Corporate governance strategies employed by firms that are ethical, societally friendly, and beneficial to its community Show
What is Corporate Social Responsibility (CSR)?Corporate social responsibility (CSR) refers to strategies that companies put into action as part of corporate governance that are designed to ensure the company’s operations are ethical and beneficial for society. Categories of CSRAlthough corporate social responsibility is a very broad concept that is understood and implemented differently by each firm, the underlying idea of CSR is to operate in an economically, socially, and environmentally sustainable manner. Generally, corporate social responsibility initiatives are categorized as follows: 1. Environmental responsibilityEnvironmental responsibility initiatives aim to reduce pollution and greenhouse gas emissions and the sustainable use of natural resources. 2. Human rights responsibilityHuman rights responsibility initiatives involve providing fair labor practices (e.g., equal pay for equal work) and fair trade practices, and disavowing child labor. 3. Philanthropic responsibilityPhilanthropic responsibility can include things such as funding educational programs, supporting health initiatives, donating to causes, and supporting community beautification projects. 4. Economic responsibilityEconomic responsibility initiatives involve improving the firm’s business operation while participating in sustainable practices – for example, using a new manufacturing process to minimize wastage. Business Benefits of CSRIn a way, corporate social responsibility can be seen as a public relations effort. However, it goes beyond that, as corporate social responsibility can also boost a firm’s competitiveness. The business benefits of corporate social responsibility include the following: 1. Stronger brand image, recognition, and reputationCSR adds value to firms by establishing and maintaining a good corporate reputation and/or brand equity. 2. Increased customer loyalty and salesCustomers of a firm that practices CSR feel that they are helping the firm support good causes. 3. Operational cost savingsInvesting in operational efficiencies results in operational cost savings as well as reduced environmental impact. 4. Retaining key and talented employeesEmployees often stay longer and are more committed to their firm knowing that they are working for a business that practices CSR. 5. Easier access to fundingMany investors are more willing to support a business that practices CSR. 6. Reduced regulatory burdenStrong relationships with regulatory bodies can help to reduce a firm’s regulatory burden. Example of CSR in CanadaIn Canada, mining companies often engage with Aboriginal communities and groups. Converting land sites into mines can cause a significant environmental impact on the Aboriginal communities living near the sites. Several Canadian mining companies engage in corporate social responsibility with local communities to ensure that the adverse effects are minimized. For example:
CSR of StarbucksStarbucks is a well-known firm that practices corporate social responsibility. As indicated by the company: “Starbucks’ social corporate responsibility and sustainability is about being responsible and doing things that are good for the planet and each other.” Starbucks’ CSR initiatives include:
Related ReadingsThis has been CFI’s guide to return on Corporate Social Responsibility. To keep learning and advancing your career, the following CFI resources will be helpful:
Which of the following is a business benefit from corporate social?Benefits of corporate social investment for businesses
increased sales and customer loyalty. operational costs savings. better financial performance. greater ability to attract talent and retain staff.
What are some benefits of corporate social responsibility?What are the benefits of CSR?. CSR increases employee engagement.. CSR improves bottom-line financials.. CSR supports local and global communities.. Contributes to the United Nations' 17 Sustainable Development Goals.. Increases investment opportunities.. Presents press opportunities.. Increases customer retention and loyalty.. Who benefits from business social responsibility?Today's employees find fulfillment in working for a socially responsible company, which means your CSR efforts will make them less likely to quit. According to a recent study, 95% of employees who work for purpose-driven companies report that they are more loyal to their employer.
What are the 4 types of corporate social responsibility?The four main types of corporate social responsibility are environmental responsibility, ethical responsibility, philanthropic responsibility, and economic responsibility.
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