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Corporate social responsibility (CSR)

CSR includes bringing value to the community and generating a positive impact

Corporate social responsibility (CSR) definition

CSR is based on the belief that businesses have a greater duty to society than just providing jobs and making profits. It asks business leaders to consider their decisions’ environmental and social impacts in order to reduce harm where possible.

In the business world, CSR is often associated with sustainability, and environmental, social and governance (ESG). All three movements focus on ensuring that environmental and social factors are considered when making business decisions.

CSR asks that companies contribute to the community beyond core business operations. Sandra Odendahl, Senior Vice President and Lead, Sustainability, Diversity and Partnerships at BDC, adds to that, saying that CSR is about a company playing a positive role in the community and considering the environmental and social impact of their business decisions.

In your company’s pursuit of profit, you need to ask what you are giving back to your community.

What are examples of corporate social responsibility?

CSR initiatives can range from philanthropy to operational changes and from sustainable sourcing to transparent equity policies and community involvement.

There are several ways you can integrate CSR into your business.

1. Donations and sponsorship

You can donate time and/or money to meaningful causes for your business, employees and community, such as sponsoring a local sports team or community organization. However, Odendahl says that making a big splash, such as by presenting an oversized cheque, can be considered self-serving or misguided.

To really make your donation count, you may want to support a cause closely related to your business activity. For example, a winemaker may choose to support a clean water or sustainable agriculture initiative. Longer-term financial commitments show that you’re truly invested.

2. Operational initiatives

Operational CSR initiatives generally revolve around improving business efficiency or performance in ways that also have positive social and environmental impacts.

Environmental examples

These actions will save you money that would have otherwise been spent on materials and energy. They’ll also help prove to employees, investors, customers and your community that you take your environmental impact seriously.

Social examples

  • Purchase from suppliers and partners who are diverse, local and socially responsible.
  • Consult community stakeholders about business decisions.
  • Improve workplace diversity, equity and inclusion.
  • Enhance workplace health and safety.
  • Institute sound, transparent policies, like a code of ethics, to prevent harassment and discrimination.

These actions will help you build social capital and show that you’re a community player—something clients and employees will appreciate.

3. Strategic transformation

Some CSR initiatives can involve a wholesale transformation of your business strategy or model, where social or environmental goals become a priority.

Many businesses embed impact or purpose into their business models. For example, social enterprises and co-ops put social or environmental goals at the heart of their missions and business strategies. They seek profits but formally pledge to focus on a “double bottom line,” or even a “triple bottom line”—tracking profits and social and/or environmental impacts. These metrics help keep companies accountable to themselves and stakeholders.

B Corps, or beneficial corporations, follow a rigorous process to assess their environmental, social and governance performance.

How do I adopt CSR in my business?

CSR isn’t something a company achieves through one-off actions. It’s an ongoing process built on actions and decisions that promote an equitable workplace and lessen a company’s strain on resources and its community.

Businesses need to look at the impacts their operations have on their local communities and environments. They must ask how they can reduce any harms they may be inflicting in pursuit of profit. And then they need to replace that harm by returning some of its value to their community.

CSR strategies are more often adopted by larger corporations but smaller businesses can use CSR principles as a launch pad for worthy initiatives.

The following four steps can help you integrate CSR into your business:

1. Assess your current efforts

Do you have clear and equitable hiring policies? Do you source your materials from local companies? Are you engaged in your community?

If yes, you are likely pursuing some CSR. To increase those efforts, start by reviewing your ESG practices along with the impacts of your products and services.

Use B Corp assessment to gain an in-depth understanding of your social and environmental performance. The free, confidential questionnaire gives you a score for your practices, policies and activities.

2. Define your CSR objectives

Define your CSR goals and include them in your mission, values and planning.

3. Decide on priorities

Pick a manageable number of priority initiatives. To help you ensure the initiatives you select are relevant and achievable, it’s critical at this stage to get input from employees, partners and stakeholders.

4. Develop an action plan 

Develop an action plan to carry out your initiatives. The plan should include a timeline, a list of tasks and resources needed, and a list of who in the company will be responsible for each element.

What CSR standards should my business adopt?

The UN Global Compact sets out principles for corporate sustainability and offers a great place to start your CSR startegy.

Once your goals are defined, plan your efforts and choose projects that align with your company’s values, as well as with those of your stakeholders and community.

How to measure CSR

To help you measure your progress in adopting CSR, you’ll need to establish metrics to go along with your action plan. Doing a B Impact Assessment can help you identify and track you progress on CSR metrics including:

  • donations (in dollars and employee volunteer hours)
  • employee and supplier diversity
  • air emissions
  • energy and water use
  • waste management

Tracking your progress on CSR goals will help you focus on your action plan. Once you launch initiatives, be sure to follow up with regular meetings to monitor progress, recognize success, identify shortfalls and make necessary adjustments.

Attend a BDC live workshop on B Corp certification or other business topics. Look for events and workshops, including Getting to 80, a workshop to assess your B Corp eligibility.

The differences between CSR, ESG and sustainability

Although CSR, ESG and sustainability may overlap in their outcomes (for example, they all emphasize social benefit and environmental protection), they differ in their primary purpose and areas of impact.

Odendahl frames it like this: “CSR nudges me to contribute to my community; ESG satisfies investors that environmental, social or governance issues won’t blindside them; and sustainability is what I embed into my core business strategy and decision-making processes.”

  CSR ESG Sustainability
Purpose To allow a company to contribute to the community and enhance its reputation beyond its core business operations. Originally designed for investors to make sure they were considering the important non-financial issues that could have a financial impact in the long term. A business approach that balances the economic, social and environmental needs of the present without compromising the ability of future generations to meet their own needs.
Benefit Enhance your company’s reputation among its community, customers and employees. Assure investors and clients that your company is actively mitigating risks and prepared to adapt to a changing world and business climate. Demonstrate to all stakeholders that your business strategy incorporates environmental, social and economic factors.

All three can help mitigate risk, but sustainability deliberately aims to also create positive value in the world outside the company—for now and for the future.

Next step

Discover how BDC’s B Corp assessment tool can help you examine your current practices and equip you to build a more sustainable business.

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