What is corporate social responsibility?
Corporate social responsibility (CSR) is a business concept that describes a company's commitment to behave in an ethical way.
It typically focuses on achieving a balance of environmental, social and economic aims, while still addressing the concerns of stakeholders and shareholders.
CSR took off in the 1970s and has grown in popularity ever since. And with ethical and environmental concerns now high on the agenda for consumers and businesses alike, this is a key focus area for many organisations.
There’s no one 'correct' way to do CSR. Companies take their own individual approaches to this aspect of management, and what it means to be socially and environmentally responsible can vary significantly from one business to another.
CSR can cover everything from corporate governance, to environmental sustainability, to the conditions of workers and much more. It’s often broken down into the following four categories:
Environmental - For example, offsetting environmental harms, increasing use of renewable energy sources and cutting pollution.
Philanthropic - Making contributions to charitable causes.
Ethical - Making sure stakeholders, including workers and customers, are treated fairly. Economic - Taking the above areas into account when making financial decisions, such as investment choices.
What is the purpose of corporate social responsibility?
Broadly speaking, CSR has two primary purposes. Firstly, it helps to improve society and the world around us in various ways. Secondly, it helps to create a positive brand image, which in turn can help to give businesses a competitive advantage over rival companies. So, when done well, CSR is a win-win.
Why is corporate social responsibility important?
CSR is important for many reasons, most notably because social and environmental issues matter to people, and by behaving in a responsible, ethical way, businesses can have a positive impact.
As touched on above, there is also a strong business case for implementing a CSR strategy. Here are some of the reasons why it makes sense for companies to be proactive in this area.
Strengthens brand messaging
Consumers these days pay attention to much more than just the products and services that companies offer. They’re interested in the full picture, including how ethically businesses behave, and they want to feel like their purchases are doing some good in the world. Highlighting the importance of this issue, an international survey carried out by software company OpenText found that 78% of consumers prioritise buying from companies that have ethical sourcing strategies in place.
So, by having strong CSR policies and weaving this into their messaging, businesses can enhance the appeal of their brands.
With a positive brand image comes the potential for more sales and greater customer loyalty, both of which are great news for companies’ bottom lines. There is also evidence that people are willing to pay more for products and services provided by socially responsible businesses. A global survey carried out by NielsenIQ found that 55% of respondents were willing to pay extra for products and services from businesses committed to having a positive environmental and social impact. In this way, CSR can help to increase your profitability.
Attracts the top talent
Workers are also placing a greater emphasis on ethics when it comes to choosing employers, meaning that organisations with strong CSR policies may find it easier to hire and retain the best personnel. Underscoring this point, a UK poll carried out by consultancy Global Tolerance revealed that more than two-fifths (42%) of workers want to be employed by organisations that have a positive impact on the world. This figure was even higher among millennials at 62%.
Makes workers feel more engaged
A good CSR policy allows workers to contribute to social and environmental goals in a direct, meaningful way. For example, companies can give employees paid leave to volunteer their time to support local charitable causes. This can be highly rewarding for those involved, and it often has the effect of making workers feel more engaged and motivated in their roles overall.
What is a corporate social responsibility policy?
CSR policies set out businesses’ social and environmental objectives, and they pinpoint the specific actions that companies will take to achieve them.
For example, at Markel Direct, our CSR policy specifies goals such as supporting local community initiatives through the direct involvement of our workers, as well as providing corporate donations of money or time to select charities and welfare organisations. You can read our full CSR policy for further details.
Do small businesses need a corporate social responsibility policy?
In the past, CSR was largely seen as the preserve of major multinational corporations. However, with rising societal awareness of environmental and social issues, it’s now clear that CSR is important for all types of businesses, large and small.
As a small business, you might not have the deep pockets of large corporations and you may not be able to afford to enlist the help of CSR consultants, but there are still plenty of actions you can take to make your company as ethically and socially responsible as possible.
Bear in mind that all the benefits that apply to large organisations also apply to small businesses. From helping you to enhance your brand, to making it easier to attract the best workers, there are a range of advantages associated with taking a proactive approach to CSR.
Simple things, like sourcing your business insurance from a provider with a clear CSR policy themselves, help to contribute to making your business more socially and environmentally responsible. Other actions could include going paperless in your office to reduce waste, expanding your recycling efforts, and giving workers paid leave to volunteer on community projects.
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