Corporate Social Responsibility (CSR) requires a company to take responsibility for the impact of its operations on society and the environment therefore it can be described as the efforts a company makes beyond the legal requirements to improve society as well as the environment.
According to a 2016 study involving CEOs, over 65% of the CEOs who took part in the study, said that companies are increasingly treating CSR as a core aspect of business rather than a stand-alone side channel.
The Harvard Business Review recommends a number of approaches to engage in CSR:
#1 Transform the business model
This entails creating new forms of business to address the environmental or social issues with the aim of boosting business performance. A good example of this is hiring locals to help in the distribution of products instead of outsourcing that service to another company. By doing so, a company would be able to lower its operating costs, create employment opportunities for the locals and ultimately help grow the local economy.
#2 Improving operational effectiveness
These are the efforts geared towards boosting the functional performance of a business. For this reason, they optimize a company’s operations and in the process deliver social and environmental benefits as well. Examples of such efforts include green initiatives that not only help a company conserve natural resources, reduce pollution and waste, but also reduce its operating costs.
#3 Engaging in philanthropy
Philanthropy initiatives should not aim to boost a company’s profits or improve its performance. Instead, they should aim to benefit local community programs and charities. In most cases, such initiatives involve donating money or other assets to charities and other community programs.
Below is an Infographic from Norwich University Online explaining how consumers are more passionate about global social issues and would consider a company’s CSR efforts before buying its stocks or mutual funds. It also provides recommendations for how to improve engagement in CSR.
