Organizational Wellness

What is Corporate Social Responsibility?

Jun 16, 2023
Last Updated Jun 16, 2023

Companies are increasingly defining success by more than the balance sheet. They’re looking at the impact the organization is having on the world around them and asking how to leave a positive legacy. Customers have begun demanding this level of community accountability, and so are workers: nearly a quarter of Gen Z and Millennial workers are concerned about climate change and want employers to get involved in reshaping the world. They are, in short, demanding corporate social responsibility. 

This has led to a surge in businesses dedicating resources to philanthropic projects. But there is more to corporate social responsibility than simply writing a check or donating time and money. Responsible companies need to consider their entire value chain, including how products are made, the labor conditions and materials on which they rely, how much waste is produced, how their hiring practices impact the communicates in which they operate, and more. By thinking holistically about these issues, organizations can ensure that they’re doing what is best for their community — not just financially but also socially and environmentally. Let’s get started!

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What Is Corporate Social Responsibility?

Corporate social responsibility (CSR), is a business model in which companies are accountable to themselves and stakeholders for their impact on society, the environment, and the economy. This self-regulating model is about more than just preventing unethical business practices — it is about becoming a force for good. CSR strategies aim to help companies be more accountable for their societal impact with the goal of improving the communities in which they reside.

This framework encompasses more than charitable efforts — corporate social responsibility is about how companies make a profit, not just how they spend it. It means that companies should use ethical labor practices, minimize their environmental impact, and be transparent with stakeholders about the state of the company and the business practices they use. The ways in which a company aims to be a force for good is often influenced by the company’s values and goals. Organizations focus on participating in initiatives that align with and support their overall mission to maximize their impact. 

In order to effectively implement CSR practices, companies first need to identify their mission, vision, and goals. While there are short-term changes and benefits to CSR, much of corporate social responsibility is geared towards long-term changes. Having a clearly articulated vision and direction makes it easier for companies to say the course. 

Types of CSR

There are five main types of corporate social responsibility: philanthropic, environmental, ethical, financial, and volunteering. Some models focus on either financial responsibility or volunteering, but each of these five types has different areas of emphasis and impact on society. 

Environmental Responsibility

Efforts to preserve the environment are increasingly a focus as climate change intensifies. By modifying operations and supporting relevant causes, businesses that are interested in improving their environmental responsibility can leave natural resources better than before. 

There are many different ways to go about preserving the environment with responsible business practices, including reducing pollution and emissions, recycling goods and materials, encouraging consumers to engage in re-use practices, replenishing natural resources, and creating products that enhance these values. Companies can use any combination of the above methods to neutralize their impact on the environment. 

Ethical Responsibility

Ethical responsibilities means a business acts in a fair and ethical manner, operating morally and within the standards of their industry and region. Ideally, there should be fair and positive treatment for all types of customers and all employees. This means working with people of all demographics, offering employees favorable pay and benefits beyond the mandated minimums, and being fair in employment consideration. 

Ethical standards do not stop at the employees or customers. They also include working with diverse suppliers and being honest in the disclosure of any business concerns when dealing with investors. Ethical strategies depend on every level of a business to be equally engaged in the effort.

Philanthropic Responsibility

The philanthropic aspect of corporate social responsibility encourages companies to spend their resources in ways that have a positive impact on society and make the world a better place. 

This can take many forms, but most often looks like donating to charities or social causes that align with the company’s values. However, it can also encompass working with vendors that have similar philanthropic interests, as well as supporting the charitable endeavors of employees with time off or matching financial contributions. Attending community events or sponsoring fundraising events is another way for companies to spend resources in meaningful ways.

Financial Responsibility

The financial aspect encompasses the many ways an organization spends its budget and profits. This can include researching and developing products, investing in green building improvements, opting for more expensive but environmentally friendly processes, or paying to enroll employees in Diversity, Equity, Inclusion, and Belonging (DEIB) initiatives. 

This segment of CSR often ties the philanthropic, ethical, and environmental types together. Those three strategies require a clear plan that’s backed by financial investments in order to be successful. 

Volunteering

This type of CSR is exactly what you would expect: participating in local causes by volunteering time in addition to any financial donations. This is one of the best ways to demonstrate that a company is sincere in its efforts to improve corporate social responsibility and support social causes that are relevant to the company’s core values and goals. 

Why Is Corporate Social Responsibility Important?

CSR efforts can improve the bond between corporations, their employees, and the customers they serve. Successful companies have a responsibility to set the standards for ethical behaviors so that companies in the same industry can follow suit. Ultimately, the changes should positively impact how companies interact with their communities and reduce negative impacts on the environment. 

A natural consequence of working to improve society is that it improves the brand image of actively engaged corporations. Companies often receive a boost to their brand with workers and consumers alike. 

Today’s customers are looking at the impact companies have on their communities and the environment when choosing where to spend their hard-earned dollars: Three out of every four consumers in America would decline to do business with a company that supports issues that conflict with their beliefs. An impactful CSR strategy can show these shoppers their spending supports their community.

Employees are looking for the same alignment. More than half of workers wouldn’t consider a job with a company that holds values contrary to theirs, and most would be willing to take a pay cut to work in an organization with compatible values. Companies looking to improve employee attraction and retention can consider CSR initiatives as a part of their border talent strategy.

How to Improve CSR

While it is important to be aware of CSR and its increasing impact on the way that customers interact with businesses, there are a few things to keep in mind for improving your company’s CSR strategies. 

The first is to focus on relevant initiatives. Time spent volunteering or money donated is often seen as more genuine when it aligns with an organization’s mission. The American Kennel Club, for example, advocates to make women’s shelters pet-friendly. Victims of domestic violence will often delay leaving their relationship if it means leaving a pet behind, so pet-friendly shelters remove a barrier to them reaching safety. This also improves the safety of dogs around the country, making the initiative a perfect alignment with the AKC’s mission.

Another way to improve CSR is to be a trailblazer. Don’t be afraid of setting the industry standards by implementing practices that go beyond the legal requirements. Adopting socially responsible practices before they are mandated gives you more time to refine your processes so that you can be ahead of the curve on specific issues. 

Finally — and this is perhaps the most important point — it is vital to avoid using CSR as pure marketing. Most consumers will see through these efforts if your motivation is not genuine, and the strategies can ultimately backfire to create negative brand recognition. All efforts to improve corporate social responsibility should be genuine and driven by a true desire to make a positive difference. 

Responsible Inside and Out

Corporate social responsibility is more than a one-time effort for positive publicity. It is about making the world a better place with practices and focuses that go beyond monetary donations. Businesses that are interested in improving their CSR can target one or more of several areas, including environmental, ethical, philanthropic, and financial responsibility. 

Organizations looking to have a positive impact on their community should look internally for ways to make a difference as well. Employers can have a profound impact on the lives of their workforce, so providing a positive employee experience is an important part of being a responsible organization. 

Most employees value their wellbeing as much as their salary, making wellness programs a powerful way to improve their lives. Speak with a Gympass wellbeing specialist today for help setting up a workforce wellbeing program that boosts your employee experience!

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Gympass Editorial Team

The Gympass Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.


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