Before we get into the definition of CSR, let’s start with a simple break down of the words in the term Corporate Social Responsibility:
Corporate : Business
Social : The community and the environment
Responsibility : What you need to do to play your part
Many people use the terms Social Responsibility, Corporate Citizenship and Corporate Social Responsibility interchangeably (as though they mean the same thing), but it does help to differentiate between the three.
1.1 What is Social Responsibility?
Each person and business has a responsibility towards the society they live in; we have to take care of our communities and the environment. We can call that the social responsibly of the person or business.
In business, social responsibility is therefore the idea that businesses must strike a balance between earning profits and benefiting society as a whole.
1.2 Corporate Citizenship
We hold businesses responsible for their actions because we consider them to be citizens of our society.
What is citizenship?
Citizenship: The status of being recognised as a member of a particular country or society, which comes with rights and responsibilities. – Miriam Webster
What is Corporate Citizenship then?
Corporate Citizenship is the idea that a company is a citizen and therefore has roles and responsibilities to perform in society.
In order to be seen as good “corporate citizens”, organisations include strategies within their business models that contribute positively towards the societies (people and the environment) they operate in.
Corporate Citizenship describes a company’s role and responsibilities towards society. As good corporate citizens, companies should accept that they are collectively responsible, together with the government and other entities, for their local community and the environment. They must honour this as an essential part of their core business. – (Bounds 2018: 128)
What is Corporate Social Responsibility?
Corporate Social Responsibility (CSR) refers to strategies that organisations include within their business models, which enable them to benefit society while growing their market share.
This can be done through philanthropy (donating money, time or goods) or development programs, like teaching computer skills to people in rural areas. It could also be something that benefits the natural environment, like recycling programs.
Sustainability is an important term in CSR; it refers to the ability to continue something for a long period of time. When a company designs its CSR program, it should be in such a way that it can run for extended periods of time. Sustainability also means that a company should take care of its surroundings so that it can operate there for extended period of time, without depleting the available resources.
Sustainability focuses on meeting the needs of the present without compromising the ability of future generations to meet their needs. The concept of sustainability is composed of three pillars: economic, environmental, and social—also known informally as profits, planet, and people. – Investopedia
The concept of corporate social responsibility, that businesses should both self-regulate and benefit their communities, goes back to before the 1800s. In America, at the time, states had the right to invalidate a business’s license to operate should the business act irresponsibly.
Shortly thereafter, in 1819, the Supreme Court ruling that corporations were legal persons (citizens) protected by the Constitution negated that right. This elevated the concept of corporations being “good citizens” to a voluntary level.
So if being a good corporate citizen is voluntary, and presumably costly, why would any corporation choose to do so? The answer is a fairly simple one: It’s good business.
From Google to Ben & Jerry’s, some of the world’s largest and most profitable corporations have integrated measures to promote good corporate citizenship into their mission statements and business models. And it is paying off.
… You don’t have to be a Google-size company to benefit from being green and practicing corporate social responsibility. Installing energy-efficient lights, allowing telecommuting, and recycling will not only improve your world, it will result in quantifiable cost savings that you can see in the bottom line.
Other Articles Related to This
To read the other articles related to social responsibility, you can click on the following links:
- What is the Triple Bottom Line in CSR? 3Ps Simply Explained
- Definition of Corporate Social Investment: CSI vs CSR
- Describe the Differences Between CSR and CSI
- 6 Examples of Stakeholders and Their Importance in Business
- Name 5 Components of Corporate Social Responsibility (CSR)
Are you ready to test your understanding of the concepts of CSR, Social Responsibility and Corporate Citizenship?
Download the flash cards below and practice with others. You will find more on my Facebook page. Share them with your friends and test each other online.
Your own answers might be slightly different. For example, you might give a definition of CSR which is not exactly like what is written here. That’s fine. In fact, it’s great if you can explain it in your own words. What’s most important, is that you get the basic idea of each content, and are able to explain it to someone else.
Bounds, M., 2018. Focus Business Studies Grade 12 Learner’s Book. 14th ed. Cape Town: Maskew Miller Longman.
Grant, M. 2020. Sustainability. Investopedia. https://www.investopedia.com/terms/s/sustainability.asp
Miriam Webster Dictionary. citizenship, https://dictionary.cambridge.org/dictionary/english/citizenship
Moreno, C. 2015. Doing Their Part: 3 Excellent Examples of Corporate Social Responsibility. Autodesk. https://www.autodesk.com/redshift/doing-their-part-3-excellent-examples-of-corporate-social-responsibility/