What is corporate social responsibility (CSR)?
Corporate Social Responsibility (CSR) is the idea that a company should play a positive role in the community and consider the environmental and social impact of business decisions. It is closely linked to sustainability − creating economic, social, and environmental value – and ESG, which stands for Environmental, Social, and Governance. All three focus on non-financial factors that companies, large and small, should consider when making business decisions.
In recent years, there has been a shift from CSR to social purpose. Many companies have pivoted from having a community investment strategy and a ‘nice to have’ mindset to adopting a holistic approach in which their mission is built into everything they do.
CSR can involve a broad scope of approaches and initiatives—everything from sustainable practices to community involvement. Customers increasingly expect responsible behaviour from companies they do business with.
What is an example of corporate social responsibility?
CSR initiatives can range from philanthropy to operational changes and even transforming your entire business strategy or model.
1. Donations and sponsorships
You can donate time and/or money to causes that are meaningful for your business, employees and community.
2. Operational initiatives
Operational CSR initiatives are often oriented around improving business efficiency or performance in ways that also have positive social or environmental impacts in the wider community. Initiatives can fall into several categories, here are a few examples.
- deal with diverse, local and socially responsible suppliers and partners
- consult community stakeholders about business decisions
- support community initiatives
3. Strategic transformation
Some CSR initiatives can involve a wholesale transformation in a company’s business strategy or model to integrate social or environmental goals as a key priority.
Many businesses imbed impact or purpose into their business model. You may hear this referred to as social enterprises, purpose enterprises, and coops. They place social or environmental goals at the heart of their mission and business strategy. These companies are still businesses that seek a profit, but they also formally pledge to focus on a “double bottom line” or even a “triple bottom line”—tracking profits along with social and/or environmental impacts.
An example is B Corps—certified “Beneficial corporations” that follow a rigorous process to assess their environmental, social and governance performance.
What are the main benefits of corporate social responsibility?
Businesses have a variety of reasons for pursuing CSR. Here are some common benefits:
- improved employee productivity, engagement, talent acquisition and retention
- lower costs and reduced waste
- enhanced community support, branding and customer loyalty
How do I adopt corporate social responsibility in my business?
These four steps can help to integrate CSR into your business.
1. Assess your current efforts
You may already be doing some CSR informally without realizing it. Start by reviewing your current environmental, social and governance (ESG) practices and the impact of your products or services.
You can use a B Corp assessment to get a good picture of your ESG performance. This free confidential questionnaire allows you to get a score for your ESG practices, policies and activities. You don’t need to pursue B Corp certification to do the assessment.
2. Define your CSR objectives
Next, define your CSR objectives and include them in your mission, values and planning.
3. Decide on priorities
Now pick a manageable number of priority initiatives. It’s important to get input from employees, partners and stakeholders on which initiatives to pursue.
4. Develop an action plan and follow up
Finally, develop an action plan to carry out your initiatives This should include a timeline, a list of who is responsible for tasks and resources dedicated to projects. Be sure to follow up with regular meetings to monitor implementation of the action plan, recognize successes, spot any shortfalls and make needed adjustments.
It’s important to establish metrics to gauge your efforts. Here are some examples of possible CSR metrics for various types of initiatives:
- Amount of donations (e.g. dollar figures, employee volunteer hours)
- Score on the Greenhouse Gas Equivalency Calculator (a free tool developed by Natural Resources Canada)
- B impact assessment (a free confidential tool developed by BDC and B Lab, the nonprofit that certifies B corps)
- Emissions volume
- Energy and water use
- Diversity in employees and suppliers
After a year, reevaluate your efforts and create a new action plan. You can increase accountability and transparency by issuing regular reports on your CSR efforts or for specific areas, such as environmental disclosure and diversity reports.
What corporate social responsibility standards should my business adopt?
Several standards are available for various types of CSR initiatives. The UN Global Compact with its standards for corporate sustainability is a great place to start.
Ideally you should define your goals, plan your efforts upfront and choose projects that line up with your company’s values, as well as those of your stakeholders and community.