into four categories: environmental, philanthropic, ethical, and economic responsibility.
1. 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
- Regulating energy consumption by increasing reliance on renewables, sustainable resources, and recycled or partially recycled materials
- Offsetting negative environmental impact; for example, by 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 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 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 in the areas listed above. The end goal is not to simply maximize profits, but make sure the business operations positively impact the environment, people, and society
WHAT ARE THE BENEFITS OF CORPORATE SOCIAL RESPONSIBILITY?
Corporate social responsibility initiatives can, for example, be a powerful marketing tool, helping a company position itself favorably in the eyes of consumers, investors, and regulators. CSR initiatives can also improve employee engagementand satisfaction—key measures that drive retention. Such initiatives can even attract potential employees who carry strong personal convictions that match those of the organization.
Finally, corporate social responsibility initiatives, by their nature, force business leaders to examine practices related to how they hire and manage employees, source products or components, and 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. Reconceptualizing the manufacturing process so that a company consumes less energy and produces less waste, for example, 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.