What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is a business model in which companies are socially accountable to their employees, their stakeholders, their customers and the general public.

Companies that are interested in corporate social responsibility aren’t just focused on making a profit. Instead, they think consciously about the impact they have on the environment, their local community and wider society.

There are many different reasons for companies to embrace corporate social responsibility. As well as benefiting society as a whole, a company’s CSR initiatives can help them:

• Attract and retain employees: Employees increasingly want to work for organisations whose values align with theirs. Deloitte’s 2022 Millennial and Gen Z survey found that two in five young people had rejected a job because it didn’t align with their values. Meanwhile, those who are satisfied with their employer’s social and environmental impact are more likely to want to stay with them for more than five years.

• Drive growth: According to a 2020 study, companies with ‘purposeful’ positioning experienced 175% growth over a 12-year period, compared to 70% for those with low purpose. Embracing CSR can have a huge effect on a company’s long-term success.

• Improve brand perception: Today, consumers hold the businesses they buy from accountable for effecting social change and want to support companies that can demonstrate their social and environmental credentials.

• Attract investors: Having a clear position on corporate social responsibility shows investors that the company is thinking in terms of long-term as well as short-term gains. Plus, investors frequently use environmental, social and governance (ESG) metrics to quantify businesses to invest in — which is closely tied to CSR.

• Save money: Implementing CSR measures requires an up-front investment, and may not financially pay off straight away. However, it can save money in the long run through things like increasing customer loyalty and decreasing attrition.

Here are a few different areas you could focus on when putting together a CSR plan:

Most businesses have large carbon footprints, and taking steps to reduce yours is a big part of corporate social responsibility. This might mean examining your supply chain to identify any stages, processes or materials that could be made more environmentally friendly or introducing policies on things like recycling at your head office.

Many companies practice corporate social responsibility by donating to social causes or nonprofits. While larger companies tend to have more resources to spare, even small organisations can make a difference.

As well as simply donating money, you could look into ways of ‘donating’ the services or expertise of your employees, such as paying them to do pro bono work that uses their specific skills.

All companies should be operating with ethical labour practices, including paying employees fairly and ensuring they have access to the benefits they’re entitled to.

However, going above and beyond what the law requires is a good way to demonstrate your corporate social responsibility. This might include providing employees with additional benefits like bonuses, employee assistance programmes or occupational maternity pay.

For companies that work with suppliers in countries where labour laws are less stringent, it’s particularly important to ensure that every stage of your supply chain uses sustainable labour — otherwise, your reputation could suffer.

Volunteering your time to community events and other charitable causes shows the public that you care about social issues. Some companies give their employees additional days off to spend volunteering, while others organise volunteer drives and encourage everyone to volunteer together.

As well as doing good for your community, the visibility of your organisation helping out for no financial gain can help to show that you’re a socially conscious brand.

See why 10,000+ organisations use Personio

Why choose Personio? Take a moment to discover our holistic HR system in detail with a free personalised demo from our experts, tailored to answer your business' needs.

Book Your Demo

Here are the steps to take to improve your corporate social responsibility:

The first step is to get a full picture of what you’re already doing — you might find that you’ve already introduced some initiatives that fall under the CSR umbrella.

To assess your current situation, review your environmental, social and governance (ESG) practices and policies, and work with stakeholders to discuss the impact your products or services have on the wider community.

Next, define your CSR objectives. These could be anything from improving the sustainability of your supply chain to donating money or supplies to local nonprofits. Include these objectives in your mission and values statement.

You only have a limited amount of time and resources, and you might not be able to implement all of your planned CSR initiatives at the same time. Work with stakeholders, partners and employees to decide on a manageable number of priority initiatives that you want to start with.

If you want to know whether you’ve succeeded in your CSR initiatives, you’ll need to decide on when and how you’ll measure the results of your actions. It’s important to set specific, measurable goals so that you’ll have a clear idea of whether or not you’ve achieved them.

Finally, develop a plan for putting your CSR initiatives into action. This should include a timeline, a list of who is responsible for each task, and an outline of the resources that will be dedicated to each project. It’s also important to schedule regular follow-ups so you can monitor progress.

Getting certified for your CSR efforts can boost your credibility and help you to gain public recognition for your work. Here are a few different CSR certifications you could look into:

B Corporations, or B-corps, are companies that have been certified by B Lab as meeting high standards for social and environmental performance. To become a B-corp, you need to go through a rigorous verification process every three years. You can get started with a free B Impact Assessment to find out how you’re currently performing.

ISEAL Alliance is a global membership organisation for sustainability systems and accreditation bodies like Fairtrade International, Gold Standard, the Rainforest Alliance and more. The alliance carries out assessments to determine whether companies meet the organisation’s codes of good practice. If they do, they’re deemed to be ‘ISEAL Code Compliant’.

The Sustainability Accounting Standards Board (SASB) provides a framework for assessing the financial impact of a company’s sustainability efforts. They provide standardised, structured and comparable data that investors and stakeholders can use to compare different companies.

Here are some real-life examples of corporate social responsibility in action from big-name brands:

• Starbucks: The coffee chain has implemented a number of different CSR measures, including sourcing 95% of their coffee sustainably (they’re working towards 100%), and introducing hiring schemes for veterans and refugees.

• LEGO: LEGO also has a number of different CSR initiatives at play. They aim to phase out single-use plastic in their packaging by 2025 and make all LEGO products from renewable materials by 2030. They also operate local community engagement projects in 31 countries worldwide.

• TOMS: TOMS is a shoe brand that’s been committed to CSR since the beginning. Initially, they gave away one pair of shoes to a person in need for every pair sold. These days, the company donates one-third of its net profits to charity, and is working to make its products more sustainable.

Here are the answers to some FAQs about corporate social responsibility:

Corporate social responsibility is a way of describing a company’s impact on the world around it. As well as benefiting society as a whole, implementing CSR practices can also have big benefits for companies, like increased staff retention, better customer loyalty and more investment capital.

Employees are likely to stay longer at companies that take CSR seriously. Customers are more loyal to brands whose values align with theirs. And shareholders can see an increased return on investment in companies that aim to have a positive impact on the world.

Some examples of corporate social responsibility include reducing your carbon footprint, supporting local communities and donating money. Engaging in ethical labour practices and working to improve diversity, equity and inclusion in the workplace is also an important part of CSR.

More efficient processes, better data and a modern, streamlined HR system leave you time for the things that really matter — like making a difference to your community and the world around you. Visit our customer success stories to find out how 5000+ organisations are using Personio to save time and resources for the things that count.