What is CSR?
Although it has gained much ground in companies worldwide over the past years, the immediate question asked by the public when talking about CSR is “What is CSR?” In short, Corporate Social Responsibility (CSR) is a business model that invites companies to act responsibly and ethically, to give back to the communities wherein they operate, instead of focusing solely on profit; to somewhat even the scale by adopting an ethical business model. It is about having business practices that focus on benefiting society. By doing so, companies aim to promote positive social and environmental practices. It also goes beyond that in focusing on how companies make profits, not how they spend them. CSR is ultimately about creating systematic change in the country or industry in which the company operates.
These practices would also naturally increase consumer trust, and would thus benefit the company in return on the long term. By benefiting its environment, society, or nurturing economy through positive practices, a business would also increase its long-term shareholder value, because it would do so by directing its initiatives towards future concerns and attempt to alleviate them.
Not to be confused with philanthropy, CSR is not simply about writing a check for a cause in order to show support, but true CSR goes beyond philanthropy. True CSR aims to benefit society by starting at home, from a company’s own employees. Because the key to a company’s success starts at home, by adopting an ethical business model, a company not only attracts loyal and conscious consumers, but will also in turn gain more conscious employees that are in line with the company’s mission. So in addition to philanthropy, a socially responsible company would also decrease its carbon footprint, employ ethical labor practices, and employ sociocultural practices that would leave a positive impact on the society it operates in.
Why CSR?
Experience has shown that CSR has become of increasing importance over the past years, with communities and consumers placing more importance on companies that adopt it. That is why industry leaders have come to accept it as an opportunity to strengthen their foothold while helping the communities in which they operate. Many leaders in fact refrain from considering any business strategies that do not have a CSR angle: if it is not a main component of said strategy, it should be the main component.
A perfect example of how CSR is tied to crises and how companies stand to gain from it would be the financial crisis of 2008, which was indeed a significant blow to companies and corporations worldwide. From the crisis we can discern three types of companies: those that employ CSR marginally, those that employ it strategically, and those that have in fact embedded it into their mission. The latter two models of companies were shown by studies to have been the least affected. Because through correct and well-informed CSR practices, they were able to work better on the problems faced by the environment in which they operate, and were able to better direct their CSR investments to alleviate the toll the crisis left on their society and economy.