Corporate Social Responsibility: What You Need to Know

Posted by Albers School of Business and Economics on Thursday, November 3, 2022 at 9:16 PM PDT

EMBA students in class

Today, smart business strategy involves more than just the bottom line: it also involves ethical consideration and social responsibility. Companies across the globe are building corporate social responsibility (CSR) into their business models.

But what exactly is CSR? How can it be implemented? And what are the benefits?

What is Corporate Social Responsibility (CSR)?

Corporate Social Responsibility (CSR) reflects a business’s commitment to social and environmental concerns within its operations. Businesses must balance economic, social, and environmental concerns while meeting the needs and expectations of their various stakeholders.

CSR is sometimes also referred to as corporate citizenship: How is a company doing business ethically? And how is it contributing to the community, the economy, and the planet? 

Companies of all sizes incorporate CSR; indeed, most companies surveyed around the globe claim to have some form of CSR in their business practices, including 91% of corporations in the United States.

Businesses successfully implementing CSR include:

  • Rolex
  • Ferrari
  • LEGO Group
  • Netflix
  • Adidas
  • Microsoft

One example of successful corporate citizenship can be found in LEGO’s environmental sustainability efforts. LEGO’s CSR goals include recycling 100% of its operational waste, producing products made from plant-based polyethylene, and generating renewable energy.

What are the benefits of CSR for my company?

Once considered peripheral, CSR has become critical to strategic planning. According to Strategic Human Resource Management, “A stronger integration of social responsibility into business strategy emphasizes responsible employment practices and HR’s strategic role in communicating, protecting and maintaining business values.” Millennials and Gen Z-ers are more likely to place value on CSR when making purchases and choosing their employers.

Regardless of generation, most employees want opportunities to make an impact. CSR initiatives can help address this need while also having a positive impact on the community and the brand.

By incorporating socially responsible practices, businesses build trust with the public, increasing brand credibility. A 2018 survey revealed that an overwhelming majority of consumers in the U.S. and UK expect brands to help them be more ethical and environmentally friendly. According to Forbes, “If your brand isn’t helping your consumers improve their environmental and social footprint, then you’re in danger of disappointing 88% of them.”

One reason is because consumers feel they are doing their part to make the world a better place when they use a product or service of a socially responsible company. Digital Marketing Institute claims, “The more socially responsible the company, the more supportive their community and consumers become.”

This extends to internal staff as well. Employees are more likely to be satisfied in a socially responsible workplace, making them more committed to their employers. It’s no surprise, then, that organizations focused on CSR have higher retention rates. Lowering worker attrition is an important cost-saving measure for businesses. 

There are other financial and ethical benefits, too. “Organizations have enormous potential to effect change in their communities and the environment when they invest in corporate social responsibility initiatives and leadership,” states the Center for Creative Leadership. “And in doing so, they can also boost their bottom lines.”

How can my business implement CSR?

Companies take various approaches to CSR initiatives, whether it be economic, environmental, ethical, or philanthropic.

When committing to implementing CSR, businesses most focus on:

  • aligning services with ethical considerations;
  • taking a top-down approach, ensuring involvement and buy-in at all levels;
  • collaborating with the communities you seek to serve, including soliciting assessment from community partners about the company’s CSR work; and
  • maintaining transparency about goals and progress to ensure accountability.

One example of transparency can be found on IKEA’s website, which outlines the company’s CSR goals and reports on their progress. It’s not always about meeting every goal; setting company commitments, making progress, and being transparent about your progress with your stakeholders will build brand credibility.

Successful business CSR models will involve a range of practices, including:

  • Coordinating volunteer opportunities to serve your local community;
  • Donating money to charities or nonprofits;
  • Partnering with supply companies owned and operated by people from traditionally marginalized backgrounds;
  • Monitoring the environmental impact of business practices;
  • Collaborating with environmentally conscious partners; and
  • Supporting employees, especially regarding wellbeing, diversity, equity, and inclusion.

How do we measure the success of CSR initiatives?

When incorporating corporate social responsibility initiatives, it’s important to first establish and track measurable goals. What outcomes do you want to see from incorporating CSR into your business model?

Then, determine the data you want to track. What key performance indicators (KPIs) will you track in order to identify your impact?

Potential KPIs include:

  • Energy efficiency
  • Waste reduction numbers
  • Time spent volunteering
  • Financial contributions
  • Employee surveys
  • Social/philanthropic activities
  • Feedback from strategic partners
  • Recognitions or publicity received

Analytics can help businesses measure the value and success of their corporate citizenship efforts, providing insights necessary to building their CSR strategy. Armed with the right data, you can refine your goals and metrics, adjusting your company’s methods along the way. 

Be sure to track the impact of your competitors’ CSR initiatives, too. What strategies are they incorporating? What success are they experiencing? And how can this information inform your practices?

How can I learn to implement CSR in my leadership and strategy?

CSR is quickly becoming embedded into the fabric of modern business practices, making it important for those in leadership positions to know the ins and outs of corporate citizenship. At Seattle University’s Albers School of Business, professionals from all ranges of experience and industries develop their skills in leadership and corporate citizenship while also honing their business acumen.

Each year, Seattle University hosts Albers Ethics Week, an intensive week examining ethical issues in business. We invite dozens of speakers from the Seattle business community to speak with students about ethical considerations in fields such as accounting, finance, data analytics, marketing, and HR management. This year’s event focused on “Revisiting Ethics and Corporate Culture,” hosting speakers from companies such as Starbucks and Harvard Business School.

Students and Alumni in our Albers community also benefit from access to the Center for Business Ethics, which was built to assist the business community with addressing ethical problems and promoting the common good.

Ready to grow as a leader and propel your team forward? Discover which program is right for you.

For more news about business ethics, keep an eye on our blog.