Corporate social responsibility (CSR) is a commitment made by an organisation to carry out their business in an ethical way. It generally involves taking responsibility for the social, economic and environmental impact they have on the local community and wider world.
CSR activities can involve:
Developing employee and community relations
Improving working standards and conditions
Responsible sourcing, e.g. fair trade ingredients or sustainable fishing
Waste reduction and recycling
Reducing impact on the environment, e.g. reducing emissions
CSR typically refers to self-regulated action taken by businesses that go beyond what is deemed compulsory by law and ethical standards as stated by regulators.
What are the business benefits of CSR?
Embracing CSR can benefit an organisation in many ways:
Employee engagement – Conducting business responsibly can lead to motivated employees who are more likely to stay with the organisation.
Having a sense of purpose drives employee engagement, job satisfaction and performance. This reduces the feelings of stress and fatigue that can come from badly designed work.
Improved corporate reputation – Many organisations prefer to deal with suppliers with responsible policies as it reflects well on them too. Similarly, many customers prefer to buy from ethical businesses in an increasingly socially-conscious world.
Benefits can be visible through an increase in reputation, media attention and custom resulting from being able to portray a positive corporate image.
Long-term financial savings – Although there may sometimes be a short-term outlay to bring an organisation up to standard, reduced waste and emissions can lead to long-term cost savings through the avoidance of disposal costs and potential fines.
Improved recruitment – CSR can help an organisation attract higher quality candidates during recruitment. Potential employees who want to make a difference to society or the environment are more loyal and productive than those who are only motivated by financial gain.
A more engaged workforce also reduces staff turnover, which in turn reduces recruitment costs.
Innovation – Becoming more environmentally conscious may become vital to many organisations’ existence. For example, due to consumer demand, many automotive companies have had to innovate and embrace the production of electric cars, rather than resist them as they did in the past.
If they chose not to adopt more sustainable business practices, they may have lost a significant market share to rival manufacturers that would only grow in future.