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What is Corporate Social Responsibility?

Corporate social responsibility (CSR) is a business model that helps a company be socially accountable to itself, its stakeholders, and the public.

Many companies implement social initiatives to produce positive work environments for employees and greater financial returns for stockholders. Many also try to limit their environmental impact, build strong communities, and encourage ethical treatment of all workers in an effort to increase their effectiveness.

Milton Friedman wrote in Capitalism and Freedom in 1962: "There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game…The businessmen who complain about being forced to comply with social responsibilities are complaining about the rules of the game."

Social initiatives are not mandated by law in any country, but they help companies to secure employees and build their reputation. A number of major corporations including Walmart, Home Depot, Apple Inc., Nike Inc., and Starbucks were severely criticized for failing to take measures that would protect the rights—including working conditions, wages, child labor, and union-busting practices—of workers making their products in developing countries. These critics contend that the drive for corporate profits is universal and without restrictions; thus businesses must be socially responsible when choosing to work with suppliers or subcontractors who use child labor or keep their employees in dangerous working conditions.

Some social responsibility programs have other operating priorities than purely financial ones: Monsanto has explicitly targeted African-American farmers who cannot afford to pay for patented genetically engineered seed, while the North Carolina Growers Association which supplies migrant farmworkers to that state's agricultural industry has invited growers who operate "wet lines" (employing more than 50 workers) to join their efforts to work on improving working conditions, housing and education for immigrant communities.

A growing number of companies are embracing sustainable business practices in an effort to reduce energy usage, water use, solid waste production, greenhouse gas emissions, and/or develop a positive public image. For example, Walmart launched Project Gigaton in April 2018 to reduce its carbon emissions by 1 billion tons before 2050; Google is using a combination of renewable power sources including solar panels and fuel cells at data centers in Hamina Finland, and Council Bluffs Iowa, and Staples has achieved LEED certification of its first two stores in Mexico.

Corporate social responsibility is often associated with philanthropy, which is the voluntary provision of resources for social benefit by corporations, businesses, or private individuals. The expression "corporate philanthropy" typically refers to community engagement through charitable giving away of a company's own money to other organizations. Much corporate philanthropy is directed toward nonprofit institutions serving youth, health and human services, arts and culture, the environment, education, civic engagement, and other causes. Business corporations generally have an increased interest in issues related to their corporate image and marketing efforts as well as their potential liability over these issues. As such many corporations seek out community partnerships and sponsor various programs and initiatives that may be aligned to their bottom line.

The term "corporate social responsibility" has evolved over the past 30 years, which is when corporations began to take more seriously the impact they had on the world at large. Since then, it has become an accepted practice for businesses to balance profit-seeking with programs that support various initiatives throughout their communities, regions, and supply chains. In addition, as a result of growing awareness among consumers that some companies do invest in public welfare and environmental stewardship—while other companies do not—a competitive corporate landscape emerged where some companies were prioritizing CSR as part of their strategy.

Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical norms, and international norms. CSR strategies encourage the company to make a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others.

Since corporations' influence in most societies is inevitable due to their size and economic power they may be viewed as "social actors" (Bakker; Matten & Moon, 2008) rather than merely "economic agents". Indeed, it has been suggested that the modern corporation fulfills any number of social roles—from a healthcare provider to educator—and is able to affect society in numerous ways. According to Gittell & Thompson (2005), we may even come to regard corporations as "quasi-citizens". Their perspectives help us better understand how the firm's social responsibility may be defined and implemented. Some writers, such as Dalziel & Tulleth (2009), have argued that CSR must necessarily involve a dialogue between corporations and society.

Corporate social responsibility is not a new idea, but it has become more important in recent years as people have become more interested in where their products come from and the companies behind them. The good news for businesses is that implementing CSR initiatives can produce positive work environments for employees and greater financial returns for stockholders. In addition, many companies are making an effort to limit their environmental impact, build strong communities, and encourage ethical treatment of all workers. If your company needs help adding a strong social impact component to its business model, contact us today! We can help you implement CSR initiatives that will benefit your business and make you stand out from the competition.

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