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Last updated October 4, 2021

CSR 101: What is Corporate Social Responsibility in 2021?

Join 100s of companies powering their CSR programs to offer volunteering & giving opportunities to their employees, track and report on their efforts.

Corporate Social Responsibility (CSR) is a business initiative that can result in positive outcomes for employees, employers, and many good causes across the globe. Done well, CSR can drastically improve how your business is perceived, engaged with, and help your company’s broader mission and vision.

In this post, we’ll explore the ins and outs of CSR. We’ll dive into CSR history, share an overview of the different types of CSR, and we’ll explore the benefits of Corporate Social Responsibility initiatives— some of which may surprise you. We’ll wrap up the article with some FAQs.

Our first in our back-to-basics series, this article is to help guide you towards defining a CSR strategy that fits with your business and equipping your efforts with the tools and knowledge to win support from internal stakeholders.

What is Corporate Social Responsibility?

CSR covers companies’ practices to be responsible corporate citizens for their shareholders, employees, customers, communities, and society at large. Corporate social responsibility is about acting for profit, people, and the planet—the so-called triple bottom line.

With corporate social responsibility initiatives, companies consider not just shareholders, but all of their stakeholders in the way they operate – including economic, social, and environmental aspects of their business.

The history of CSR

Over the years, a number of organizations have defined CSR, from the United Nations, the European Union, to the International Organization for Standardization (ISO).

As the importance of sustainability and sustainable development have grown and these terms are sometimes used interchangeably with corporate social responsibility. The emergence of shared value creation or ESG (environmental, social & governance) also overlap with CSR, but speaks to different audiences like academics, governments, or investors. 

Movements like the UN Sustainable Development GoalsB Corporations, and the UN Global Compact are driving the CSR agenda forward, moving CSR to the forefront of a company’s strategy.

While there are differences, they all embody the same principles and aim to CSR companies and socially responsible business practices.

Socially responsible organizations can be traced back to the mid-to-late 1800s and came hand-in-hand with philanthropy efforts and worker wellbeing in factories throughout the industrial revolution. 

However, corporate responsibility really settled into its own in the early 1950s with the American economist, Howard Bowen. Bowen published Social Responsibilities of the Businessman, and businesses began to take note of how they need to look after staff, their communities, and their philanthropic responsibility. 

What is Corporate Social Responsibility?

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After this, the American Committee for Economic Development formed a ‘social contract’ for emerging businesses in the 1970s— a big step towards popularising the initiative and CSR programs.

Jumping forward a few decades more, authors and professors from Harvard business school and other reputable places began to write more heavily on corporate responsibility, dictating the way for businesses to be more conscious of their people and environments.

Today, corporate social responsibility sits as a must-have strategy for every business and cuts across the entire business, from its supply chain to the employee experience to end consumers and their social or environmental benefits. Despite it originating to lead businesses ethically, it now provides many more benefits that depend on various CSR strategies implemented.

Any business can implement a CSR strategy; it’s not something that only corporate giants can handle. The truth is, managed well, even the smallest of companies can create a positive impact.

What’s the difference between Corporate Social Responsibility (CSR) and Environment, Social, Governance (ESG)?

Corporate Social Responsibility (CSR) is the qualitative implementation of positive impact initiatives. It encompasses the company’s mission when it comes to social responsibility and reports on how that affects things like employee sentiment or brand reputation with customers. CSR strategies keep employees, stakeholders, shareholders, and customers in the loop on the business’s do-good efforts.

ESG, on the other hand, reports on the quantitative metrics that determine if a company’s CSR initiatives are on track and successful. For example, an Environment, Social, Governance (ESG) metric is often numerical and measurable.

To pin it down, a company’s CSR initiative may be to reduce single-use plastics in the workplace. ESG criteria on this initiative could be the company has cut down single-use plastics by 50% in one year, and 80% of the workforce are now plastic-free.

Why is CSR important?

To some extent, we were all responsible—and still are—for positively affecting the world and the social or environmental challenges it presents. Although today, consumers feel the heat more than ever. The recently coined “eco-anxiety” is flooding social media feeds thanks to influencing characters like Greta Thunberg and Lauren Singer encouraging socially responsible behavior. 

What is Corporate Social Responsibility?

Carbon Footprint Activist: Greta Thunberg

Eco-anxiety has encouraged younger generations to live more aware of their environmental impact and social responsibility to better the world, and now they’re looking to their employers to help them get there. 

Yet, it doesn’t stop there. CSR is not only crucial for our planet and its people’s environmental sustainability, but it’s essential for our economy as well.

An efficient corporate responsibility initiative has the power to increase employee engagement. Companies with higher levels of engagement are 22% more productive and can create a 50% higher revenue per employee. There’s no wonder all businesses are looking to tie corporate social responsibility into their business model and business strategies.

Employees today want to do more than work for a company; they want to work with a company and for a larger purpose.

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Different types of Corporate Social Responsibility initiatives

There are many different areas of corporate social responsibility that are formalized by business CSR programs. A few examples of areas these programs help to address are:

  • Increasing social responsibility
  • Eradicating child labor
  • Creating free educational services
  • Initiating fair trade practices in supply chains
  • Promoting environmental responsibility
  • Sponsoring local events
  • Using sustainable resources
  • Minimizing business travel’s environmental impact

Of course, these are just a select few impacts a business corporate social responsibility program can have. Let’s explore what some of these programs actually look like.

