This is the third post in a three-part series featuring our blog competition winners from Michigan State University. The author of today's post is Pujitha Kasipuram.
What is CSR
Corporate social responsibility is not a new term, as it originated back in the 1930’s where a firm tends to focus on mainly profits and private interests. According to Norine Kenney who is a part the U.S Council on International Business, “there is no solid definition of CSR; however, it is not a replacement for the governmental role and responsibility in meeting challenges of sustainable development.” This states that there is not one definition of CSR nor it substitutes the responsibility of a government. In fact, corporate social responsibility can be evaluated in many directions such as providing good working conditions to employees or how it can relate to globalization in three ways: environmental, economic, and social. With globalization and CSR, it is believed that there should be equal access to all three resources, but is this necessarily true? Since the government is not fully responsible to enforce for such issues, how can corporations be held accountable that are engaging in ethical practices? Corporate Social Responsibility varies by region, by country, and by group. It is a broad topic to discuss, but increasingly becoming important for consumers.
Why is CSR important
In order for firms to survive in the business world today, they need to start focusing on creating products that cater to more consumers. Corporate Social Responsibility helps companies maintain a good reputation and are extremely important for growth and efficiency. Consumers are becoming more and more curious as to what raw materials are going into their products which effects their buying patterns. It also plays a factor in employment decisions as most people want to work for a company that has excellent CSR practices. Employees are looking for companies that are focused on the triple bottom line: people, planet, and revenue. To further support this point, Forbes did a study to scope out companies with the best reputation. According to Kasper Ulf Nielsen, Reputation Institute’s executive partner said, “people’s willingness to buy, recommend, work for, and invest in a company 60% by their perceptions of the company, and only 40% by their perceptions of the products.” Reputation Institute analyzed companies on several dimensions which include workplace, governance, citizenship, financial performance, leadership, products and services, and innovation. Of these dimensions, citizenship, governance, and workplace are important components of CSR which impacts someone’s perception and how they feel about a company and their corporate social responsibility practices. In 2017,
Companies like Lego, Microsoft, Google, and Walt Disney Company have been recognized for their CSR efforts. All these companies make an active effort starting from the C-suite such as their CEO advocating social responsibility from top to bottom. With that being said, simply saying your company has CSR efforts and is stated in the core values is not enough. CSR has to start from the top and trickle down through its employees and practices incorporating everyone into the company.
Ways to practice CSR
As more people are becoming aware of the corporate responsibility, there also poses many challenges. Firms have to make sure they are at the forefront of providing new initiatives such as focusing on voluntary, regulatory, stakeholders, and partnerships. To implement corporate social responsibility can be a challenge because the concept of “Corporate Social Responsibility” is evolving at the same time challenges are rising. Therefore, CSR continues to change in different directions and a single approach or definition will not suffice.
For firms to become more responsible in how they engage business practices, they must take active steps to reduce negative effects on the environment. Firms can practice CSR by focusing on the environment, philanthropy, ethical labor practices, and volunteering. For example, when Microsoft held the #1 position in CSR, David Bross, Microsoft Senior Director of Citizenship and Public Affairs stated that “this is really a testament to our employees worldwide and the differences they make in their local communities. We have a Citizenship Leads across the globe and they work daily in collaboration with a wide range of stakeholders on a range of issues important to local communities.” This supports the fact that a company has to encourage efforts not only with their management, but also with their employees to build their reputation for socially responsible practices.
There are many other ways that companies can practice CSR, but it is important to understand that firms must pay attention to these issues. When you focus on Corporate Social Responsibility, it can lead to more profits as consumers are willing to buy more. It can also impact your employment level in the company as people want to work for firms who have good practices. Although the government is not exactly responsible for enforcing CSR, it does impact a consumer’s perception.