SUMMARY NOTES - WHAT IS CSR?

Corporate social responsibility (CSR) is the idea that businesses should operate
according to principles and policies that make a positive impact on society and the
environment.
Through CSR, companies make decisions driven by financial gain and profitability, and
the impact of their actions on their communities and the world at large. CSR goes beyond
legal obligations: by voluntarily adopting ethical, sustainable and responsible business
practices, companies seek to deliver benefits to consumers, shareholders, employees and
society.
Why is corporate social responsibility important?
Often, a company’s business model and practices are built around financial goals.
However, CSR programs encourage business leaders to consider corporate citizenship or
the larger impact of the business on society when making decisions. Corporate social
responsibility helps companies ensure that their operations are ethical, safe and delivering
positive impact wherever possible. Through CSR initiatives, companies work to limit
environmental impact, contribute to solving societal problems (such as poverty and
inequality) and ensure their brand identity reflects their values.
What is the triple bottom line and how is it related to CSR?
The theory of the “triple bottom line” can help organizations as they pursue corporate
social responsibility. As a financial framework, the triple bottom line refers to the idea
that a company’s business model should revolve around the three P’s: people, planet and
profit. By maximizing all three, a company aims to make a positive impact on the world
and remove barriers to growth.
What are the main types of corporate social responsibility?
Corporate social responsibility initiatives generally fall into four categories:
environmental, ethical, philanthropic and economic. Each type of CSR contributes to a
company’s overall CSR strategy.

Environmental responsibility

More companies are assessing their overall environmental impact and engaging in CSR
efforts that aim to protect natural resources and minimize any contribution to climate
change. CSR encourages sustainability in business through eco-friendly practices, such as
by reducing energy consumption, using renewable resources and minimizing waste.

Environmental responsibility hinges on eliminating negative impacts of business

operations (primarily through limiting pollution-causing activities) as well as offsetting
them through actions such as planting trees and engaging in programs that support
biodiversity.
Ethical responsibility
CSR initiatives often focus on social impact and human rights concerns, such as ensuring
fair wages, safe working conditions and proper treatment of employees and suppliers.
They also encourage accountability both internally and externally. Ethical CSR may
include abiding by fair labor practices, ending workplace discrimination and ensuring
supply chain transparency.
Philanthropic responsibility
CSR practices include donating money, resources or time to positive causes and
organizations, such as local and national charities, educational programs, disaster relief
and more. Businesses who adopt philanthropic CSR engage with the communities where
they operate, offering support through volunteer work, sponsoring local events, making
contributions to local nonprofits or supporting skills training programs.
Economic responsibility
Corporate social responsibility involves ensuring that money is not a company’s sole
motivator. To demonstrate this, companies enact policies and procedures to make sure
their choices align with values, even if the alternatives may save money or boost
profitability. Economic CSR also includes efforts to support the economic development
and growth of the communities in which a business operates—for example, supporting
job training and job creation efforts and forging local partnerships.
What are the benefits of corporate social responsibility?
The benefits of CSR include:
Business benefits

CSR can have a positive impact on an organization’s brand identity as well as its bottom
line. Some CSR efforts, such as improving energy efficiency, can reduce operating costs
and might lead to savings in the end. Consumers increasingly prefer brands that share
their values, and CSR policies offer ways for organizations to demonstrate those values,
building trust and loyalty to fuel a competitive advantage.

