Corporate Responsibility

Corporate Responsibility

Companies of different sizes implement corporate responsibility (CR) or corporate social responsibility (CSR) programs. It’s a way for them to control and measure their impact on society.

Why does corporate responsibility matter, how is it put into action, and is it effective? Taking a closer look at the topic can answer these questions.

What Is Corporate Responsibility?

Corporate responsibility is a self-regulating practice that companies adopt to make themselves accountable. The model means that they can demonstrate and justify their impact to employees, owners, shareholders, and the public.

It particularly concerns identifying the business as an active part of society. Being responsible means being aware of the company’s impact and how different actions could produce better results for all. The aim is to enhance the economy, environment, and society and not to do harm.

For businesses, it’s also about brand image. CR can mean being more attractive to employees, shareholders, and consumers. Clear communication of CR goals is essential so that it can be measured by results and not just intentions.

Types Of Corporate Social Responsibility

CSR policies or company action plans often focus on work in four areas:

• Environmental – taking actions that are environmentally friendly. These could include recycling, offsetting CO2 emissions, using renewable energy, reducing pollution, and following sustainable practices.
• Philanthropic – also known as social, these aims focus on making the world a better place. It might mean giving staff paid time off to volunteer, donating a portion of profits to charities that align with their values, or creating their own nonprofit organizations. 
• Ethical – means acting in a fair way. Often, it means setting higher standards and doing more than the minimum. Examples include paying above minimum wage, using fair trade products, or having firm policies on not using products that come from child labor or slavery.
• Economic – taking financial responsibilities seriously. It means looking beyond the need to simply maximize profits, including investing in people and diversity. This aim ties in with the three others. It means making funds available to support environmental, philanthropic, and ethical actions possible. It’s also about transparent practices.

How It Works

CSR is a self-regulating model. It isn’t enforced by external bodies. Communication is essential, as being accountable to stakeholders and customers is the best way to ensure that CSR goals are met. The International Organization for Standardization (ISO) has created a set of voluntary standards. They guide companies on how CSR principles can become actions.

Most companies create policies and statements to set their intentions and explain how they’ll go about it. Typically, they follow up with annual reports to engage with employees, stakeholders, and consumers.

What It Looks Like In Practice

There’s no one perfect answer to corporate responsibility. One crucial aspect is that its authentic and comes from the company’s aims and values. In practice, CSR needs to be visible throughout a company. For example, if there’s an emphasis on fair trade, then working conditions for employees should also meet a high standard.

It might seem that CSR is easier for large companies as they have money to invest. However, implementing policies across the whole organization is much faster and impeller for small to medium-sized businesses. Changes can be small, such as using LED light bulbs or implementing progressive paid time-off to support families.