Corporate Social Responsibility (CSR) is the responsibility the corporates have towards the society and the environment. The essence of this responsibility is that the society and environment contribute to the profitability of a company. Thus it is the responsibility of the company to ensure that it gives back to the society and environment to make up for the usage, and to avoid exploitation of it. There are four main types of CSR: environmental responsibility, ethical/human rights responsibility, philanthropic responsibility and economic responsibility. Let us examine each one of them.
1. Environmental corporate responsibility
Environmental responsibility refers to an organisation’s commitment to sustainability and environment friendly operations. Climate change and extreme weather events caused by it has brought environment conservation into focus. A lot of onus on that has been placed on companies as they have been historically and currently responsible for carbon emissions.
Recognising their responsibility towards the environment, several companies are prioritising sustainable practices and pledging to go Net Zero. For example Google and Microsoft have committed to go Net Zero by 2030.
Ethical responsibility is a company’s commitment to operate their business in a manner that is ethical, upholds fundamental human rights, provides equitable and fair treatment, does not practice racial, gender or any other form of discrimination, and participate in any form of exploitation.
Philanthropic responsibility of a company includes its aims, goals and objectives for actively improving the society as a whole. One of the major aspect of corporate philanthropy is providing financial support from company earnings to worthy causes within the local community — often in the form of a trust or foundation.
It basically entails using the vast resources, knowledge, expertise and influence of a company to solve local community development challenges. To know about the top 10 companies conducting philanthropic CSR, read the article in the link.
4. Economic corporate responsibility
Economic responsibility of a comprises of the practice of making financial decisions of an organisation based on a commitment to doing good. This includes companies making decision to use renewable or clean energy for its operations, even if it might be more expensive than fossil fuels.
In order to uphold economic responsibility, the business leaders are challenged to think past operational cost savings and instead put their obligation to corporate citizenship at the heart of all financial decisions. The companies that have aligned themselves with Science Based Targets are a good example of this form of CSR.
Apart from these four main types of CSR, there are also other areas corporates can focus on, to act in a more responsible manner. These include:
Engaging Employees
Employees are the heart and soul of an organisation. It is essential to ensure that they also recognise the same and consider themselves to be an integral part of the company. This also helps them attain more employment satisfaction, which could enable the company in retaining these employees.
One of the ways organisations can do this is by engaging them in its CSR initiatives. Each human being believes in a cause. Encouraging the employees to participate in a CSR initiative that works towards a cause that aligns with the employees value system helps them feel belonged. This, in turn, benefits the company significantly which makes employee volunteering initiatives a win-win, as both – the social responsibility of company is managed, and an employee is also retained.
As the world fights the battle of righting the past wrongs on vulnerable sections of society such as women and members of LGBTQ community, companies have responsibility to participate in the movement by improving on its own employees culture.
An organisation can perform this responsibility by promoting more diversity in its hiring practice. It can ensure that the promotions handed over are also done in a manner that there is enough representation of minorities at the top level. The companies can also create policies that would allow and encourage its employees to embrace different cultures, backgrounds and identities.
Supply Chain Responsibility
The responsibility of a company does not end at making their own operations sustainable, without taking into account the sustainability of its supply chain. Numerous major brands have come into spotlight in the recent years, that have been themselves doing well in controlling their emissions, but are accused contributing to emissions by associating with unsustainable suppliers. It does not do well for a company to turn a blind eye on its suppliers activities.
Organisations can employ carrot and stick method to ensure their supply chain is clean. It can help its suppliers be more sustainable by providing financial and technological support, and can place penalties on the ones that do not adhere to the sustainability standards of the company.
A company is responsible to not only to its shareholders, but also to its employees. An organisation can fulfil its responsibility towards its employees by ensuring their well-being – physical as well as mental. This can be done by ensuring that their mental health is great, there is an availability of counselling services for employees if and when they need it. The companies can also keep in consideration that their employees have an access to health or well-ness centre, so that their physical health is cared for, they have access to nutritious food, and they have enough time to spend with their loved ones.
