What is corporate social re­spons­ib­il­ity (CSR)?

Corporate social re­spons­ib­il­ity (CSR for short) is the in­ter­na­tion­ally regarded concept for re­spons­ible corporate behaviour – although it is not clearly defined. In a nutshell, CSR refers to the moral and ethical ob­lig­a­tions of a company with regards to their employees, the en­vir­on­ment, their com­pet­it­ors, the economy and a number of other areas of life that its business affects.

CSR is often un­der­stood as a voluntary com­mit­ment to certain company rules i.e. beyond national laws and standards. This means that companies that operate re­spons­ibly and morally can often use their CSR for PR purposes as well. If it becomes known that a company vol­un­tar­ily commits itself to a good cause, this improves their public image.

For this reason, however, the concept of corporate social re­spons­ib­il­ity is re­peatedly cri­ti­cised: many companies do not embrace CSR as a result of genuine altruism, but rather to develop their own image. In this article we explain in detail what CSR is, how it has developed, and how CSR is borne out in some companies today.

The concept of companies acting re­spons­ibly is not new, but through the term “corporate social re­spons­ib­il­ity” (CSR) it has taken on a modern meaning. Even centuries ago people were occupied with the question of whether the economic activity of a business should be used for good rather than to simply make a profit. In the middle ages there was a concept of the “honest merchant” who would operate according to a code of values and thereby influence other traders to bring benefits to society as a whole by complying with certain rules of conduct.

For bigger companies, corporate re­spons­ib­il­ity won a greater meaning during in­dus­tri­al­isa­tion, as firms would build housing for their employees and harsh working con­di­tions prompted a growth of the issue in the col­lect­ive con­scious­ness. Companies slowly began to accept social re­spons­ib­il­ity for their employees and their families, although when decisive im­prove­ments were made it has only as a result of na­tion­wide im­ple­ment­a­tion and state le­gis­la­tion. An en­vir­on­ment­al ethic simply did not exist in most companies at that time.

The modern concept of company re­spons­ib­il­ity as we know it today arose in the 1950s in the US. At that time, many public dis­cus­sions were being held on the topic and the first sci­entif­ic findings were being published. Howard R. Bowen in his article “Social Re­spons­ib­il­it­ies of the Busi­ness­man” described corporate re­spons­ib­il­ity as the logical con­sequence of the social ac­count­ab­il­ity of in­di­vidu­als within the company. Thereby, it would have to orient itself according to these rules and there­after enforce them. At the time, most companies did not feel obliged to work towards a more moral business focus: the defining outlook was that economic growth remained the de­term­iner of everyday working life.

From the 1970s, socially active in­sti­tu­tions that could have a positive influence on the moral outlook of society were in­creas­ingly re­cog­nised by companies. Society and business were in constant in­ter­ac­tion and it was believed that through this there could be a con­sol­id­a­tion of social norms within the cap­it­al­ist economy. Corporate social re­spons­ib­il­ity existed before the century’s end, although perhaps more so as a hopeful ideal than as a behaviour-changing act.

In recent years, with the growing focus on en­vir­on­ment­al­ism and questions of ethics within a glob­al­ised world, CSR has begun to take on a stronger meaning. The rising im­port­ance of the internet meant that companies who behaved ir­re­spons­ibly were quickly derided and suffered a serious blow to their public image when op­er­a­tion­al scandals, abuses, and griev­ances were pub­li­cised on social networks. From this, corporate social re­spons­ib­il­ity developed from an ideal to an important field of work for many companies.

Corporate social re­spons­ib­il­ity (CSR) and "corporate cit­izen­ship" are also often used syn­onym­ously. The confusion of terms shows, on the one hand, that CSR is a broad field and covers many sub-areas, while on the other hand, that the term itself is mis­lead­ing. This is because "re­spons­ib­il­ity" implies an ex­tern­ally imposed principle and em­phas­ises the less voluntary nature of CSR.

