Corporate social responsibility (CSR) describes a company’s obligation to all of its stakeholders. Corporate social responsibility entails sustainability of financial, economic, social and environmental elements. Companies use corporate social responsibility as part of their business management strategies.
Stakeholders include any parties that are influenced by or who can influence a company’s decisions. Although we usually think of investors, directors, partners, subsidiaries, and customers when we think of stakeholders, this group also includes employees, suppliers and communities.
Why corporate social responsibility? Corporate social responsibility can help a company with human resources, risk, regulations and other important elements of business.
Regulations and Corporate Social Responsibility
Many companies hope to keep the government from interfering in their industries. Through voluntary corporate social responsibility, companies can self-manage health, safety, diversity, environmental sensitivity, labor standards, social welfare and the like.
Human Resources and Corporate Social Responsibility
CSR can help build an atmosphere of good will for your employees. CSR is often important to both veteran workers and recent grads. Many employees like to take part in volunteering, fundraising, and payroll giving. So corporate social responsibility can help with recruiting and retaining human resources.
Risk Management and Corporate Social Responsibility
A company’s reputation can be undone in the blink of an eye. Environmental disasters, product malfunctions, customer service catastrophes and corruption can erode a company’s hard-won goodwill. By fostering a culture of craftsmanship, pride, concern for the community and the law, a company can reduce the risk that employees will put the firm at risk.
Branding and Corporate Social Responsibility
By building a brand around corporate social responsibility, a company can target certain consumers. The Body Shop, Whole Foods Market, Roots and other companies are known for their corporate social responsibility, integrity and best practices. Corporate social responsibility can also help reduce negative attention. Tobacco, oil, clothing, fast food and other companies may use CSR to divert attention away from cancern, pollution, child labour, obesity and other issues.
Loyalty and Corporate Social Responsibility
Corporate social responsibility programs can build customer loyalty, as an extension of branding. A company that donates a portion of proceeds to a local school, non-profit agency or cause may be able to secure the loyalty of consumers who support those causes. For example, some grocery stores donate funds to college funds or school playground funds – parents are thus often keen to concentrate their shopping at that grocery store.
Corporate social responsibility has obvious rewards for business. The key in implementing CSR is lining it up with your overall business strategy. If you’re unsure where to head, consider hiring a consultant to help with corporate social responsibility.
This article, which was written by Andrea Coutu of Become a Consultant at ConsultantJournal.com, originally appeared in Suite101.com.