A business’s measure of success goes beyond the bottom line. In today’s world, how a company gives back to its community, positively impacts the environment, and acts for the greater good—not just a greater profit—is critical. That’s where the corporate social responsibility of a business comes in. Show
What is corporate responsibility? Corporate social responsibility, also known as CSR, is the concept that a business has a responsibility to do good. CSR means that a company should self-regulate its actions and be socially accountable to its customers, stakeholders, and the world at large. But what does this really mean in practice? Read on to discover the four types of corporate social responsibility of business and how they look in action. Environmental ResponsibilityFor companies committed to CSR, it’s important for businesses to engage in environmentally friendly practices. Corporations can be significant contributors to greenhouse gas emissions, pollution, waste, and natural resource depletion—but by committing to environmental responsibility, a business takes ownership over its impact on the environment. Depending on a business’s size and industry, environmental responsibility can take many different forms. For some companies, it means using alternative energy sources and sustainable materials. For others, it means enacting a company-wide recycling program or donating to and volunteering for local environment-focused organizations. Ethical ResponsibilityBeing ethically responsible means ensuring a business engages in fair business practices across the board—including treating all employees, stakeholders, and customers ethically and with respect. This type of CSR can also take a lot of different forms. Some common examples of ethical responsibility include setting a higher minimum wage, guaranteeing all materials are ethically sourced, and ensuring that all employees receive competitive pay and comprehensive benefits as well as treated with respect. Philanthropic ResponsibilityIn today’s world, it’s almost expected for businesses to give back to the communities they exist in and donate to causes that align with their company mission. When businesses do this, they’re following through with their philanthropic responsibility. This philanthropic responsibility can be as small scale as sponsoring a local nonprofit’s annual fundraiser or as large-scale as donating a percentage of a business’s annual earnings to a prominent cause. Economic ResponsibilityWhen a business is acting with economic responsibility in mind, it is making financial decisions that prioritize doing good, not just making more money. This means that this type of CSR is intertwined with the other types above. For example, this could mean that a business signs a contract with a supplier that uses sustainable materials—even if it costs more. Another example of economic responsibility is when a company commits to a transparent salary system that fairly compensates all employees and makes up for past gender and race pay gaps. The Benefits of CSRWhen a business commits to socially responsible practices, it positively impacts its employee satisfaction and retention. It’s also great for brand identity because CSR initiatives help bolster customer trust and public respect. And, of course, the CSR initiatives themselves have a ripple effect of positive good. With every new sustainable business practice and every company committed to fair pay and ethical employee treatment, more positivity is brought into the world. Here at Pacific Oaks, we believe that the measure of a successful business goes beyond the profit that it makes. If you’re interested in becoming a business leader that drives innovation and socially responsible missions, explore Pacific Oaks College’s B.S. in Business Administration or its M.A. in Organizational Leadership and Management programs. Learn more about our Leadership Scholarship available to students in these programs. Learn more about Pacific Oaks CollegeIf you would like to learn more about the academic programs available at Pacific Oaks, fill out the form below to request more information, or you can apply today through our application portal. and business ethics, one framework has proven to stand the test of time—the pyramid of corporate social responsibility. This framework provides levels of responsibility that businesses can achieve as they grow and expand their sustainability practices. What is the Pyramid of Corporate Social Responsibility?Developed in 1979 by Archie Carroll, the pyramid of corporate social responsibility is a four-tier guide to self-regulation as it relates to the morals and ethics of business. The pyramid itself is split into four levels, ranging from the most vital base level to levels that businesses should strive for as they develop and grow as a company.
This is the base of the pyramid and is the responsibility of a business to stay profitable in order to continue existing. This is the base for all other responsibilities because if the business is not running, it can not accomplish the other levels.
This is the responsibility of a business to ensure that they are complying with the laws and regulations of the nation and/or location where they reside and do business. Following the regulations put in place by governing bodies to ensure fair and ethical business allows organizations to continue on the path towards overall corporate responsibility.
This tier implies that businesses should operate in a fair and ethical manner. This can include going above and beyond what is required by law and making changes that reflect ethical decision-making by the business as a whole.
