Corporate social responsibility (CSR) is a term that goes by many names. It is also known as corporate conscience, social performance, sustainable business, responsible business, and corporate citizenship.
All of these terms mean the same thing: it means that any business following these standards holds themselves accountable for their actions and will actively make philanthropic efforts, care about their impact, and take ethics into account.
The Benefits of CSR
There are many positives sides to CSR, which explains the rising popularity of this self-regulatory practice. Studies have proven that customers feel better about spending money with companies that hold the same values.
Furthermore, CSR causes an increase in employee engagement, comfort, and contentment. As any business owner knows – happy employees are productive employees, creating better work and facing less turnover.
When a company chooses to embrace CSR, there are plenty of options available. For example, they can choose between environmental responsibility, human rights responsibility, philanthropic (perhaps the most common), and economic responsibility.
There’s no limit to CSR options, as companies can mix and blend to best match their ethics, image, and target audience. Even how a company participates in CSR can change drastically, as funding can come in the form of donations, lending opportunities, and workforce incentives.
As with any business plan, it is essential to implement systems for financial management. No company has an infinite budget, and thus there should be a careful allocation of CSR funds.
The different CSR options available will help to naturally create a business model, which can then be fleshed out in further detail. For example, a company that looks at CSR to create value will be more interested in a sustainable business model than a company looking to CSR for philanthropic means.
While philanthropy is the most common form of CSR, it is also one of the most intimidating. It requires the donation of funds (or aid) to local charities and non-profits. This does not include any funds spent on advertising and sponsorship events, which are two sides of the same coin when it comes to CSR.
Another alternative for CSR, which allows for an upfront understanding of the costs, is to work it into the very nature of the business. For example, a company could focus on local or ethical sources for any materials required. While this will have a higher upfront cost, it is easier to calculate and predict in the long run.