Corporate social responsibility (CSR) is a model on which a company stays socially accountable and committed to its people, community, environment, and stakeholders. They aim to positively impact various social and environmental measures, starting from within the company.
A company’s CSR shapes the perception of the brand. This determines how attractive it is to the customers, employees, and investors and how well it retains its employees, ultimately reflecting the company's overall success.
How Many Types of CSR Do Businesses Practice?
Based on the purpose of the corporate social responsibilities model on the companies, there are four types of CSR every business should follow.
1. Economic Responsibility
Economic responsibility ties all the other areas in the CSR model. A company can be economically responsible for its employees, environment, and customers. Whatever the company does, it’ll essentially be an investment to get better results.
Companies aiming for environmentally sustainable and ethical business practices must undergo expensive processes to ensure their products and processes support their responsibilities. Besides, they need to invest in training their employees, recruit various talents to ensure a diverse workforce, and ensure that they align with the company’s practices.
2. Environmental Responsibility
Environmental responsibility is something fundamental for every company since most of the activities have a direct effect on nature. An environmentally responsible company will aim to preserve nature and its resources and opt for sustainable practices.
Companies can be environmentally responsible by reducing pollution, wastage, and harmful emissions. They can replace finite resources with something more sustainable, recycle goods and materials, and promote reusing and upcycling products to their customers.
3. Ethical Responsibility
A company is ethically responsible because they need to act fairly and ethically. While external influences can shape a company's ethics, ensuring a fair internal environment is also a responsibility of the company.
Companies need to ensure fair treatment for all the employees in the business, and their employee and employment practices should align with labor law. They need honest disclosures about concerns with the stakeholders, investors, vendors, and suppliers.
4. Philanthropic Responsibility
Besides being ethically and environmentally responsible, the philanthropic responsibility of a company following CSR practices includes being socially accountable through donations. Larger companies and small businesses can make charitable contributions to community programs through non-profit organizations or carry out such programs themselves.
Why is CSR Important for a Company?
Corporate Social Responsibilities can benefit society, the environment, and businesses of any scale. Some of these benefits are listed below:
Investors are more inclined to be engaged with companies that operate using a CSR model. Companies that want to stand out from their competitors and have financial leverage in the market can attract investors by adopting CSR strategies. It also helps investors to view the worth of the company.
Companies responsible for society and the environment follow ethical practices and take care of their employees immediately becomes a brand for everyone to recognize. The more the customers are aware of such companies, the more they will feel attached to them and have a positive inclination.
It helps to boost the morale and engagement of the employees working in a company operating with a CSR model. Employees in sync with CSR will have a stronger bond with the company and its responsibilities and feel more connected with the world. And with fair treatment towards employees, more talent will be acquired as more people will want to work for these companies.
What Should a Company Employing CSR Avoid Doing?
Certain activities will taint a company that’s trying to operate with the CSR model. Some of these activities are listed below:
Using CSR as a marketing scheme. CSR should be more like the core responsibilities of a company rather than using them as marketing stunts. Advertising with CSR responsibilities has a higher chance of backfiring. Instead, they should build and ingrain CSR practices in the company’s culture over time.
Contributing to unrelated charities. Although companies may feel inclined to participate in every charitable program, that’s not a wise practice and will send the wrong message to people. Instead, they should donate and contribute to charitable issues related to the business's focus.
Waiting for the industry to approve. This may backfire in many ways, but most importantly, it will set you back, and someone else may catch up with the industry by embracing similar ideas. Companies should rather use CSR activities that aren’t in the industry yet. This will allow them time to refine the processes, and other companies will follow.