Corporate Social Responsibility (CSR) (DP IB Business Management)

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 

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

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