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What Is Corporate Social Responsibility?

Corporate Social Responsibility (CSR) is a concept that says, companies should operate in a manner that accounts for the social and environmental impact created by the business itself.

According to nonprofit organization As You Sow (which works to promote environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies), companies that engage in CSR make a commitment to developing policies that integrate responsible practices into daily business operations, and to reporting on progress made toward implementing these practices.

The Rise of Corporate Social Responsibility

Companies can endeavor to be socially responsible by conserving energy, conserving water, preventing pollution, reducing waste, outsourcing responsibly, and engaging in community education. As these values become more important to employees and consumers, corporations have increased their engagement in CSR. Many companies now incorporate CSR into their operations, rather than making it a small part of the company’s human resources or philanthropy department.

According to a May 2012 article in Time Magazine, “Ten years ago, for instance, only about a dozen Fortune 500 companies issued a CSR or sustainability report. Now the majority does. More than 8,000 businesses around the world have signed the UN Global Compact pledging to show good global citizenship in the areas of human rights, labor standards and environmental protection.”

The Case Against Corporate Social Responsibility

Even as CSR is steadily gaining advocates on the personal and corporate levels, the concept has also earned its share of critics. David Fogel of Forbes argues that “only a handful of consumers know or care about the environmental or social records of more than a handful of firms. ‘Ethical’ products are a niche market: Virtually all goods and services continue to be purchased on the basis of price, convenience and quality.” He continues: “Although ethical mutual funds have grown in size, they have had no measurable impact on share prices.”

Aneel Karnini of The Wall Street Journal further claims that, “The danger is that a focus on social responsibility will delay or discourage more-effective measures to enhance social welfare in those cases where profits and the public good are at odds. As society looks to companies to address these problems, the real solutions may be ignored.”

No matter your philosophy, it is hard to deny that CSR is here to stay. A recent survey found that 65% of MBAs say they want to make a social or environmental difference through their jobs.

 

Dave Donovan

Author:

Dave Donovan has written extensively for the web with a primary focus on articles targeting finance and business.