Corporate Social Responsibility (CSR) (DP IB Business Management)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
An Introduction to Corporate Social Responsibility
Corporate Social Responsibility (CSR) refers to the concept that businesses have a responsibility to consider and positively impact society beyond their economic interests
It is a framework through which companies voluntarily integrate social and environmental concerns into their business operations and interactions with stakeholders
Diagram: social responsibility goals
CSR involves taking into account the impact of business activities on various stakeholders, including employees, customers, communities, the environment, and society at large
CSR goes beyond legal compliance and strives for companies to actively contribute to sustainable development and societal well-being
Examples of Socially Responsible Activities
Socially Responsible Activity | Example |
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Sustainable sourcing of raw materials and components |
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Responsible marketing |
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Protecting the environment |
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Responsible customer service |
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Ethics and CSR
Ethics relates to the rights or wrongs of making a strategic decision that are beyond legal requirements
Some ethical businesses adopt an ethical code of practice which informs decision-making and may set out how they:
Behave responsibly with regards to the environment (for example, using recycled materials in packaging)
Avoid negative impacts on animals (e.g animal testing)
Adopt fair working practices (e.g. paying a real living wage)
Implement robust and equitable supply chains (e.g. using sustainably-sourced raw materials in production)
Takes steps to eliminate corruption (e.g. ensuring appropriate tax is paid in the countries in which the business operates)
Avoids controversial products or take steps to minimise their impact or access to them (e.g. having strict verification procedures in place prior to cosmetic surgery procedures being carried out)
Ceases trading with questionable suppliers or customers (e.g. cancelling a supply contract with a supplier that uses child labour)
It is now common practice for large companies to publish annual Corporate Responsibility Reports which provide an audit of the steps being taken to meet their commitments to a range of stakeholders alongside annual financial reports
Extra costs are involved in operating in a socially responsible way and these costs are usually passed on to consumers
Reasons for Implementing CSR
Business set ethical or socially responsible objectives for a range of sound commercial reasons
Business Reasons for Implementing CSR
Reason | Explanation |
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Improved Reputation |
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Added Value |
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Employee Morale & Motivation |
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Solve Social Problems |
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The Impact of Implementing CSR
Businesses experience a range of impacts as a result of implementing CSR
They usually attract long-term loyalty from employees and customers and may find that their approach provides a useful competitive advantage
They are also likely to receive the support of the local community and local government especially if they share their aims
Suppliers and competitors of ethical businesses often change their approach to ensure that they do not lose sales to more ethical rivals
Taking an ethical approach costs more and may reduce the overall level of profits if the business is not able to raise their prices to compensate
Case Study
Japanese fashion retailer Uniqlo has tried to move towards an eco-friendly strategy in recent years
It is focusing on technologies that make the production of new clothing from recycled materials possible
The business has invested significant sums in energy-efficient production facilities
It supports the campaign to safeguard the islands and coastal regions of Japan’s threatened Seto Inland Sea
Examiner Tip
Some large businesses have been accused of greenwashing, where significant efforts are made to create the impression that its is environmentally friendly when, in fact, it is not.
Greenwashing may involve
Making broad sustainability claims without evidence.
Overstating positive environmental effects in marketing materials.
Advertising products as eco-friendly whilst but sourcing raw materials from unsustainable suppliers
In 2015, Volkswagen admitted to cheating emission tests by making its diesel cars appear far less polluting than they really were whilst promoting them as environmentally friendly in its marketing campaigns
This led to Volkswagen facing several lawsuits and fines totalling billions of dollars and long-term damage to its previously excellent reputation for quality and dependability
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