Until relatively recently, most large businesses had as their almost exclusive objective the increase of their market share and therefore the maximisation of their profits.

Over the last decades, however, more and more corporate and organisational managements have recognised that they have a social duty to do more than simply maximise profits for shareholders and increase executives’ remuneration. In other words, they have a social responsibility to do what is best not only for their companies, but for humanity, the planet and society as a whole.

This realisation led to the emergence of companies identified as socially responsible. Some even bear names or labels such as B Corporations (B Corps), social purpose corporations (SPC) and low-profit limited liability companies (L3Cs).

But what is corporate social responsibility and what are the different forms it can take?

WHAT IS CORPORATE SOCIAL RESPONSIBILITY?

Corporate social responsibility is the idea that a business has a responsibility towards the society in which it operates and to which it is addressed.

Companies that adopt practices compatible with and friendly to corporate social responsibility are usually organised in a way that enables them to act in a socially responsible manner. It is a form of self-regulation that can be expressed in a variety of initiatives or strategies, depending on an organisation’s objectives. Many organisations communicate these efforts to external and internal stakeholders through corporate social responsibility reports.

There are various examples of what ‘socially responsible’ means depending on the organisation and the sector of economic activity in which it operates. Businesses are often guided by a concept known as the triple bottom line, which states that a business must be committed to measuring its social and environmental impact, its actions for sustainable development and its profits.

TYPES OF CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility is traditionally divided into four categories: environmental, philanthropic, ethical and economic responsibility.

Environmental Responsibility

Environmental responsibility is the belief that organisations should behave in the most environmentally friendly way possible. It is one of the most common forms of corporate social responsibility. Some companies use the term ‘environmental management’ to refer to such initiatives.

Companies seeking to implement environmental responsibility can do so in various ways:

Limiting polluting practices : Reducing pollution, greenhouse gas emissions, limiting the use of single-use plastics, rational water use and waste management

Saving energy resources : Increasing the use of renewable energy sources, sustainable resources and recycled or partly recycled materials

Offsetting negative environmental impacts : Planting trees, funding environmental research and donating to related causes.

Ethical Responsibility

Ethical responsibility concerns ensuring that an organisation operates in a fair and ethical manner. Organisations that implement ethical responsibility policies aim to exercise ethical behaviour through fair treatment of all stakeholders, including leadership, investors, employees, suppliers and customers.

Companies can apply methods of ethical responsibility in alternative ways. For example, a business may set its own higher minimum wage if the one established by Greek law does not constitute a ‘living wage’. Similarly, a business may require products, ingredients, materials or components to be sourced in accordance with standards of free and lawful trade.

In this respect, many companies have procedures to ensure that they do not purchase products derived from slavery or child labour.

Philanthropic Responsibility

Philanthropic responsibility refers to a business’s aim, through its own means and actions, to shape the world and society in a better way.

In addition to acting ethically and in an environmentally friendly manner, organisations and companies driven by philanthropic responsibility often allocate part of their profits to related actions. While many companies make donations to charitable and non-profit organisations that align with their missions, others donate to worthy causes that are not directly related to their business. Others go so far as to create their own charitable organisation in order to give back with a positive impact on society.

Economic Responsibility

Economic responsibility is the practice of a business that grounds all its financial decisions in its commitment to contributing to society. The ultimate aim is not only the maximisation of profits, but also ensuring that business activities have a positive impact on the environment, people and society.

WHAT ARE THE BENEFITS OF CORPORATE SOCIAL RESPONSIBILITY?

Most companies embrace corporate social responsibility because of ethical beliefs, something that can lead to many benefits and significant social change.

Corporate social responsibility initiatives can, for example, be a powerful marketing tool, helping a company to promote itself in a positive way in the eyes of consumers, investors and regulators. These initiatives can also improve employee engagement and satisfaction – key measures that lead to consumer loyalty. They can even attract prospective employees who have strong personal beliefs that align with those of the organisation.

Finally, corporate social responsibility initiatives inherently compel business managements to examine employee recruitment and human resource management practices, where and how they source products or components and the steps they take to provide value to their customers.

These principles can often lead to innovative and pioneering solutions that help a company act in a socially responsible way while increasing profitability and achieving its objectives. For example, restructuring the production process so that a company consumes less energy and produces less waste enables it to become more environmentally friendly, while reducing energy and materials costs – value that can be recovered and shared with both suppliers and customers.