These days, large companies cannot afford to not take CSR seriously. Some employ CSR spe­cial­ists who help to not only formulate the companies’ moral code but also to monitor its im­ple­ment­a­tion. This can often have added economic benefit if the positive corporate social re­spons­ib­il­ity can be used for marketing and PR use; everyone involved benefits from well-im­ple­men­ted CSR.

Companies are sometimes accused of driving their CSR efforts in the hope of having a positive ad­vert­ising effect and in­creas­ing profits, and not for moral motives. Critics therefore simply equate CSR with marketing. On the other hand, there is also a wide­spread opinion that the intention behind corporate social re­spons­ib­il­ity is not so important, as long as it is ul­ti­mately be­ne­fit­ting people. 

The internal area of re­spons­ib­il­ity includes all internal processes that affect the corporate strategy itself. The internal area of re­spons­ib­il­ity is usually the re­spons­ib­il­ity of company ex­ec­ut­ives and in­flu­ences important decisions, e.g. which business partners are acquired, one's own re­spons­ib­il­ity to the market with regard to mono­pol­ies, fair and realistic growth planning, and healthy prof­it­ab­il­ity.

In the ideal case, the moral compass of the company plays an important role in decision-making, however, it is usually difficult to judge from the outside to what extent a company takes its internal area of re­spons­ib­il­ity seriously. CSR man­age­ment that is visible to the outside world is at least an in­dic­a­tion that the internal strategy also takes moral prin­ciples into account.

The middle area of re­spons­ib­il­ity includes all those actions of a company whose effects on the en­vir­on­ment and society can be measured more or less directly. This includes CO2 emissions and air pollution as well as working con­di­tions for employees. This also includes re­spons­ible supply chain man­age­ment, because co­oper­a­tion with morally ques­tion­able companies ul­ti­mately supports their corporate policy.

Corporate social re­spons­ib­il­ity (CSR) in the middle area of re­spons­ib­il­ity is the most difficult to co­ordin­ate for many large cor­por­a­tions, but has gained con­sid­er­able im­port­ance – precisely because it is in this area that the most damage can occur. This applies not only to the en­vir­on­ment and society, but also to a company’s own employees, stake­hold­ers, and repu­ta­tion.

Stake­hold­ers: Stefanie Hiss suggests that the middle area of re­spons­ib­il­ity mainly refers to stake­hold­ers. Generally speaking, stake­hold­ers are people who have an increased interest in processes, working con­di­tions and, in most cases, the success of the company. The following groups of people form important stake­hold­ers:

Companies have a duty to their employees to ensure a pleasant working en­vir­on­ment and, in addition, to make in­form­a­tion suf­fi­ciently trans­par­ent in terms of career op­por­tun­it­ies and hier­arch­ies. This also includes the issue of fair payment and profit sharing as well as the lim­it­a­tion of the term of contracts.

Another fun­da­ment­al element for healthy CSR in this area is the con­struct­ive in­ter­ac­tion with trade unions when they operate within the company. In extreme cases, there can be strikes if companies do not take their social re­spons­ib­il­ity towards their employees seriously. Un­ac­cept­able working con­di­tions sometimes even call human rights or­gan­isa­tions or state in­sti­tu­tions into question. Fre­quently employees will make these griev­ances public, meaning that the news can spread like wildfire across social media and cause con­sid­er­able image damage.

Investors have a clear interest not only in the success of the company, but also in fair co­oper­a­tion. Above all, listed companies are threatened with con­sid­er­able damage if their dealings with business partners and investors are morally ques­tion­able or dishonest.

Companies that supply products should not deceive their customers. Es­pe­cially in the case of consumer goods such as food, a company has the re­spons­ib­il­ity to correctly inform the customer about the pre­par­a­tion and com­pos­i­tion of the product. Knowing the origin of the product and the raw materials used is also important to many customers. If a company presents itself to the outside world as en­vir­on­ment­ally friendly, but uses eggs from caged pro­duc­tion or com­pon­ents from en­vir­on­ment­ally harmful pro­duc­tion plants in the man­u­fac­tur­ing of a product, this can lead to the loss of a con­sid­er­able customer base.

