Understanding Corporate Social Responsibility

What is corporate social responsibility?

The term corporate social responsibility (CSR) was once a buzz word among 

environmental and socially-focused circles, but it has now become ingrained in modern day business lingo. Nowadays, CSR has come to be understood as a company’s duty to take care of the “triple bottom line”:

  • People: the benefits of the company’s business practices – such as low pollution levels –  extend not just to shareholders and employees, but also to the communities, countries, and regions in which the company operates
  • Planet: the company strives to limit its environmental impact, such as reducing its waste or purchasing carbon offsets
  • Profit: the company generates economic value not just for internal benefit, but for society in general, such as job creation  

Due to the diverse nature of our world, no “one size fits all” CSR solution exists. CSR comes in several forms:[1]

  • Philanthropy: companies engage in activities such as providing grants for groups addressing a social/environmental issue that is important to the company; donating products for in-kind giving; sponsoring events run by charity partners; matching employee donations
  • Business practices: companies use socially responsible business practices such as fair trade, no animal testing, local sourcing, diversity, and workplace safety
  • Products: companies invest in research to create products that are organic, use less packaging, made of recycled goods, or uses less energy than comparable products


Why is CSR an important part of today’s corporate landscape?

The concept of CSR has evolved from describing a company’s occasional philanthropic effort to now being a key strategic priority for companies of all sizes. Why? Take a moment to let these statistics sink in:

  • Nine out of 10 consumers expect companies to make a profit while also employing responsible business practices and working on social and environmental issues[2]
  • 66% of global consumers in 2015 were willing to pay more for sustainable goods (up from 55% in 2014)[3]
  • 53% of employees said that a “job where I can make an impact” is important to their happiness; 73% of students about to graduate agreed with that same statement[4]
  • 32% of employees would seriously consider leaving their job if their company gave no / little money to charity, and 65% would seriously consider leaving their job if their company harmed the environment[5]

Essentially, the socially-conscientious consumer market segment is growing. Aided by social media, consumers are pushing companies to be more ethical and transparent in their business practices; one viral video can either boost or significantly damage a company’s reputation. One can also see that employees are becoming more socially-conscientious as well and want to make sure that they work for a company that shares their values and facilitates ways for them to make an impact. To attract the best talent, companies need to offer the best benefits, including employee volunteer opportunities, sponsorships, and matching gifts.


Two of a company’s greatest assets are their customers and their employees. Companies would be wise to listen to them and embrace CSR as a strategic priority. Take Patagonia for example, which has engaged in socially responsible business practices since the 1970s. Patagonia is a CSR pioneer, first donating profits to grassroots environmental efforts and sponsoring environmental and conservation campaigns, and then reducing energy and using organic cotton.[6]  Today, more companies are following suite: 64% of CEOs say that “corporate social responsibility (CSR) is core to their business rather than being a stand-alone program.”[7]


How do companies benefit?

Numerous reports focus on how CSR is a good public relations opportunity and increases media coverage for the company. While those are true benefits, they are more impactful, meaningful benefits for companies to experience:

  1. Better financial performance: According to a 2015 study, organizations that had a genuine commitment to CSR substantially outperformed those that did not, with an average return on assets 19 times higher.[8]
  2. Discovery of new products/solutions: Integrating CSR means looking at conducting business in a new way. Thinking and acting in a new way can lead to new opportunities. For example, as part of its sustainability efforts, Unilever created a new hair conditioner that uses less water.[9]
  3. Build new or strengthen current markets: CSR activities can lead a company to new geographies. Many companies, such as Microsoft and Coca-Cola have expanded operations globally. By entering into new markets, they help make an impact by increasing access to technology and improving infrastructure.
  4. Customer trust and loyalty: As noted above, customers are demanding more socially responsible products. If a company can show how it is more socially responsible than competitors, it can gain a strong and influential group of loyal customers.
  5. Dedicated, engaged employees: A majority of job seekers are searching for positions with companies that share their values. In this regard, employees see their position less as “just a job” and an opportunity to truly make an impact; thus, they are likely to stay in that position for quite some time (reducing recruitment costs for the company). Having a genuinely strong CSR presence and offering opportunities such as employee giving will also keep employees engaged.  


How does technology create more effective CSR initiatives?

Thanks to technology, CSR activities have become much easier to integrate into business operations. HR, CSR, or other responsible managers now have access to services like DonationXchange that not only customizes CSR activities to their company, but also helps:

  • Automate the process: forms such as grant applications can be created, sent, and reviewed/approved online, thereby increasing turnaround time and eliminating the risk of papers being lost
  • Improve communication: a CSR manager can save time by creating email templates and then make quick edits to personalize the messages to donors, grant recipients, and employees
  • Tracks and reports on key metrics: software can quickly create exportable reports so that companies can analyze and promptly relay performance to stakeholders
  • Facilitates employee engagement: replace paper sign-up sheets with personalized employee accounts; offering a simple solution can facilitate and improve employee volunteerism and employee giving


Build stronger communities inside and out through CSR programs managed by DonationXchange. Read more about our services and request a free demo.