The Four Types of Corporate Social Responsibility 

May 3, 2021

“There is no more powerful institution in society than business…The business of business should not be about money; it should be about responsibility. It should be about public good, not private greed.” -Anita Roddick (Business as Usual) 


The bottom line of a business is making profit. Profits, after all, are the lifeblood of a company. 

However, it doesn’t bode well for a business or company to focus solely on its profitability. By today’s standards, companies need to look beyond their profit margins—they need to be sensitive to the times. Consumers are much more aware of how they spend their money and choose to support brands that take stances on issues that they’re passionate about o. In a sense, corporate social responsibility is a company’s way of showing their consumers that they care about the community. Companies that exercise corporate social responsibility think beyond their sales and are mindful of their impact on the communities they serve.—far more than just thinking of their sales and regular transactions.

Companies that do want to survive and thrive in today’s economy and social climate should not only have an awareness be aware of today’s social issues but take a stance, come up with CSR ideas and do something about it. In that way, businesses can build a brand that consumers can respect, trust and support. 

 

WHAT IS CORPORATE SOCIAL RESPONSIBILITY? 

 

Generally, corporate social responsibility (CSR for brevity) is initiatives are a set of standards and measures that businesses put in place to benefit society. Similarly, these are strategies that companies implement as part of corporate governance to ensure that the company’s actions and operations are ethical and beneficial for society. Also regarded as corporate citizenship or corporate conscience, CSR illustrates how businesses understand the role they play in our greater society. A company’s CSR efforts show their commitment to go beyond what is required and mandated by law, environmental associations, and ethical standards.

More often than not, CSR results in short-term costs that have no immediate economic gain for the company. Instead, the costs incurred are meant to benefit environmental and social progress.

WHAT IS THE PURPOSE OF CORPORATE SOCIAL RESPONSIBILITY? 

CSR ensures a company’s sustainable growth by encouraging them to conduct their day-to-day business transactions ethically and work towards positively impacting the communities they serve.

While the idea of sustainability is typically hinged on environmental concerns, it can apply to other aspects of a business. Sustainability can also refer to a company’s economic impact, procurement, hiring, and training processes. CSR comes in a variety of forms, with common examples being implementing greener practices at in the workplace and donating money making donations to charitable organizations.

THE FOUR TYPES OF CORPORATE SOCIAL RESPONSIBILITY 

Corporate social responsibility is interpreted and implemented differently by businesses and companies. While there may be many ways to understand CSR, the underlying idea is to operate in a manner that is economic, social and environmentally sustainable.  

Below are the four categories of corporate social responsibility initiatives:

1.) Environmental Responsibility 

Back in the day, pollution and consumption were once considered to be the inevitable costs of doing business for companies. Unfortunately, we might attribute today’s current climate crisis as a consequence of that outdated line of reasoning. As environmental issues continue to grow on a global scale, it is important now more than ever for companies to be aware of their impact on the environment. Many businesses and companies have directed their efforts towards addressing environmental issues. Environmentally responsible and conscious companies need to take stock of their processes and willingly do what they can to reduce their carbon footprint and environmental impact. 

This is particularly true when it comes to waste disposal and sustainable resource consumption. After all, global warming is very real, and it is a threat—and corporations largely contribute to this global challenge.Today’s consumers are aware of this and would hold companies accountable for their actions. That said, many consumers would want to see companies take responsibility and have an actionable plan to address these problems. 

Similarly, some companies have taken a more proactive approach in addressing these issues by partnering with environmental organizations such as One to Tree. RAFI One to Tree was born out of the goal aims to slow down the effects of harmful environmental practices and revive biodiversity in the country. Primarily, our goal is to grow native trees for a more sustainable future. To do this, they partner with businesses and communities to offer community-based and environmentally appropriate native tree growing services to assist in restoring forest cover.

2.) Ethical Responsibility 

Ethical responsibility focuses on those involved in the business—from the top heads leadership down to the employees and customers. It ensures that everyone receives fair treatment. Typically, ethical responsibilities are self-enforced initiatives that companies should put in place because they believe it is the morally correct thing to do rather than out of any obligation. That said, ethically responsible companies consider how their stakeholders will be affected by their activity and work on a plan to have the most positive impact. Primarily, companies focus on their economic and legal responsibilities, but they must also consider their ethical responsibilities, which are intended to provide ethical and fair treatment for all employees. A good example of this is offering jobs to those who would otherwise struggle to find work, paying fair and livable higher wages, and ensuring that safe working conditions are maintained in factories. 

Ethically responsible companies consider every level of the supply chain, including those who may be working outside of the business. As an example, this type of CSR program might be put in place to ensure that the people supplying the products for their company receive fair treatment. While these kinds of policies may take more effort to create and enforce, they ensure that shareholders, stakeholders, employees, and customers are treated with dignity and respect.

3.) Human Rights Responsibility

A company’s human rights responsibility is to ensure that they are enacting fair labor practices. This means establishing fair trade practices and condemning child labor. While there are laws enacted to prevent any unfair labor practices by unions and employers, issues arising from unequal pay and the like still go unanswered on a large scale. That said, companies should be humanely responsible. Employees are the core of a company, and it is the belief of many consumers that good company leadership means treating employees fairly. 

Apart from ensuring that they are humanely responsible, companies should also take into account whether the companies they are in business with are also taking human rights responsibility seriously—especially when it comes to child labor. 

4.) Philanthropic Responsibility 

This type of CSR typically involves making investments in the local community. It can be for educational programs, health initiatives, scholarship programs or anything that supports notable causes in general. Companies should view the people in their community as more than a source of revenue and understand the pivotal role they play in their success.Today’s modern consumers want to know that companies care about them outside of the cash they spend. 

As a result, corporations choose to donate money to causes that are meant to effect social change. Many may choose to attach their brand to the cause, while some may choose to remain anonymous—either of which is just as noble.

5.) Economic Responsibility 

Plainly speaking, companies that do not make money do not remain in business. However, companies should be mindful enough that their profits do should not come at the expense of ethics. While unethical practices can benefit the company in the short term, long-term effects can have a negative impact and may even be disastrous. Economic responsibility should include finding and implementing only the most efficient practices for minimizing the possibility of wasted capital. For many companies, this would mean implementing a new manufacturing process that improves efficiency or investing in new equipment. 

IN CONCLUSION 

At times, doing the right thing can mean a long, winding, and difficult road towards success. Indeed, short-term corporate profits can be achieved possible through unethical and irresponsible means. However, while this may satisfy a company’s short-term goals, unscrupulous business practices can hurt its reputation. By today’s standards, a strong reputation is necessary for sustainability. It may be a little costly to do the right thing, but a staunch commitment and advocacy for social responsibility can build brand equity that can withstand the test of time. 

By balancing profit considerations with ethical guidelines, companies can make win-win decisions that help a company succeed while also making a positive impact on the community and, eventually, the world. 

RAFI One to Tree can partner to help your company’s CSR efforts and mitigate its environmental impact. If you would like to learn more about partnering with us, send us an inquiry through the “Contact Us” page.