Corporate social responsibility (CSR) is a company’s commitment to manage the social, environmental and economic effects of its operations responsibly and in line with public expectations.
It is part of a company’s approach to corporate governance and often touches every part of the business—operations, human resources, manufacturing, supply chain, health and safety, and more.
CSR activities may include:
- Company policies that insist on working with partners who follow ethical business practices
- Reinvesting profits in health and safety or environmental programs
- Supporting charitable organizations in the communities where a company operates
- Promoting equal opportunities for men and women at the executive level
Some aspects of CSR may be required by law. For example, banks and hospitals are legally required to protect people’s private information. Others are voluntary.
The benefits of CSR are many. Companies establish good reputations, attract positive attention, save money through operational efficiency, minimize environmental impacts, attract top talent and inspire innovation. Public companies often report on their CSR performance in their annual reports.
CSR matters for companies because if the community does not approve of how they do business, they may lose customers or see their reputations suffer. The news media and activist groups often watch companies closely and are quick to publicize instances of irresponsible behaviour.