Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) Definition

Investopedia / Zoe Hansen

What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

To engage in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment instead of contributing negatively to them.

Key Takeaways

  • 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.
  • CSR helps both society and the brand image of companies.
  • Corporate responsibility programs are a great way to raise morale in the workplace. 
  • Some examples of companies that strive to be leaders in CSR include Starbucks and Ben & Jerry's.

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Understanding Corporate Social Responsibility (CSR)

Corporate social responsibility is a broad concept that can take many forms depending on the company and industry. Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands.

As important as CSR is for the community, it is equally valuable for a company. CSR activities can help forge a stronger bond between employees and corporations, boost morale, and aid both employees and employers in feeling more connected to the world around them.

For a company to be socially responsible, it first needs to be accountable to itself and its shareholders. Companies that adopt CSR programs have often grown their business to the point where they can give back to society. Thus, CSR is typically a strategy that's implemented by large corporations. After all, the more visible and successful a corporation is, the more responsibility it has to set standards of ethical behavior for its peers, competition, and industry.

Small and midsize businesses also create social responsibility programs, although their initiatives are rarely as well-publicized as those of larger corporations.

Example of Corporate Social Responsibility

Starbucks has long been known for its keen sense of corporate social responsibility and commitment to sustainability and community welfare. According to the company, Starbucks has achieved many of its CSR milestones since it opened its doors. According to its 2020 Global Social Impact Report, these milestones include reaching 100% of ethically sourced coffee, creating a global network of farmers and providing them with 100 million trees by 2025, pioneering green building throughout its stores, contributing millions of hours of community service, and creating a groundbreaking college program for its employees.

Starbucks' goals for 2021 and beyond include hiring 5,000 veterans and 10,000 refugees, reducing the environmental impact of its cups, and engaging its employees in environmental leadership.

The 2020 report also mentioned how Starbucks planned to help the world navigate the coronavirus pandemic. The company's response to the pandemic focuses on three essential elements:

  1. Prioritizing the health of its customers and employees
  2. Supporting health and government officials in their attempts to mitigate the effects of the pandemic
  3. Showing up for communities through responsible and positive actions.

Today, there are many socially responsible companies whose brands are known for their CSR programs, such as Ben & Jerry's.

Special Considerations

In 2010, the International Organization for Standardization (ISO) released ISO 26000, a set of voluntary standards meant to help companies implement corporate social responsibility. Unlike other ISO standards, ISO 26000 provides guidance rather than requirements because the nature of CSR is more qualitative than quantitative, and its standards cannot be certified.

ISO 26000 clarifies what social responsibility is and helps organizations translate CSR principles into practical actions. The standard is aimed at all types of organizations, regardless of their activity, size, or location. And because many key stakeholders from around the world contributed to developing ISO 26000, this standard represents an international consensus.

What Is Corporate Social Responsibility (CSR)?

The term corporate social responsibility (CSR) refers to practices and policies undertaken by corporations intended to have a positive influence on the world. The key idea behind CSR is for corporations to pursue other pro-social objectives, in addition to maximizing profits. Examples of common CSR objectives include minimizing environmental externalities, promoting volunteerism among company employees, and donating to charity.

Why Should a Company Implement CSR?

Many companies view CSR as an integral part of their brand image, believing that customers will be more likely to do business with brands that they perceive to be more ethical. In this sense, CSR activities can be an important component of corporate public relations. At the same time, some company founders are also motivated to engage in CSR due to their convictions.

What Is the Impact of CSR?

The movement toward CSR has had an impact in several domains. For example, many companies have taken steps to improve the environmental sustainability of their operations, through measures such as installing renewable energy sources or purchasing carbon offsets. In managing supply chains, efforts have also been taken to eliminate reliance on unethical labor practices, such as child labor and slavery.

Although CSR programs have generally been most common among large corporations, small businesses also participate in CSR through smaller-scale programs, such as donating to local charities and sponsoring local events.

Article Sources
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  1. Frontiers in Psychology. "Corporate Social Responsibility and Employee Engagement: Enabling Employees to Employ More of Their Whole Selves at Work."

  2. Ben & Jerry's. "Socially Responsible Causes Ben & Jerry's Has Advocated For."

  3. Starbucks. "2020 Global Environmental & Social Impact Report," Pages 10 and 20.

  4. Starbucks. "2020 Global Environmental & Social Impact Report," Page 9.

  5. International Organization for Standardization. "ISO 26000, Social Responsibility."

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