Corporate social responsibility occurs when businesses look to have a positive social, environmental or cultural impact through their practices. It is a concept that is becoming increasingly visible. Businesses are ready to show the world they are conscious about social and environmental causes.

It’s important to know what exactly corporate social responsibility entails and how to avoid being a company that does it all for show.  

What Is Corporate Social Responsibility?

The practice of corporate social responsibility (CSR) refers to a company taking into account all of its stakeholders when operating and not just being focused on economic gain. A company that practices CSR looks for ways to have a positive impact on the outer environment and community. 

Put simply, you want to do good. This could include giving back to the community through volunteering, or tackling projects that respond to social justice issues. 

Not only is it great for your branding, but it’s also a rewarding experience for you and your employees. 

What Does It Mean To Take On Corporate Social Responsibility?

Taking on CSR can look different for all companies. The overarching principle is that it must benefit the wider community. A company that practices CSR can actively look to improve their environmental impact, practise positive ethics among employees and ensure their products are made and sourced from ethical practices that don’t harm individuals, communities or the environment. 

The definition of what constitutes CSR is rather broad, which is why there are so many ways to do it. 

Accountable To Shareholders

Shareholders may not be willing to invest their money into a company that does not have ethical practices. Taking this into consideration, companies have been demonstrating to shareholders their steps to have a positive impact on the community. Holding themselves accountable to shareholders is an increasing priority for companies.  

Give Back To Society

Another way CSR can be implemented is by being more involved in the community. Companies can team up with local charities or organisations to lend their support financially. This could be in the form of volunteering or using their platform to help promote their cause. 

If you’re an ecommerce business, your opportunities here are endless as you have more reach in the online world. 

Environmental Concerns

Our carbon footprint and investing in sustainable products is a constant concern for consumers, particularly in line with the current importance of climate change. As a way to help, consumers are looking to ensure their money goes towards products and services that are environmentally cautious. 

Companies have responded to this by taking steps such as packaging their products in recycled materials, using natural resources, using cruelty-free products, engaging in initiatives that plant trees or donating a portion of their profits to environmental causes. 

Workplace Ethics

Workplace ethics regulate the internal functions of the company to ensure employees are treated fairly and respectfully. It is not uncommon for workplace practices to come under fire. 

Companies have faced scrutiny for discriminating based on sexuality or race. Certain companies have chosen to engage in CSR by starting within the internal operations of their company. This can look like stricter regulations, more inclusivity and creating a safer environment, being open about salaries to ensure no one is making less for the same work. 

Why Should My Business Implement Corporate Social Responsibility?

There is growing evidence of interest in CSR.  A report by Harvard Business School noted that 77% of consumers were interested in businesses that committed themselves to being socially responsible and 73% of investors were more likely to be impressed by a company that practised CSR. 

CSR is an attractive quality for a business. It can lead to more investors wanting to be a part of your company’s vision and an increase in your customer base. 

The constantly changing market means that businesses need to keep up with what consumers want. It is evident that consumers and investors have demonstrated that they value CSR. Therefore, implementing CSR is not just about attracting customers and investors, it can also help keep your business relevant. 

It’s also a rewarding experience to know that your business is using its resources and platform to make change. 

Is This Like Setting Up A Charity Or Not-For-Profit?

No, a Charity and Not For Profit (NFP) business are two completely separate structures. 

CSR means an already standing business ensures their practices benefit their wider community somehow. However, it is not unheard of for a company to set up a charity or not for profit to be linked to their business. For example, McDonalds has a not for profit called the Ronald Mcdonald House Charities for terminally ill children. 

If you’re looking into setting up a separate charity or not for profit, our expert lawyers are happy to chat with you about the process. 

What Is Greenwashing?

As CSR gains traction, there are many companies who have attempted to implement CSR for the ‘look of it’ without their practices actually being ethical. This is known as greenwashing. 

This occurs when companies have exaggerated or misled consumers about their reduced negative environmental impacts in order to gain their favour. In other words, you’re giving the false impression that you’re ethical or sustainable for an ulterior motive. 

For instance, BMW claimed their i3 was an environmentally friendly car with zero emissions. This statement was proven to be untrue, bringing the company under global scrutiny. 

Clothing brands such as H&M and Zara have been accused of greenwashing by advertising sustainable practices or products while their companies’ mass production continues to be some of the biggest contributors to global carbon emissions and landfill waste. 

Prior to advertising your reduced carbon footprint, make sure you’re being truthful about your practices. 

What Businesses Actually Do Undertake Corporate Social Responsibility? 

Ben and Jerry’s is a widely known ice cream brand, but they have also shown commitment to CSR. They released a vegan ice cream range to reduce the use of dairy in their products. They have also been outspoken in their support for social causes such as Black Lives Matter and the Children’s Defence Fund. 

An example of CSR being practised within a company is Dan Price’s Gravity Payments. CEO Dan Price made global news when he decided to pay all his employees $70,000 by forgoing his own salary. Paying his employees above the average national wage for Amercians and still keeping his company in business, Gravity Payments demonstrated there’s no good reason to pay employees terrible wages. 

Where Do I Start?

CSR  can be implemented in a number of ways. As mentioned before, there is no strict definition so long as the purpose and intention is of benefit to the wider community or environment. CSR needs to come from a genuine place as consumers have been quick to call out companies whose sustainable marketing practices have contradicted their actual practices. 

CSR can start by ensuring your internal policies are treating your employees well, donating a portion of profits to a charity, volunteering, partnering with organisations that are charitable. It’s best to look at your own company structure and assess which kinds of CSR your business could readily get started on. 

Need Help? 

CSR  can be very beneficial for your company, however, it can be overwhelming to figure out how to get started. At Sprintlaw, our lawyers have expertise in not-for-profits and charities. We’ve helped a number of businesses meet their visions and would love to assist you with yours. 

If you would like to discuss how your company can have a more positive social, cultural or environmental impact you can reach our team of legal consultants at 1800 730 617 or for a free, no-obligations chat.

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