Employee volunteering programs

Volunteering programs include on and offline activities. Team members can volunteer themselves for manual labor to nonprofit organizations in the local community, or volunteer their skill sets to help less fortunate people thrive.

This type of program promotes corporate citizenship, corporate governance, and can help a nonprofit on operational cost savings.

Corporate giving programs

Also known as corporate philanthropy. Giving programs include charitable donations of cash, services, or goods. They can also include setting up corporate foundations, and often perform best if the charity is close to the business mission or a particular team member.

This type of financial assistance for an NGO can be exactly what they need to survive through tougher times.

Sustainability initiatives

This type of CSR includes the practice of a business running as environmentally conscious as possible. This can consist of finding a plastic-free goods supply chain, meat-free lunches, recycling, and sustainable development; there are many options.

Employee wellbeing, diversity & inclusion

CSR is about looking after many different communities, and employees are a community themselves, sitting directly under a company’s roof. This CSR area can drastically improve an employee’s experience, which in turn affects a customer’s perspective on the company, talent retention, and even bottom-line ROI. Although employee wellbeing has discovered a recent tie with CSR, it was long overdue. 

74% of Gen Z workers believe work should contribute more to their lives than a paycheck, and they’re looking at CSR when considering their next employer.

Employee wellbeing has several key areas:

1. Physical — Yoga, gym classes, pedal bikes for office commutes, “a healthy body is a healthy mind” mentality.

2. Social & community — Activities like buddy systems, staff retreats, culturally inspired meet-ups, fostering genuine connections among team members. Highlighting exemplary team members, remote work options, book clubs, acts of building community through goodness. This builds a sense of belonging in a workforce, and focuses on including diverse groups of people under one mission.

3. Mental — Mental health awareness, access to psychologists and health care, counseling, meditation.

4. Financial — Study-support, financial planning advice, and home-office stipends also fall under CSR activities.

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Benefits of CSR initiatives

Customer & employee loyalty 

Loyalty is hard to build today but can be highly rewarding. CSR initiatives allow people to witness your business’s kindness and consistency; two factors helping build trust and loyalty. 

Bottom line financials

It’s not just staff engagement and retention that adds to a more financially valuable company by using CSR. A study from 191 sample firms listed on the Korea exchange showed a positive correlation between a firm’s financials and business value alongside Corporate Social Responsibility efforts.

Research also shows a standard deviation increase in a customer-facing CSR score leads to “an increase in the economic value of innovation by about 10% of its sample mean.”

Local and global impact

We touched on it earlier, but the global impact your business can make on the world will always be welcomed, little or large. 

Mission & vision alignment 

Strategically considered CSR initiatives can radically help your business align with its mission and vision. It doesn’t always have to come from your product; a good CSR initiative can be the solution to bringing purpose to the workplace, creating a shared initiative in line with the employer’s and employee’s values. 

Partnership, external relations & press opportunities

If you’re in a saturated market and are often struggling to get press traction with your product, consider ways to get positive attention via your operations. CSR is a way to promote who you are and what you do with acts of goodness. 

Unique selling points 

Whether it gives your employer branding a USP or your product a USP, a strong CSR strategy can help your business stand out from the competition. 

Corporate Social Responsibilility FAQs

How to measure corporate social responsibility (CSR) success?

Corporate social responsibility (CSR) can be measured the following ways:
Benchmark your results against competition or top performers
Set calendar goals and KPIs
Measure the qualitative effect of a CSR campaign with an employee feedback loop
Use digital tools and platforms to evaluate the success of your campaign
Analyze other business variables: staff retention, audience size, and sentiment
Bottom-line financials and company value, etc.

What are some example KPIs to measure corporate social responsibility (CSR) success?

Ever CSR business model needs to incorporate the following KPIs:
Higher employee engagement rates
Higher employee retention rates
Increased online brand sentiment
Lower customer churn rate
Increase in brand organic searches
Increase in employee satisfaction

Who manages a corporate social responsibility (CSR) program?

Many companies have a specific CSR department, whereas others rely on Human Resources teams or location-specific Office Managers. It can also be a responsibility of marketing or communications departments, depending on what the business hopes to achieve with its CSR initiatives. 
A CSR program certainly needs a manager to head up the business model. No matter whether you choose to use a digital platform like Alaya to handle your initiatives or not, the project itself is best managed by someone that has a good overview of all teams and people. 

What does a successful corporate social responsibility (CSR) program look like?

Every CSR program will have different key performance indicators. What’s important is that you establish what they are from the start. 
Perhaps you’re looking to retain talent, keep employees engaged, receive more positive brand sentiment, or want an increase in brand name searches; the list is long. Establish what goals you’re after and make sure you hit them.

How can corporate social responsibility (CSR) impact company bottom-line financials?

Increased bottom-line is mainly because of lower financing costs due to better innovation, competitive differentiation leading to more customers, greater employee engagement and productivity, and reduced recruitment costs due to staff retention and employee referrals. 

Wrapping it all up

Old-school Corporate Social Responsibility can be time-consuming, but it can be so much more efficient if you’re willing to adopt the right technology to help your team work. Plus, it’s something that all employees are looking for in their employers and something that business owners need to seriously consider if they hope to win genuine loyalty and respect from future talent. 

CSR has proven to increase employee engagement, performance, and even bottom-line revenue per team member for many companies. Numbers aside, it’s also proving to better our world. If you have the time and talent to incorporate CSR in your business growth, then there’s no time like the present to dive right in and help start making the world a better place, one act at a time.