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Corporate social responsibility

Corporate social responsibility (CSR) or corporate social impact is a form of international private business self-regulation[1] which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in, with, or supporting professional service volunteering through pro bono programs, community development, administering monetary grants to non-profit organizations for the public benefit, or to conduct ethically oriented business and investment practices.[2][3] While once it was possible to describe CSR as an internal organizational policy or a corporate ethic strategy[4] similar to what is now known today as Environmental, Social, Governance (ESG); that time has passed as various companies have pledged to go beyond that or have been mandated or incentivized by governments to have a better impact on the surrounding community. In addition, national and international standards, laws, and business models have been developed to facilitate and incentivize this phenomenon. Various organizations have used their authority to push it beyond individual or industry-wide initiatives. In contrast, it has been considered a form of corporate self-regulation[5] for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels. Moreover, scholars and firms are using the term "creating shared value", an extension of corporate social responsibility, to explain ways of doing business in a socially responsible way while making profits (see the detailed review article of Menghwar and Daood, 2021).[6]

For broader coverage of this topic, see Environmental, Social, Governance.

Considered at the organisational level, CSR is generally understood as a strategic initiative that contributes to a brand's reputation.[7] As such, social responsibility initiatives must coherently align with and be integrated into a business model to be successful. With some models, a firm's implementation of CSR goes beyond compliance with regulatory requirements and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law".[8]


Furthermore, businesses may engage in CSR for strategic or ethical purposes. From a strategic perspective, CSR can contribute to firm profits, particularly if brands voluntarily self-report both the positive and negative outcomes of their endeavors.[9] In part, these benefits accrue by increasing positive public relations and high ethical standards to reduce business and legal risk by taking responsibility for corporate actions. CSR strategies encourage the company to make a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others.[10] From an ethical perspective, some businesses will adopt CSR policies and practices because of the ethical beliefs of senior management: for example, the CEO of outdoor-apparel company Patagonia, Inc. argues that harming the environment is ethically objectionable.[11]


Proponents argue that corporations increase long-term profits by operating with a CSR perspective, while critics argue that CSR distracts from businesses' economic role. A 2000 study compared existing econometric studies of the relationship between social and financial performance, concluding that the contradictory results of previous studies reporting positive, negative, and neutral financial impact were due to flawed empirical analysis and claimed when the study is properly specified, CSR has a neutral impact on financial outcomes.[12] Critics[13][14] have questioned the "lofty" and sometimes "unrealistic expectations" of CSR,[15] or observed that CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. In line with this critical perspective, political and sociological institutionalists became interested in CSR in the context of theories of globalization, neoliberalism, and late capitalism.

sees itself as a part of the system, not a completely individual economic actor concerned only about maximizing its profit,

recognises unsustainability (the destruction of the natural environment and the increase of social injustice) as the greatest challenge of our age,

accepts that businesses and enterprises have to work on solutions according to their economic weight,

honestly evaluates its weight and part in causing the problems (it is best to concentrate on 2–3 main problems),

takes essential steps – systematically, progressively, and focused – towards a more sustainable world.

Corporate philanthropy: company donations to charity, including cash, goods, and services, sometimes via a corporate foundation

Community : company-organized volunteer activities, sometimes while an employee receives pay for pro-bono work on behalf of a non-profit organization

volunteering

Socially-responsible business practices: ethically produced products that appeal to a customer segment

Cause promotions and : company-funded advocacy campaigns

activism

Cause-related marketing: donations to charity based on product sales

Corporate social marketing: company-funded behavior-change campaigns

's AA1000 standard, based on John Elkington's triple bottom line (3BL) reporting

AccountAbility

The Prince's Accounting for Sustainability Project's Connected Reporting Framework

[60]

The conducts audits based on its Workplace Code of Conduct and posts audit results on the FLA website.

Fair Labor Association

The verifies labour conditions in companies' supply chains using interdisciplinary auditing teams.

Fair Wear Foundation

's Sustainability Reporting Guidelines

Global Reporting Initiative

's Common Good Balance Sheet[61]

Economy for the Common Good

GoodCorporation's standard developed in association with the Institute of Business Ethics

[62]

Synergy Codethic 26000 Social Responsibility and Sustainability Commitment Management System (SRSCMS) Requirements—Ethical Business Best Practices of Organizations—the necessary management system elements to obtain a certifiable ethical commitment management system. The standard scheme has been built around ISO 26000 and UNCTAD Guidance on Good Practices in Corporate Governance. The standard applies to any organization.

[63]

Certification / Standard

Earthcheck

Social Accountability International's standard

SA8000

guidelines

Standard Ethics Aei

The environmental management standard

ISO 14000

The requires companies to communicate their progress[64] (or to produce a Communication on Progress, COP), and to describe the company's implementation of the Compact's ten universal principles.[65]

United Nations Global Compact

The Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) provides voluntary technical guidance on eco-efficiency indicators,[66] corporate responsibility reporting,[67] and corporate governance disclosure.[68]

United Nations

The publishes the FTSE4Good Index, an evaluation of CSR performance of companies.

FTSE Group

tracks the reputation of the world's largest companies on Environmental, Social, Governance (ESG), Corporate Social Responsibility, ethics, and sustainability.

EthicalQuote (CEQ)

The is a not-for-profit organization that leads the creation of the IRI framework; the guiding integrated CSR reporting framework based on Islamic principles and values.[69]

Islamic Reporting Initiative (IRI)

CSR/ policies

SRI

How such policies are implemented in practice

Results and management expectations

Enhancing the visibility of CSR and disseminating good practices

Improving and tracking levels of trust in business

Improving self- and co-regulation processes

Enhancing market reward for CSR

Improving company disclosure of social and environmental information

Further integrating CSR into education, training, and research

Emphasising the importance of national and sub-national CSR policies, and

Better aligning European and global approaches to CSR.

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(2011)[211]

United Nations Guiding Principles on Business and Human Rights

Guidelines for Multinational Enterprises (2011)[212]

OECD

Corporate Social Responsibility in India Magazine