In recent years, corporate social responsibility (CSR) programs have changed from being a ‘good to have’ to essential for most companies.

For instance, events such as the BP Deepwater Horizon spill in 2010, the 2008 subprime mortgage crisis, the Volkswagen emissions scandal of 2015, and the growing concerns about climate change and pollution have spurred many companies to examine the environmental, ethical, economic and social impact of their activities.

In this blog, you will discover more about the types of CSR that companies use, their benefits and certification, and how to create a successful CSR strategy.

What is corporate social responsibility?

CSR refers to strategies and practices undertaken by companies to increase profits, and it has an active role in the community and world around them.

It embraces the notion that a company can positively impact society and make a difference in improving the social order. CSR is a broad topic that reflects the company’s culture, and includes:

• Human aspects, such as promoting ethical labor practices.
• Philanthropy and concepts of community engagement.
• Environmental sustainability.

Although CSR operates in a self-regulated manner, there are some standards and guidelines that a company can choose to comply with, such as ISO 26000. For instance, ISO 26000 provides voluntary measures to help companies assess their progress and strategies in CSR initiatives.

Types of corporate social responsibility

Below, we will examine five types of corporate social responsibility.

Environmental responsibility

Environmental CSR refers to a company’s obligation to environmental sustainability. For instance, more company owners prioritize sustainable strategies and measures each year by considering their environmental impact at each stage.

There are many practices that companies can take to be more environmentally responsible, including the following:

• Investing in green technology.
• Reducing pollution.
• Increasing their usage of sustainable and renewable energy.
• Introducing product recycling and waste initiatives.
• Offsetting carbon footprint by implementing green initiatives, such as partnerships with environmental conservation bodies, or tree planting initiatives

For example, LEGO has a set objective of using only sustainable materials to produce toy bricks by 2023. The company is achieving this by partnering with designers to replace plastics with plant-based materials and sustainably sourced polyethylene.

Philanthropic responsibility

Philanthropic CSR is usually charity-based. For instance, it entails partnering with non-profit and charitable organizations that align with the company’s vision and values. The company may even set up charitable trusts or participate or invest in local community projects.

Companies can support and encourage their employees to volunteer for certain community charities. Others run matching gift programs, where they match their employees’ donations to charity.

For example, in 2020, Google contributed $100m towards the COVID-19 charity initiative.

Ethical responsibility

Ethical CSR entails providing benefits to a company’s stakeholders beyond mandatory and legislative roles. Ethical CSR ensures that companies act ethically and fairly toward the following groups in the community:

• Employees: Companies provide employees with a working environment that is free from discrimination and offer additional incentives, such as extended maternity benefits/pay, flexible working and private healthcare. For example, Netflix gives employees unlimited maternity and paternity leave.
• Local community: Most companies use internal expertise, services, products and supply chains in a manner that benefits the local community. For example, Liam Wright, the owner of The Homemade Deli, organized an initiative to give 1.4 million disadvantaged children in his area £15-a-week food vouchers during holidays and half-terms.
• Customers: Companies are transparent about their terms and conditions. They offer services and products that are sustainable and safe to use. They also use a fair pricing system.
• Suppliers: Companies partner with environmentally, ethically and socially responsible suppliers. They ensure that suppliers’ tender processes are run transparently and fairly.

Economic responsibility

Economic CSR refers to the company’s practices of making financial decisions to ensure that it remains financially transparent and profitable while benefiting the local community. Some of the economic CSR practices include:

• Maximizing income.
• Keeping costs to a minimum.
• Managing financial risks properly.
• Providing return to the shareholders.

Economically responsible companies can create and sustain job opportunities in the local community. They also support and encourage far-reaching programs that benefit the community, which may go beyond the basic legal requirement.

For example, Hewlett Packard Enterprise has invested over $1.9bn in developing and researching next-generation technologies. These include things such as photonics, memory-driven computing and silicon designs, which create sustainable technology solutions that meet the IT demands of the future while reducing energy usage.

Legal responsibility

The legal responsibility of companies includes the following:

• Paying taxes.
• Keeping customers and employees safe.
• Meeting health and environmental safety requirements.
• Being transparent and truthful about the security and safety of their services and products.

At the very least, legal CSR is about protecting your company from penalty or prosecution, which will impact its reputation and profits.

Environmental regulation is a good example to demonstrate a company’s legal CSR. For instance, companies are usually required by law to meet environmental standards relating to carbon emissions and pollution.

For example, as the largest healthcare company in the world, Johnson & Johnson is committed to achieving ‘net-zero carbon emissions’ by 2045.

Benefits of corporate social responsibility

Below, we discuss the various benefits of CSR.

