What is Corporate Social Responsibility?
As the interest in sustainability topic grows, so does the number of definitions and terms. This article aims to compile all the questions I was Googling in late hours after my day-to-day tasks back in the day. Corporate Social Responsibility or CSR is a complex concept. I can only hope that after reading this article, it will become something you understand and can explain to your colleagues.
Key definitions
Below are listed some of the key terms used to describe business efforts to “do the right thing”. No one approach fits every business, so I will do my best to clarify the differences between these terms.
Corporate Social Responsibility
Done well is just good business. A company’s Corporate Social Responsibility (CSR) consists of a strategy, program, and specific activities for using the power of business to create a better world. CSR usually is a voluntary activity and its strategic activities usually cover several of the “weak” points of a company.
A couple of examples:
If a company is in the plastic bottle (aka bottled water) business, their CSR might be supporting education on waste management in their home country or protecting local rivers.
Whirlpool who's selling home appliances. Their CSR's cornerstone is to provide energy-saving appliances to communities in need.
One of the key angles of Shopify's CSR strategy is to empower more people to launch their businesses and create a living for themselves.
Sustainability
It’s the ability to meet the current needs without compromising the ability of future generations to meet their own needs. Sustainability in the business context refers to a minimal negative and possibly a positive effect from a company's operations. A sustainable company would generate profit for its stakeholders and benefit the local environment, community, society, or economy.
The challenge is that the terms and definitions don’t end here. Let's review a couple more that interconnect with the two covered above.
ESG reporting
It’s a process during which a company publishes a report about environmental, social, and governance (ESG) impacts the business has. For some large, public-facing companies, like banks, ESG reporting is mandatory. In EU regulation, their reports have to disclose the following aspects as a minimum:
environmental matters
social matters and treatment of employees
respect for human rights
anti-corruption and bribery
diversity on company boards (age, gender, educational and professional background) (Source).
Many companies to whom ESG reporting is not mandatory also create reports. In these reports, the company would usually recap its Corporate Social Responsibility project progress. In this case, the company chooses which information to share. For a report to be truly trustworthy, it should be audited by a third party.
Green, clean and eco-friendly
… are terms used interchangeably with sustainable. Whenever any of these terms come up, I try to understand what the company means by that. In the perfect world, a company should always link to a resource where anyone can read more about why the specific product or service is “green.”
“In reality, the regulation is almost non-existent. Companies choose a term that has the best SEO ranking and calls it a day.”
This creates an environment where greenwashing is very common. The only way to overcome this is by educating ourselves - making sure we don't get greenwashed by companies and we don't contribute to this ourselves. Hope this helps!
