Corporate Social Responsibility

Practicing CSR is one of the most effective ways for an organization to be socially responsible. It can help corporations bring positive change and not only help the society but also help themselves in the process. In the current ever evolving market, corporate social responsibility can give a competitive edge to the corporations and studies have shown that consumers are will to be spend more on products that are developed or build by socially responsible corporations. 

Many multinational corporations opt for a strategic CSR rather than a traditional approach, which means that CSR can be seen in their day to day activities. They usually apply what is known as CSR filter to help them take more socially responsible decisions. Implementing strategic CSR has helped corporations to change the way society sees their business and has given them a positive brand image. In 1991, Archie B. Carroll recast the four basic requirements of CSR into a pyramid known as the Carroll’s CSR pyramid. This pyramid model suggest that an organization has social responsibilities that fall into four main categories i.e. economic, legal, ethical and philanthropic. For the good CSR strategy, the business must find ways to implement CSR practices around its core values and objectives. Supporting a cause that aligns with the organization’s expertise and at the same time falls under one of the CSR responsibilities (economic, legal, ethical or philanthropic) can really maximize the impact. Taking the example of the LEGO, their new bricks are made from 100% sustainably sourced sugarcane rather than conventional plastic use. The company is also working toward replacing all its products with sugarcane plastic by 2030, thus creating a big positive impact environmentally. A good CSR model requires corporate accountability which can only be achieved by embedding practices like corporate transparency and stakeholder orientations in daily operations of an organization. A good example of corporate transparency is an online shopping company called Zappos, which has an entire department Zappos insights, dedicated for handling stakeholder queries by sharing relevant company information and even organizing tours for vendors. Another key factor to address is the change in mind set from economic theory to stakeholder theory. Stakeholders need to be see strong commitment of the organization to stakeholder orientation and in some cases stakeholder democracy in order for them to comply with CSR threshold. These practices help an organization to understand what stakeholders care about as knowing their demands and aligning them with the organization’s mission will create a productive CSR strategy. Starbucks, the coffee giants with CSR practices like buying coffee at higher rate from their farmers, providing good customer service, treating their employees as partners and having discount campaigns for customers using their own mug due to environmental reasons, is one of the biggest names in corporations that practice stakeholder theory and has effective corporate governance.

Implementing strategic CSR requires continuous work as it becomes the way an organization does its business. It is important for the business to be authentic and don’t claim to care about something that they don’t really care about. A related incident was seen in 2015 when Volkswagen cars were found to be emitting up to 4000 percent more nitrogen oxide than the legal limit while claiming to be 90 percent more efficient by installing software on their cars to falsify the test results. Volkswagen was not only penalized $1.45 billion, their market reputation took a huge hit. Implementing CSR also requires to keep follow-up on practices and don’t let organization go astray from being socially responsible. Sometimes this trend of being socially responsible can force the organizations to practice greenwashing. It usually happens due to the market pressure to have environmentally or socially benefitting products and usually has disastrous outcomes as unethical practices rarely get unnoticed. To eliminate such consequences, organizations need to have good corporate governance as part of their CSR strategy. The corporate workflow should be in such a way that the goals of a manager, an employee, a stakeholder and the whole organization are in line with each other. This will result in a more streamline processes what will eventually make the organization a socially responsible business.