CSR can also help attract top talent and drive employee engagement and retention, as
more workers seek employers whose values align with their own. Additionally, a
proactive approach to ethical and social issues has the potential to prevent legal problems,
fines and reputational damage.
Consumer benefits
CSR initiatives can help people become more responsible consumers, making it easier for
them to access products and services that align with their values and educating them on
issues of sustainability and ethical consumption. It can encourage companies to prioritize
and invest in testing, quality control and safety measures. CSR can also minimize the
likelihood of defective or harmful products reaching consumers.
Environmental benefits
CSR can have a positive impact on the overall health of the planet, as it encourages
environmental responsibility and sustainable practices. CSR initiatives can help
companies reduce their greenhouse gas emissions or pursue net-zero emissions goals that
are key to slowing climate change. They might also help conserve natural resources,
reduce pollution and limit disruption of ecosystems. Additionally, a focus on CSR can
support investment in research and development of eco-friendly products and practices.
Societal benefits
Corporate social responsibility can help support local communities and address societal
issues, such as poverty, inequality and environmental concerns. CSR initiatives can fuel
economic growth by creating jobs. They can also shape public opinion as companies
leading the way inspire others to follow suit, creating a positive ripple effect. A focus on
ethical behavior at the corporate level reinforces a broader norm of ethical behavior
across other parts of society.
Why are companies adopting CSR?

Consumers are increasingly seeking products and services from socially responsible
companies. Meanwhile, many investors are prioritizing companies whose values are clear
and aligned with their own. To meet these demands, businesses are integrating CSR into
their operations. In addition, global expansion and the increasingly interconnected nature
of supply chains pushes companies to comply with a growing web of regulatory
environments and to better confront the impact of their business on communities around
the world.

With increased awareness of environmental issues, labor practices and ethical concerns,
combined with better research and communication, CSR is now more central to business
strategies. Some companies even have dedicated CSR departments.
What are some examples of corporate social responsibility?

Examples of CSR include:

 Donating a percentage of profits to environmental or social causes

 Committing to using recycled and eco-friendly materials
 Sourcing fair-trade materials and ingredients
 Engaging in social activism or fundraising on behalf of social causes
 Using technology such as artificial intelligence (AI) to drive energy efficiency and
reduce carbon footprints
 Creating programs for the ethical use and disposal of products, such as electronics
recycling programs
 Instituting diversity, equity and inclusion (DEI) programs that support efforts to
diversify and grow the workforce in new ways
  Supporting programs that replenish the natural resources, such as water or timber,
used for production
 Turning to renewable energy sources and other strategies that help in the pursuit
of net-zero or carbon-neutral goals
 Establishing employee well-being programs that support their physical and mental
health

What is the difference between CSR and ESG?

Corporate social responsibility is the overall ethos that drives a company to adopt policies
and practices that support sustainability, societal and other ethical ends. Environmental,
social and governance (ESG) is about the ways in which their impact is measured or
quantified. While both CSR and ESG are about reflecting the company’s values, CSR is
typically seen as more of an internal framework, while ESG frameworks are often used
externally as a way of demonstrating real-world impact.
What governs corporate social responsibility?

Because the parameters of corporate social responsibility are continually evolving, there
is no single standard by which CSR initiatives are measured or governed. Companies that
embrace CSR are guided by local and international laws, including environmental
regulations, labor rules and consumer protection standards.

Some efforts are also held to industry-specific standards; for example, the Global
Reporting Initiative (GRI) provides reporting standards for sustainability. Organizations
like the United Nations have introduced global guidance, such as the Sustainable
Development Goals (SDGs), which encourage businesses to adopt sustainable practices.

Many companies that embrace CSR will also engage in CSR reporting, through which
they document performance of non-financial metrics and provide transparency on social
and environmental impact. CSR reporting is typically voluntary; however, some
jurisdictions mandate that large organizations disclose social and environmental
performance, so that investors and consumers can assess CSR efforts.
What does a corporate social responsibility team do?
Some organizations have designated corporate social responsibility teams that oversee a
company's CSR activities. People on these teams plan and run the social and
environmental programs that align with the company's values and goals. They work with
company leadership to devise the overall CSR strategy and engage stakeholders,
including employees, customers, investors and community partners, to help them
succeed. They also typically track and report on their progress by using metrics and other
methods of assessment, deal with compliance and regulatory issues and manage
communication about the company’s CSR efforts both internally and externally.