This is the top tier of the pyramid and is a business’s effort to make a larger impact on their environment by creating a positive change in society and/or other non-self-serving areas. This can include donating to charities or putting an emphasis on sustainable business practices, for example. What are the 3 P’s?Also known as the Triple Bottom Line, the three P’s are the bottom-line measurement for the social and environmental impact of any given company. 1. People This refers not only to the employees of a company, but to the people of the society in which a company operates in and has an effect on, as well. Internally, HR should set rules and regulations which are in line with the standards of the company and the welfare of its employees. In the community in which the company operates, the business should keep in mind how they impact the people around them, whether that is the people who live near the physical building of the company or those who buy the company’s products. They should make ethical decisions regarding these people and the pollution they create—waste, noise, and otherwise. 2. Planet This refers to the planet Earth, the one on which all companies currently operate. Businesses should make ethical decisions in relation to their effects on the environment, positive or negative. When making business decisions, companies should attempt to minimize the harmful effects their business might have on the environment. They should also look to do good for the environment, such as using recycled materials, for example. 3. Profit In order for a company to succeed and continue to exist as a company, it must generate a profit. In the past, this has been the main, and often only, consideration for businesses. How can manufacturers incorporate corporate social responsibility (CSR) into their inventory management processes?There are many ways for a company to be socially responsible. Here are a few examples:
Greenwashing is when companies purposefully provide misleading information to consumers so they believe that the company is more environmentally friendly than it actually is. This can be harmful in many ways, including taking business away from actual green companies and instead putting it toward products that do more environmental harm.
Keeping the health and safety of employees in mind is vital to a sustainable business as well as talent retention. Ethical businesses are those that make employee wellness (both mental and physical) a top priority. In addition to maintaining strong morals, companies that take wellness into account will have more productive employees and retain talent as employees are more likely to enjoy being at that company.
By hiring employees that fit into the culture of sustainability, companies can build their social responsibility practices from the ground up. Some candidates may be more sustainably inclined, or more willing to learn, which for many ethical businesses may be a huge leg up on other candidates. By integrating the ideas of social responsibility into company culture, a stronger foundation will be set for future sustainability endeavors. LeanDNA helps manufacturers along the path to sustainability.Learn more about how LeanDNA can be used for developing a sustainable supply chain. Check it out FAQWhat is Corporate Social Responsibility (CSR)? The standard definition of corporate social responsibility is a form of self-regulation that businesses apply in order to be both sustainable and ethical in their business practices. The theory creates a framework for continuous development toward a more sustainable world. What is the Pyramid of Corporate Social Responsibility? Created in 1979 by Archie Carroll, the pyramid of corporate social responsibility includes four layers of responsibilities that a business can strive for and achieve in order to integrate ethics and sustainability into their business models. What are the 3 P’s? People, planet, profit. These are the basis for social and environmental responsibility by companies, as well as fair and ethical business practices. This all ties back into corporate social responsibility and the pyramid of corporate social responsibility. What is the Triple Bottom Line (TBL)? The triple bottom line is the three Ps—people, planet, and profit. What is greenwashing? Greenwashing is when a company claims its product or company is environmentally friendly in ways that it is actually not. This misleading information may take away business from companies who do apply sustainability practices to their products and may have an overall negative effect on the environment. What are the 4 levels of social responsibility?Corporate social responsibility is traditionally broken into four categories: environmental, philanthropic, ethical, and economic responsibility.
Who first presented the concept of social responsibility of a company?Although responsible companies had already existed for more than a century before, the term Corporate Social Responsibility was officially coined in 1953 by American economist Howard Bowen in his publication Social Responsibilities of the Businessman. As such, Bowen is often referred to as the father of CSR.
When did the 4 levels of corporate social responsibility organized?Then, in 1991, Archie B. Carroll simplified CSR into a four-part pyramid. Its simplicity, yet ability to describe the idea of CSR with four areas, has made the pyramid one of the most accepted corporate theories of CSR since.
What are the 4 responsibility of a business?The four main types of CSR are environmental responsibility, ethical responsibility, philanthropic responsibility and economic responsibility.
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