What is corporate social responsibility?
Corporate social responsibility is a form of self-regulation in which a business holds itself accountable to contribute to goals held by society. Businesses are conscious of the effects that they have on society in a variety of ways, and these can be tackled by taking measures, whether they be charitable, ethical and environmental. A business that decides to include corporate social responsibility initiatives in its operations wants to play its part in addressing disadvantage and improving the world, whether it is within their business, in their local or national communities or on a global scale.
Initiatives may be additional measures that a business takes, or they may involve reworking existing business practices and processes. In the past, corporate social responsibility was seen as a ‘nice to have’ rather than a ‘must do’ business practice, but consumers and employees increasingly see it as an expectation. Many businesses delve into the area of corporate social responsibility by implementing one-off or casual initiatives, but increasingly businesses are embedding such initiatives into their business plans, whereby they become second nature when considering every business decision.
Types of corporate social responsibility
There are three main areas that most corporate social responsibility measures fall under – charitable, ethical and environmental.
Charitable responsibility
This is the most common action that businesses take to show corporate social responsibility. A business may partner with a charity long term or nominate a charitable beneficiary of one-off initiatives and provide it with assistance to address disadvantage in the community. The business and charity do not need to operate in similar fields, for example an automotive business may support a social welfare organisation. Sometimes the charity is nominated by an employee who may have experience with its services. At other times, the charity may have made a public plea for support and business leaders respond to help it.
Ethical responsibility
Businesses hold a moral responsibility to do the right thing in many ways. It includes fair treatment for all customers, suppliers and other stakeholders regardless of their race, age and sexual orientation. It also means adhering to legal requirements, such as tax responsibilities and following industry regulations. Sourcing supplies and materials through ethical means, such as goods that have not been tested on animals or made with animal products, also falls under this banner.
Ethical responsibility can also include the way the employer treats employees. For example, it ensures staff are paid at correct rates according to awards and enterprise agreements, or that women and men are treated equally. Some businesses may operate in an industry that has an existing code of ethics that they can follow. For example, many construction industry association codes bind members to providing good workmanship and to commit to training the future workforce.
Environmental responsibility
Environmental issues are increasingly a concern for consumers, whether it is on a local level such as pollution of waterways or a global scale such as climate change. Preserving natural resources or minimising damage to the environment are ways to take environmental responsibility. A business does not need to be actively damaging the environment or have done so in the past for it to improve its environmental responsibility. A white-collar enterprise, for example, can take steps to reduce its electricity use as a measure to address climate change, or a retail business may get its staff together to plant trees in a local park.
Examples of corporate social responsibility initiatives
Businesses can adopt a range of methods that suit their goals or capabilities.
Philanthropy
For some businesses, donating money is the best and easiest way that they can be a socially responsible business. For example, they may make a one-off or regular contribution towards a charity’s Christmas campaign to address hardship being suffered by families. Staff may raise donations through events held during the year, and the business may match them dollar for dollar. Scholarships and sponsorships are other ways a business can provide philanthropy.
Philanthropy is commonly used to meet charitable and ethical corporate social responsibility goals, but it can also be used for environmental reasons, such as offsetting emissions.
Volunteering
Businesses that have little available cash flow to make worthwhile financial donations often consider lending their staff for projects instead of giving money. For example, some businesses will coordinate employees to take part in such public initiatives as Clean Up Australia Day or send a group of staff during working hours to help a charity such as Meals on Wheels at a busy time of year.
Some businesses provide staff with an allocation of volunteer days as part of their leave entitlements that enables them to take time off to do voluntary work at an organisation that is personal or relevant to the individual.
Activism
Corporate social responsibility may not require anything more than speaking up for a cause or standing by a community group. For example, a business leader may make a public statement for or against a cause or issue of public concern, such as reinforcing that it will always welcome customers of an underrepresented minority group that has experienced racism or persecution or that it does not source products that have been manufactured using child labour.
Businesses can also campaign for change in their community, whether it is a local issue such as protesting against the felling of trees in their neighbourhood or publicly taking a side during a national political referendum.
Internal action
Businesses can make changes to their operations and policies to prove their corporate social responsibility. For example, they may upgrade machinery or implement new processes to reduce the amount of waste that is sent to landfill, such as a recycling program.
A business could start an apprenticeship or traineeship program to employ more young people in their community, which may help address unusually high youth unemployment rates.
Policies can also be changed, for example introducing or rewriting leave entitlement policies to ensure cultural matters are accepted as reasons to take leave.
The benefits of corporate social responsibility
By becoming good corporate citizens, businesses boost their reputations in their communities, which often leads to increased custom from people who want to spend their money with businesses that do the right thing. For example, many people refuse to buy clothes from a shop that sources outfits from suppliers that use child labour but will support those that do not. It also can lead to better brand recognition, as their business name becomes more widely known among communities. For example, many football team supporters will patronise a butcher that sponsors their team.
By supporting local communities, such as implementing a policy to hire a percentage of people from the local area or an underrepresented minority group, businesses are boosting local economies, and this will also have a flow-on financial benefit to their business. However, there can also be immediate payoffs for the business for implementing many measures. For example, introducing an on-site wastewater reuse scheme will not only reduce the amount of water taken from the environment, but also the amount that the business has to pay for.
Corporate social responsibility programs also can have positive effects on staff satisfaction as well as attraction and retention rates. Employees increasingly want to work for employers who do what they can to improve the world, while having the opportunity to give back themselves through volunteering.
Corporate social responsibility initiatives do not have to be significant or only undertaken when a business has reached a point at which they can afford to give back to society. Any business can take steps now to introduce measures and reap tangible rewards, not just the feel-good sentiments of doing the right thing.
