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Corporate Social Responsibility (CSR) – Prioritizing Positive Societal Impact

Otherwise known as corporate conscience or responsible business, Corporate Social Responsibility (CSR) is a voluntary mechanism in which companies hold themselves to a set of legal, ethical, social, and ecological standards.

Corporate social responsibility is a blanket statement for the relationship between business practices and greater society. It’s the concept where, on a purely voluntary basis, corporations can choose to merge profit-driven strategies with those regulations that ensure social investment. Whether it’s improving the working conditions of employees or self-regulating practices to ensure a cleaner environment, businesses promote the adoption of CSR within a wider push for authenticity by stakeholders and citizens around the world.

In recent years, an increasing number of companies worldwide have started promoting their Corporate Social Responsibility strategies in response to greater pressure from customers, the public and their investors expect them to act sustainably as well as responsibly.  Though the exact definition of or guidelines to implementation of CSR are far from standardized. The term ‘Corporate Social Responsibility’ is imprecise and its application differs. CSR refers not only to the compliance of human rights standards, labour, and social security arrangements but also to the fight against climate change, the sustainable management of natural resources, consumer protection, philanthropic initiatives, and volunteer projects.

Responsible Companies in the Age of Globalisation

As companies assess their brand in the context of globalization, they are increasingly aware that Corporate Social Responsibility can be of direct economic value.  Recent studies have shown that a majority of consumers will choose to spend more money on a product from a ‘sustainable’ brand. Even more, in some studies, it has been found that millennials especially – to the tune of 81 percent – favor companies with clear values. Although the prime goal of a company is to generate profits, companies can at the same time contribute to social and environmental objectives by integrating corporate social responsibility as a strategic investment into their business strategy. Highlighting social impact has an enormous impact on brand popularity – and in turn on profits.

Savvy businesses are attuned to the fact that their impact on the economic, social, and environmental sectors directly affects their relationships with investors, employees, and customers. For some brands, CSR merging into corporate strategies makes sense. Patagonia for example used their home site to express outrage in November 2017 when US Interior Secretary Ryan Zinke made moves to greatly reduce the scope of federally protected wildlands. Though criticized by some, most environmental activists teamed up with the corporation as protecting hiking territories logically coincides with Patagonia’s brand. For other CSR campaigns, activists and researchers worry CSR acts more as a public relations tool than actual action to better society.

How “Socially Responsible” are Companies in Reality?

Due to the lack of international CSR guidelines, CSR strategies within most companies still show major regulatory deficiencies. There are still complaints about multinational companies harming the environment and NGOs still denouncing human rights abuses in companies.

In 2011, the United Nations published their report on Guiding Principles on Business and Human Rights, challenging states to hold transnational corporations accountable for human rights violations committed abroad. Though no enforcement mechanism currently exists to regulate extraterritorial activities of businesses, the yearly UN Forum on Business and Human Rights hopes to address this. As the world’s largest annual gathering on business and human rights, the pressure is put on businesses to hold themselves to the same standards as the laws enforced in their home countries. Though CSR could be a helpful tool for corporations to move in this new UN-encouraged direction, some are concerned it will be a marketing and rebranding ploy only.

Critics of CSR suggest that better governmental and international regulation and enforcement, rather than voluntary measures, are necessary to ensure that companies behave in a socially responsible manner. Corporate social responsibility should therefore not be seen as a substitute for a regulation concerning social rights or environmental standards.

Others accuse CSR programs undertaken by multinational companies in particular of distracting the public from ethical questions posed by their core operations. “Greenwashing” has become a major concern as many corporations that market social responsibility has yet to adopt management practices that reflect it. One clear-cut example is the greenwashing being done by the fossil fuel industry, hoping to rebrand in light of global climate action.