Corporate Social Responsibility (CSR) (HL IB Business Management)

• Corporate Social Responsibility (CSR) refers to the concept that businesses have a responsibility to consider and positively impact society beyond their economic interests

• It is a framework through which companies voluntarily integrate social and environmental concerns into their business operations and interactions with stakeholders

Corporate social responsibility goals can be focussed on a range of different stakeholders

• CSR involves taking into account the impact of business activities on various stakeholders, including employees, customers, communities, the environment, and society at large

• CSR goes beyond legal compliance and strives for companies to actively contribute to sustainable development and societal well-being
   

Examples of Socially Responsible Activities 

• Ethics relates to the rights or wrongs of making a strategic decision that are beyond legal requirements and in accordance with a businesses corporate social responsibility principles
  
  
• Some ethical businesses adopt an ethical code of practice which informs decision-making and may set out how they:
  • Behave responsibly with regards to the environment (for example, using recycled materials in packaging)
  • Avoid negative impacts on animals (e.g animal testing)
  • Adopt fair working practices (e.g. paying a real living wage)
  • Implement robust and equitable supply chains (e.g. using sustainably-sourced raw materials in production)
  • Takes steps to eliminate corruption (e.g. ensuring appropriate tax is paid in the countries in which the business operates)
  • Avoids controversial products or take steps to minimise their impact or access to them (e.g. having strict verification procedures in place prior to cosmetic surgery procedures being carried out)
  • Ceases trading with questionable suppliers or customers (e.g. cancelling a supply contract with a supplier that uses child labour)
     
• It is now common practice for large companies to publish annual Corporate Responsibility Reports which provide an audit of the steps being taken to meet their commitments to a range of stakeholders alongside annual financial reports
  
  
• Extra costs are involved in operating in a socially responsible way and these costs are usually passed on to consumers

• Business set ethical or socially responsible objectives for a range of sound commercial reasons
  
  

Business Reasons for Implementing CSR

• Businesses that choose to adopt ethical principles usually attract long-term loyalty from employees and customers and may find that their approach provides a useful competitive advantage
  
  
• They are also likely to receive the support of the local community and local government especially if they share their aims
  
  
• Suppliers and competitors of ethical businesses often change their approach to ensure that they do not lose sales to more ethical rivals
  
  
• Taking an ethical approach costs more and may reduce the overall level of profits if the business is not able to raise their prices to compensate
  
  
  • Japanese fashion retailer Uniqlo has tried to move towards an eco-friendly strategy in recent years, focusing on technologies that make the production of new clothing from recycled materials possible
    • The business has invested significant sums in energy-efficient production facilities and now supports the campaign to safeguard the islands and coastal regions of Japan’s threatened Seto Inland Sea