What is corporate social responsibility?

Corporate Social Responsibility (CSR) is the idea that business is accountable to society for moral and ethical reasons, and not out of legal requirements or a desire to increase profits. It can take many forms, from regular charitable donations to a reduction in carbon footprint (as Apple has done by reducing the packaging of its products).

For companies, social responsibility is becoming an important part of the agenda related to non-financial risk management and business sustainability — this idea is important for both clients and investors. Consumers use the products of a responsible company to make a personal contribution to a better world, and investors must check the ESG rating (an assessment of the environmental, social and management risks of a business) before investing in order to decide whether to support the organization.

Today, corporate social responsibility plays an important role in shaping a positive employee experience — more and more specialists want to work in organizations with which they share intangible values. According to recent research, millennials and Gen Z are more likely to choose a company that invests in a better society, even if wages are lower there.

In addition, the younger generation loves to volunteer and donate. If their company supports such an initiative, then the level of motivation, involvement and loyalty of staff will increase.

Traditionally, the category of social responsibility can be divided into four broad segments: environmental, ethical, philanthropic and economic responsibility. Any company can choose one or more segments that are close to their values.

Environmental responsibility

This form of responsibility assumes that organizations minimize the harm they do to the environment — in other words, they become eco-friendly. To become an environmentally responsible company, you can start small: organize separate waste collection in your office for further recycling, reduce plastic waste, and monitor your water and electricity consumption. Large manufacturing organizations can use renewable energy sources and recyclable materials, as well as compensate for the negative impact on the environment: plant trees or provide financial assistance to organizations that are involved in nature conservation.

Ethical responsibility

This responsibility is associated with ensuring fair and ethical working conditions. Companies must strive for equal and respectful treatment of everyone involved in the work process — including personnel, management, investors, suppliers, customers. If no progressive company can do without equal career opportunities, then an additional contribution to ethical responsibility can be made — by offering higher minimum wages and an expanded package of employee benefits.

Philanthropic responsibility

The main goal is to make the world and society better. You can donate funds to non-profit organizations and participate collectively in charity events. And the largest organizations create their own charitable foundations.

Economic responsibility

This practice implies that the company backs up all of its financial decisions with a commitment to do good in other areas. The ultimate goal is not just to increase the profit of the business, but to spend some of this money on a good cause. It obliges companies to make financial decisions based on ethical considerations, follow the rules of fair trade, and invest in science and culture.