Corporate Social Responsibility (CSR) is an “organisation’s obligation to maximize positive stakeholder benefits while minimizing the negative effects of its actions.”

It is the idea that businesses and other organisations occupy a significant space in society and that responsibilities are not owed only to shareholders.

The basic element of Corporate Social Responsibility (CSR)

  • Staff development via training and education
  • Equal opportunities statements
  • Written anti-discrimination policies
  • Commitment to reporting on Corporate Social Responsibility (CSR)
  • Policies for restricting the use of child labour by suppliers
  • Commitment to the protection of the local community.

Obviously laws must be obeyed (for example on employee safety and welfare), but proponents of Corporate Social Responsibility (CSR) go further and say that organisations should go further than prescribed by law so that they become good corporate citizens.

For example:

  • Release less pollution and greenhouse gasses than permitted so that the local population and world resources are safeguarded.
  • Offer enhanced welfare and training opportunities to employees.
  • Support local charities.

Merits of Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) is claimed to offer the following advantages to businesses, all of which might lead to profit increases:

  • Goodwill and reputational improvements
  • Brand strengthening and protection
  • Differentiation so as to attract particular customers, talented employees and high-class collaborators.
  • Lower costs e.g. saving energy, less waste.

Corporate Social Responsibility Stances

These refer to the approaches that organisations take to CSR. Different organisations take very different stances on social responsibility, and their different stances will be reflected in how they manage such responsibilities.

JSW identify four CSR stances, these include:

  1. Laissez Fair Stance – Short-term shareholder interest:
    Limit ethical stance to taking responsibility for short-term shareholder interest on the grounds that it is for government alone to impose wider constraints on corporate governance. It is a minimalist approach to respond to the demands of the law but would not undertake to comply with any less substantial rules of conduct. The ground here would be that going beyond it can challenge government authority.
  2. Enlightened self- interest – Long-term shareholder interest:
    A wider view of ethical responsibilities enhances the organization’s image. The cost of undertaking such responsibilities may be justified as essentially promotional expenditure. This can prevent a build-up of social and political pressure for legal regulation
  3. Multiple stakeholder obligations:
    Accepts the legitimacy of stakeholders other than shareholders and build those expectations into its stated purpose.
  4. Shaper of society:
    Largely the concern of public sector organizations and charities. Accepts a wide responsibility to stakeholders.

Limits of corporate social responsibility:

Milton Friedman argued against CSR on the basis that There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.”  That’s

  • Businesses do not have responsibilities, only people have responsibilities. Managers in charge of corporations are responsible to the owners of the business, by whom they are employed.
  • These employers may have charity as their aim, but generally, their aim is to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical customs.
  • When management as according to the definition of CSR, it means they act in some way that is not in the interest of the employee (shareholders).
  • If management undertakes any CSR, then they are generally spending the employer’s money on purposes other than those they have been authorized.

A second argument against CSR is that maximization of wealth is the best way that society can benefit from a business’s activities. That’s

  • Maximizing of wealth has the effect of increasing the tax revenue available to the state to disburse on socially desirable objectives.
  • Maximising shareholder value has a ‘trickle-down’ effect on the other disadvantaged members of society.
  • Many company shares are owned by pension funds, whose ultimate beneficiaries may not be the wealthy anyway.
  • Approaches to Social Responsibility
Proactive strategy A strategy which a business follows where it is prepared to take full responsibility for its actions. A company which discovers a fault in a product and recalls the product without being forced to, before, before any injury or damage is caused, acts in a proactive way.
Reactive strategy This involves allowing a situation to continue unresolved until the public, government or consumer groups find out about it.
Defence strategy This involves minimizing or attempting to avoid additional obligations arising from a particular problem.
Accommodation strategy This approach involves taking responsibility for actions, probably when one of the following happens:

  • Encouragement from special interest group
  • The perception that a failure to act will result in government intervention.


Sustainability reporting has emerged as a common practice of 21st-century business. Where once sustainability disclosure was the province of a few unusually green or community-oriented companies, today it is a best practice employed by companies worldwide.

Sustainability: Involves developing strategies so that the company only uses resources at a rate that allows them to be replenished such that the needs of the current generation can be met without compromising the needs of future generations. At the same time, emissions of waste are confined to levels that do not exceed the capacity of the environment to absorb them.

The triple bottom line (TBL) is sometimes summarized as People, Planet, and Profit. It consists of:

  • Social justice: fair and beneficial business practices towards labour and the community and the region in which a corporation conducts its business. A TBL company conceives a reciprocal social structure in which the wellbeing of corporate, labour and other stakeholders’ interests is interdependent.
  • Environmental quality: a TBL company endeavours to benefit the natural order as much as possible, or at the least do no harm and curtail environmental impact.

In this way, the company tries to reduce its ecological footprint by, among other things, carefully managing its consumption of energy and non-renewable resources, and by reducing manufacturing waste, as well as rendering waste less toxic before disposing of it in a safe and legal manner.

  • Economic prosperity: the economic benefit enjoyed by the host society. It is the lasting economic impact the organisation has on its economic environment.

Importantly, however, this is not as narrow as the internal profit made by a company or organisation.

A focus on sustainability helps organizations manage their social and environmental impacts and improve operating efficiency and natural resource stewardship, and it remains a vital component of shareholder, employee, and stakeholder relations.

Sustainability reporting requires companies to gather information about processes and impacts that they may not have measured before. This new data, in addition to creating greater transparency about firm performance, can provide firms with the knowledge necessary to reduce their use of natural resources, increase efficiency and improve their operational performance.

 The Value of Sustainability Reporting

Sustainability disclosure can serve as a differentiator in competitive industries and foster investor confidence, trust and employee loyalty. Analysts often consider a company’s sustainability disclosures in their assessment of management quality and efficiency, and reporting may provide firms with better access to capital.

The benefits of reporting include:

  • Better reputation
  • Meeting the expectations of employees
  • Improved access to capital
  • Increased efficiency and waste reduction

A sustainability report is an organizational report that gives information about economic, environmental, social and governance performance.

 Other reads

Building A Business, Wikipedia,