CSR 101: Corporate Social Responsibility
Forbes recently announced the companies with the best Corporate Social Responsibility (CSR) reputations, and Lego earned the No. 1 spot on the roster. How did they get there? According to the study compiled by the Reputation Institute, Lego behaves ethically, conducts business fairly, operates transparently, protects the environment and supports worthy causes.
What is Corporate Social Responsibility (CSR)?
There are seemingly infinite definitions for CSR. Here are a couple:
- CSR promotes a vision of business accountability to a wide range of stakeholders, besides shareholders and investors. Key areas of concern are environmental protection and the wellbeing of employees, the community and civil society in general, both now and in the future.
- CSR may also be referred to as “corporate citizenship” and can involve incurring short-term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change.
It’s worth noting that any steps taken exclusively to improve the company’s own profitability, for example, through energy conservation, should not be put under the umbrella of CSR.
The relationship between CSR and profitability
While CSR shouldn’t be solely for financial gain, there can be benefits to a company’s bottom line.
The International Institute for Sustainable Development notes that this concept of CSR is underpinned by the idea that corporations can no longer act as isolated economic entities operating in detachment from broader society. That means that people (read: customers) want more from the companies they purchase goods and services from.
Nowadays, consumers drive the bus. They can shop around and find a brand that aligns with their personal values. This is, especially true of Millennials. According to one survey, the majority of consumers (87 percent) said they would purchase a product because of a company’s support for an issue they cared about, a finding that clearly has a direct impact on a company’s financials.
Bottom line: Be authentic.
Don’t just pick an arbitrary nonprofit to partner with. CSR means being authentic and genuinely committing to worthy causes and responsible business practices. Before you approach CSR at your organization, think about what your brand stands for. What matters to your customers? What do your employees care most about?
If you decide to dive in to CSR, do it for the right reasons. Susan Hunt Stevens, founder and CEO at WeSpire, sums it up nicely, stating that companies need to understand what their core social purpose is and how that aligns with their stated mission as part of a cohesive CSR strategy.
CSR is as old as organizations themselves. According to the Institute for Public Relations (IPR), CSR relies on a central question: Does each organization, as it strives to achieve its mission and vision, add value to the society which franchises its existence? (IPR has more on the history of CSR here.)
Does your organization have a good answer?