For many companies, the customer is by far the most important stake­hold­er. If a company does not take its social re­spons­ib­il­ity towards its customers seriously, this is often due to poor CSR man­age­ment (if any).

Companies located in cities or at least in the immediate vicinity of set­tle­ments also have a re­spons­ib­il­ity towards local residents. The operation should not have a negative impact on the quality of life of the residents. This applies, for example, to noise and en­vir­on­ment­al pollution. In many countries, people still suffer from the harsh living con­di­tions as large factories ignore their social re­spons­ib­il­ity.

In the worst case, companies cause drinking water pollution, un­ac­cept­able noise, air pollution, and damage to the sur­round­ing flora and fauna. If such in­justices are made public, the company is threatened not only with damage to its image, but also problems with the law and en­vir­on­ment­al pro­tec­tion or­gan­isa­tions.

Companies must comply with the laws of the countries they operate within. This also includes smooth and honest co­oper­a­tion with gov­ern­ment or­gan­isa­tions such as, for example, health and safety de­part­ments and health offices. In pro­duc­tion fa­cil­it­ies, the quality standards and reg­u­la­tions specified by the le­gis­lat­or must be observed through regular checks and surveys.

The re­spons­ib­il­ity of the "fourth estate" includes the most complete possible reporting of griev­ances in companies. The re­la­tion­ship between journ­al­ists and business is therefore often two-sided: on the one hand, a company wants to present itself as well as possible, so that the media can help cultivate a positive image of them through their reporting. On the other hand, companies that do not live up to their corporate re­spons­ib­il­it­ies can quickly suffer damage to their image if journ­al­ists speak out about it. Media rep­res­ent­at­ives are therefore not welcome on some company premises.

Since corporate social re­spons­ib­il­ity is not subject to state control, the media often feels obliged to inform the public about corporate mis­con­duct. Good CSR man­age­ment in principle involves an open and honest dialogue with the media. However, journ­al­ists will rarely report on the positive per­form­ance of companies and instead focus on incidents of mis­con­duct simply because negative press sells better.

As part of their corporate social re­spons­ib­il­ity, many companies not only con­cen­trate on internal processes, but also assume social re­spons­ib­il­ity outside their own op­er­a­tions. The external area of re­spons­ib­il­ity is often equated with the term "corporate cit­izen­ship", and these are some examples of what it con­sti­tutes:

Corporate giving is the most popular means of actively living corporate re­spons­ib­il­ity. Fre­quently, however, these donations are also linked to the sale of goods and are thus intended to promote higher sales figures: for example, by promising to donate part of the profit per product sold to a good cause. Many companies also par­ti­cip­ate in events such as marathons and fun­draisers, where employees can par­ti­cip­ate. Of course, all this brings good publicity to the companies, but it does not diminish the general benefit of these actions. Such charity events are ul­ti­mately prof­it­able for all concerned.

Companies often also fulfil their social re­spons­ib­il­ity by spon­sor­ing special ini­ti­at­ives or sup­port­ing as­so­ci­ations that pursue char­it­able goals. In return, the companies are pos­it­ively mentioned by these in­sti­tu­tions and benefit from being as­so­ci­ated with them. Often, this helps companies improve their repu­ta­tion with local residents – for example, by spon­sor­ing city projects and regional events.

Companies are often willing to give employees time off if they want to carry out social activ­it­ies. Al­tern­at­ively, paid time for char­it­able work is regulated in em­ploy­ment contracts: for example, where employees are granted half a working day per quarter for these activ­it­ies. Many companies are therefore prepared to support and even reward the social con­tri­bu­tions of their employees by recording these activ­it­ies as working time.

When companies establish found­a­tions, promote social projects, and par­ti­cip­ate in fun­drais­ing galas, CSR is seen. However, CSR must also be assessed in relation to the size and scope of a company. Companies that operate globally but have their headquar­ters in a rich country should also extend social en­gage­ment to the poorer countries where they produce their products.

