Corporate Social Responsibility

by Becky Toal and Veronica Broomes

What is CSR?

Corporate Social Responsibility (CSR) is a voluntary initiative of businesses, primarily corporate and multi-national businesses. It can be considered as an organisation’s positive impact on society and the environment through its operations, products and services. This positive impact is the result of interactions with key stakeholders, such as employees, customers, investors, communities and suppliers.

Viewed from different perspectives, CSR has at least as many interpretations as there are sectors. Corporate giving or philanthropy has been one of the most popular approaches to CSR. In the early emergence of CSR, this meant having a sum of money is set aside for ‘worthy causes’. Often, the worthiness of the cause was determined by specific interests of the managing director, chair or other decision maker in the organisation.

Later, this philanthropic approach expanded to include employees giving time and/or money to worthy causes, with the approval and support of their employer. In giving time, employers allow staff a certain amount of time annually to dedicate to a chosen cause or community. When employees give their own money to ‘worthy causes’, employers may facilitate this through direct payroll deductions from employees to their preferred charity. Alternatively, employees agree collectively on a charity or worthy cause each year, for which deductions are made from employees’ earnings. Sometimes, employers match the contributions of their employees.

So, whether employees are volunteering in a community (local or overseas) or supporting their favourite charity/cause (with the approval of their employers), corporate companies are increasingly seeing CSR an opportunity for staff to share skills, gain new experiences, ‘give back’ to a community of choice and strengthen team relationships. In the process, of course, the organisation raises its profile/brand in its community of choice.

However, while some organisations continue to see CSR as simply philanthropy – a matter of donating cash, time or resources to favoured causes – for others, CSR is at the heart of strategy, policy and processes.

Since the mid-1990s, the area of CSR has grown in sophistication to include things such as cause-related marketing, annual CSR reporting and structured CSR awards, with even entire MBAs and PhDs being devoted to the subject. There is a growing volume of CSR reports that are produced by consultancy practices for corporate clients. Others have argued that CSR reporting should be an integral part of Annual Company reports, as best practice for governance and non-financial contributions to society.

Traditional versus contemporary CSR

For most small-to-medium enterprises (SMEs) operating in the UK, the phrase ‘corporate social responsibility’ is likely to be met with a response of ‘that’s only for large companies listed on the stock market’ or ‘how do I engage with that!’ But if you ask them whether they wish to be seen and respected as responsible businesses in the local and wider community, the answer will probably be ‘yes’.