Corporate Social Responsibility (CSR): Definition & Examples
What is Corporate Social Responsibility
Corporate Social Responsibility (CSR) is a type of corporate strategy that looks at how the business can better society as a whole. These can target moral issues such as environmental protection and animal testing, to more ethical acts such as charitable fundraisers. The general aim is to improve public relations and the firms brand image.
Corporate Social Responsibility comes at a cost, with some businesses diverting 1 percent on their profits to charity, whilst others give their employees time off to help local charities. Others may invest in creating a more environmentally friendly product and reducing the C02 footprint of its supply chain. For instance, in 2014, Google committed to investing $1 billion into renewable energy.
Due to the costs associated, Corporate Social Responsibility is largely a strategy for big businesses. By contrast, small and medium sized businesses do not have the same profitability to allow them to divert resources on a large scale.
- Corporate Social Responsibility (CSR) is a corporate strategy that looks at how the business can benefit the wider society.
- Firms engage in CSR for a number of reasons which include – improving employee morale, better the firms brand image, and benefit the wider society.
What is the Purpose of Corporate Social Responsibility
1. Boost Employee Engagement and Morale
A company that is socially responsible can increase the engagement of its workforce. Increasingly so, workers want to be part of something bigger than just their job. So rather than go into the office, work, go home, and repeat, they are part of something more meaningful.
Some firms have dedicated CSR teams that focus on events to help charities. For instance, sports or sponsored events may be organised to raise money. The aim is to get employees involved and feel like they are also contributing to society, but with the support of their employer.
Photo by Sebastian Herrmann on Unsplash
In turn, it helps to create meaning for employees outside of work as well. As a side effect, this can be helpful for the mental wellbeing of employees. Often they can become demotivated by the daily grind, so it can be motivational to help them become part of something bigger.
Interestingly, the values of a company are becoming more important the younger the employee. For example, nearly 9 out of 10 millennials would take a pay cut to work at a company with similar values. By comparison, only 9 percent of baby boomers would do the same. This would suggest that as we more forward, the social responsibility of the company is going to be important in attracting and keeping workers.
At the same time, there are studies that back this up, stating employee engagement is linked positively to CSR.
2. Betterment of Society
Much of the CSR that is conducted is through charities. Whether that is to assist with manual labour, or helping fund them. Charities such as Cancer Research, the Salvation Army, or the Red Cross foundation, all benefit from CSR in some shape or form.
In turn, such charities receive the funding they need to help fight against cancer, help the homeless, and contribute to disaster relief. We also have some businesses that are actively donating to good causes. For example, Amazon donated $3 million to the Center for Science and Innovation at Seattle University. The aim was to increase access to STEM and computer science education to women and other minorities.
Elsewhere, Wells Fargo, a US bank, contributed over $444 million to 11,000 charities in 2018. More than $117 million was spent helping people buy their own home, including downpayment assistance. Furthermore, over $90 million of this was spent in education, helping underprivileged communities into higher eduction.
Overall, such actions can truly benefit local communities by helping those struggling in society. Such donations can help people out of poverty, fight illness, and increase the wellbeing of people in general.
3. Brand Image
Corporate Social Responsibility can play an important role in a brands image and reputation. For instance, a study by Edelman, and Young & Rubicam, found that 87% of consumers from the UK expect firms to consider their societal impact as much as their own, while more than 70% of people make a point of buying from companies with views similar to their own.
So it is not only morally beneficial, but it can also help the companies bottom line. If customers are more likely to shop at ethical companies, it means more business for them. So even though there are greater costs, it can prove to be a win-win through higher demand.
The research shows that consumers do in fact buy from firms whose values align with theirs. For example, those who have significant concerns over the environment may look to businesses that use green technologies and invest in renewable energy. Such research includes that from Accenture. The study concluded that 63 percent of consumers are buying goods and services from companies that reflect their own personal beliefs.
Corporate Social Responsibility Examples
Google’s Corporate Social Responsibility is large and comprehensive, covering areas such as sustainability, education, to assisting research into deadly diseases. It has a number of well-organized schemes, so we will take examples of some of the bigger ones.
In 2017, Google’s charitable arm, ‘Google.org’, announced that it would award grants totalling $1 billion over the next five years. This commitment focuses on three key areas: Education, Economic Opportunity, and Inclusion.
So this looks at how to make education accessible to everyone across the world in equal measure. In turn, it’s looking to help charities develop new self-directed learning apps and online lesson plans for teachers.
Elsewhere, Google has invested heavily in reducing its environmental impact on society. The company has reduced its water consumption, eliminated landfill waste in six of its data centres, invested $1.5 billion in renewable energy, and reduced its energy consumption to 50 percent of an average data centre. As a result, the firms efforts have enabled it to remain carbon neutral since 2007.
Disney is consistently among the highest ranked companies in relation to their CSR activities. Its CSR aims include environmental sustainability, investment in youth education, volunteering, and children’s hospitals and wish granting.
One of the heart-warming examples of Disney’s CSR in action is the five year global commitment of $100 million to help reimagine children’s stay in hospitals.
This covers providing Disney themed products to make the child feel at home, to greetings from the characters. The intended goal is to reduce the anxiety that patients and families face during hospital visits.
Disney also focused on providing an equal and balanced education to children. For instance, the firm has worked with First Book over a number of years to provide more than 67 million books to educators who serve children in need. Overall, Disney spent over $338 million in 2019 in cash and in-kind donations to charitable organisations, proving to be a leader in Corporate Social Responsibility.
Microsofts Corporate Social Responsibility originates from 1983 when it raised $17,000 for the community. Since then, it’s expanded its ‘Employee Giving Program’ and now pays charities $25 per hour an employee donates time to the cause.
The company also offers to match employees contributions, which all together raised a total of $181 million in 2019. This is in addition to the $1 billion in Microsoft Cloud Services that it is providing nonprofits. The aim is to provide support to 70,000 nonprofits and assist with computing storage and technological problems.
Lego has its own separate foundation called the Lego Foundation. It is one of the leading companies in Corporate Social Responsibility, frequently ranking in the top 5 of the annual rankings.
In 2018, the Lego Foundation donated $100 million to Sesame Workshop, a non-profit that is helping young children affected by the Rohingya refugee crisis in Bangladesh and the civil war in Syria.
Furthermore, the company invested over $165 million into creating its first sustainable lego brick. Made out of plant-based plastic sourced from sugar-cane, Lego claim they are identical to the plastic versions. It’s now working with the World Wildlife Fund (WWF) to create a more sustainable supply chain.
FAQs on Corporate Social Responsibility
Corporate social responsibility is a corporate strategy where the business looks at how it can best serve society and target moral issues. This can put the firm in a more favourable light among the public, thereby improving public relations and its brand image. It can include raising money for charity or promoting good causes in its store.
CSR is where businesses look at how they can better serve society as a whole, thereby improving its public image and relations. Examples include Google that invested $1.5 billion into renewable energy, and Disney which invested $100 million in children’s hospitals.
CSR is important for a number of factors such as:
1. It can improve employee morale knowing it works for an ethical company with a purpose.
2. Society as a whole benefits from the generous activities and fundraisers of big businesses.
3. Improvement of Brand Image.
Paul Boyce is an economics editor with over 10 years experience in the industry. Currently working as a consultant within the financial services sector, Paul is the CEO and chief editor of BoyceWire. He has written publications for FEE, the Mises Institute, and many others.