Unique marketing opportunities

Cause marketing is a form of CSR where companies get strategic marketing benefits by supporting a charitable cause. This normally entails a company providing a certain amount of money to non-profit organizations in return for increased sales. For example, a company may donate 20% of its profits to charity.

When implemented well, cause marketing enables customers to feel great about their purchases from these companies. As a result, customers are willing to increase the quantity of their purchases, switch brand loyalty, or pay a higher price because the company supports a good cause. In fact, most global consumers want to buy from companies that contribute to making the world a better place.

Therefore, CSR allows your company to participate in community charitable programs, and you will also receive more customers and dollars toward your bottom line.

Increased employee engagement

Many individuals want to work for a company where their contributions will be valuable. For instance, when employees realize that their contributions at a company help drive social good, they will be motivated to produce excellent results. As a result, there is a huge positive correlation between CSR and employee engagement.

With the increased employee engagement rate, your company will see increased retention rates and high levels of productivity.

New talent attracted to your team

Similar to how CSR motivates existing employees to do more in their roles, implementing CSR in your company will attract new employees to your team. This is why human resources departments in most companies are prioritizing CSR in their recruitment effort.

Besides, many prospective employees will be drawn to join companies that participate in CSR. This will give you a competitive advantage over other potential employers or companies.

Corporate social responsibility certification

There are a wide selection of online MBA programs and certifications that can act as professional development opportunities to enhance your career. For example, on the Master of Business Administration program available from St. Bonaventure University, you can learn about ethics in business, as well as marketing management. More resources are available online that can help you improve your knowledge of CSR.

You can get started by getting a CSR certification that is ideal for you, whether you are trying to break into the field or are an experienced CSR professional. Here are some of the CSR certifications that are available.

B Corp certification

B Corp certification is a designation that a company meets high accountability, transparency, and environmental and social performance standards. Companies are assessed and verified for B Corp certification by B Lab.

To achieve B Corp certification, your company must demonstrate high environmental and social performance by getting a B Impact Assessment score of over 80%. B Corp companies must maintain their certification by updating their score every three years.

ISEAL Code Compliance

ISEAL is a worldwide membership program that supports accreditation bodies, sustainability systems, and their partners to tackle the world’s most challenging issues. It carries out assessments of companies to determine whether they comply with the organization’s code of good CSR practices.

SASB Standards

SASB (Sustainability Accounting Standards Board) offers a framework for assessing and identifying governance, social and environmental issues that are more relevant to the financial performance of companies.

Leading global investors support SASB as a fundamental method for companies to communicate to investors about financial material sustainability information in a comparable and industry-based way.

How to create a successful corporate social responsibility strategy

Below, we outline the steps for developing a successful CSR strategy.

Conduct your research

First, you need to do surveys and polls to determine the causes that are most important to your primary stakeholders (investors, customers, employees, suppliers) and the entire community.

For instance, think about your company’s core values and missions. Then, determine the CSR initiatives, practices and strategies that align well with these values.

For example, the key missions of Ford Motor Co. are to reduce greenhouse gas emissions and achieve excellent fuel economy. It is achieving this through multiple CSR goals, such as using renewable solar energy by 2035, attaining zero emissions, and attaining carbon neutrality for its vehicles by 2050.

Audit your company activities

Ensure that you invest company resources where CSR will greatly impact your company and the surrounding community.

Start by listing down areas in your company that are doing well and those that require improvement. List activities that can have negative or positive impacts. You can then think of activities that can make your company more sustainable and socially responsible.

Set specific corporate social responsibility objectives

CSR is about holding your company accountable. Most companies set their objectives with a focus on people, profit and the world.

If you wish your company to have a positive impact on the environment, here are the objectives and goals you should set:

• Improve waste management and recycling.
• Reduce carbon footprint.
• Reduce greenhouse gas emissions.
• Invest in greener technologies.

Measure the success of your corporate social responsibility practices

Companies need to set key metrics that will allow them to measure, monitor, analyze and review their progress effectively.

For example, if your goal is to achieve zero carbon emissions, then you need to implement CSR processes to closely monitor carbon emissions. This will give you an accurate picture of the progress and what else needs to be done to meet your goal.

Conclusion

CSR practices and strategies can positively impact the community while improving your company’s profits and reputation. The key CSR practices are:

• Environmental CSR: Engaging in sustainable practices.
• Ethical CSR: Upholding societal values and ethics.
• Economic CSR: Making sustainable financial decisions.
• Philanthropic CSR: Contributing company resources to community initiatives.
• Legal CSR: Adhering to rules, laws and regulations.

Implementing CSR practices and strategies in your company will make it more sustainable, positively impacting your community and the world.