The ways in which CSR can be fulfilled are mul­ti­fa­ceted: a small local company, for example, already acts in a socially re­spons­ible manner when it is involved in a par­tic­u­lar project; a small financial injection for the local city park can mean that CSR has been pos­it­ively im­ple­men­ted just as suc­cess­fully as the company offering as­sist­ance in the event of a natural disaster. Below you will find examples of some companies that have excelled in the field of corporate social re­spons­ib­il­ity.

Ben & Jerry’s are known the world over for their iconic labelling and wacky – but delicious – ice cream flavours. Since their humble be­gin­nings in 1977, Ben and Jerry have always done things their own way and main­tained a strong sense of economic and social duty in the way they handle their business.

Ben & Jerry’s corporate social re­spons­ib­il­ity spans all areas of their business. They are committed to using only Fairtrade, non-GMO in­gredi­ents in their produce, and support sus­tain­able ag­ri­cul­tur­al practices and ethical treatment of their dairy cows. They have vowed to operate the company in a manner than ensures only sus­tain­able growth is achieved and that it is the de­vel­op­ment of their employees which is put first. Their social missions are where they have been most visible, however, having supported a number of causes at a local, national, and in­ter­na­tion­al level. These include:

• 1% for Peace was es­tab­lished in 1988 to promote peace activ­it­ies and projects across the world
• Drilling Is Not The Answer: a 2005 protest against oil drilling in the Arctic National Wildlife Refuge
• Cool Your Jets: an ini­ti­at­ive for people around the world to help offset their car emissions from air travel 
• The 2011 Occupy movement was staunchly supported by the company
• The Ben & Jerry’s Found­a­tion awards more than $1.8 million per year to ini­ti­at­ives across the US targeting sus­tain­ab­il­ity and community action

IKEA is one of the world’s largest home furniture companies and it has taken up the mantle of helping combat global poverty and living con­di­tions in a number of ex­traordin­ary ways. As part of their “people and planet positive” mantra they are seeking to celebrate sus­tain­able living in all its guises; from the materials we use to how we source our energy.

The IKEA Found­a­tion was set up to oversee the company’s in­ter­na­tion­al corporate social re­spons­ib­il­ity ini­ti­at­ives. Since 2003, it has donated €1 to Save the Children for every soft toy that they have sold, with over 104 million Euros (as of 2014) being committed to help campaigns in India, Sri Lanka and Sudan, to name a few. In recent years, IKEA has supported Brighter Lives for Refugees in as­so­ci­ation with the United Nations Refugee Agency, helping bring light and renewable energy to refugee camps across Asia, Africa and the Middle East.

The elec­tron­ics man­u­fac­turer runs several char­it­able found­a­tions. The best-known of these is the Robert Bosch Stiftung, which is active in the fields of health, science, society, education, and in­ter­na­tion­al education. Robert Bosch Stiftung con­cen­trates on sup­port­ing char­it­able projects, but also develops its own ini­ti­at­ives.

Bosch also operates found­a­tions across the world that aim to improve the quality of life of the people living in the immediate vicinity of its pro­duc­tion fa­cil­it­ies. The Bosch India Found­a­tion works to improve medical care in the poorest regions of India – es­pe­cially for sick children and pregnant women. The Instituto Robert Bosch in Brazil operates several edu­ca­tion­al in­sti­tu­tions as well as being involved in the fight against poverty and drug abuse. Bosch also operates several found­a­tions for its numerous pro­duc­tion fa­cil­it­ies in China with the aim of reducing poverty and creating better edu­ca­tion­al op­por­tun­it­ies. For example, Bosch supports first-year students by paying their uni­ver­sity fees for the first semester. In addition to its local found­a­tions, Bosch also maintains a number of found­a­tions that are dedicated in­ter­na­tion­ally to the areas of refugee aid and disaster control.

Please note the legal dis­claim­er relating to this article.