Corporate Social Responsibility Concept
Corporate Social Responsibility is the business’s good will not to harm people and the environment during its operations and to contribute to the public well-being.
Corporate Social Responsibility is the business’s good will not to harm people and the environment during its operations and to contribute to the public well-being.
It is salutary to ask about any organization, If it did not exist, would we invent it? Only if it could do something better or more useful than anyone else” would have to be the answer, and profit would be the means to that larger end.
Charles Handy, ‘What’s a Business For?’ Harvard Business Review, Vol. 80, No. 12, December 2002
Corporate Responsibility or the business’s responsibility to the society is referred to by several terms that sometimes are used interchangeably.
Over the recent times, the terms Corporate Responsibility (CR) and Responsible Business Conduct (RBC) are becoming more established (as in some languages, the word “social” narrows down the concept of the term, leading to only social concerns). Another term that is also becoming more common is Corporate Sustainability, indicating to strong connection between sustainable development and corporate responsibility.
Private sector is one of the strongest and most influential actors in the market economy, greatly impacting the society and the environment, as well as economic systems of the countries. In different contexts, these impacts can be either positive or negative.
For example: A company might create jobs for hundreds of people, give them adequate and decent compensation, create fair and inclusive work environment, attract investments and play a considerable role in the development of the State economy, provide quality goods and services to the customers; or a company could bankrupt small entrepreneurs, get involved in corruption or into cartel deals, treat the employees unfairly, pollute the environment, damage cultural heritage and produce health-hazard goods.
Along with the raised public awareness, a natural demand has emerged – the business should care not only about its profit, but should also understand and take responsibility for its impact on the people and the environment. Thus, a new, broader understanding of the function of a business was born.
In their turn, the companies also realize that, by assuming these responsibilities they contribute to achieving both objectives – having their successful business, as well as raising the public well-being.
Corporate Responsibility is the company’s responsibility for the impact that it makes, through its operations and decisions, on the environment, broader economic systems and the people - its own employees, customers, suppliers, partners, local communities and the general public. It is the company’s good will to comply with high international standards of responsible business, act ethically, consider the needs of society, and make a positive contribution to the sustainable development and the tackling of social, economic, and ecological problems.
The concept of corporate responsibility was being evolved and refined during decades. As the public demand increases and its mentality changes, the concept continues to become broader and embrace new relevant issues (CSR and sustainability timeline). Probably, the most important alteration to the concept happened when the idea of CSR as a form of philanthropy changed to viewing CSR as a strategic approach – a tool for company risks prevention, strengthening its competitiveness, and managing the company’s impact.
As of now, there is no unified, comprehensive and sole definition of Corporate Social Responsibility. Definitions are still numerous, stressing out various aspects and characteristics of CSR.
CSR is "the responsibility of enterprises for their impacts on society". Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. To fully meet their social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of: maximising the creation of shared value for their owners/shareholders and for their other stakeholders and society at large; identifying, preventing and mitigating their possible adverse impacts.
CSR is "the responsibility of enterprises for their impacts on society". Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. To fully meet their social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of: maximising the creation of shared value for their owners/shareholders and for their other stakeholders and society at large; identifying, preventing and mitigating their possible adverse impacts.
Responsible Business Conduct (RBC) is about integrating within the core of businesses the management of risks to the environment, people and society.
RBC principles and standards set out the expectation that businesses – regardless of their legal status, size, ownership or sector – contribute to sustainable development, while avoiding and addressing adverse impacts of their operations including throughout their supply chains and business relationships.
Social responsibility is the responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that:
- Contributes to sustainable development, including health and the welfare of society;
- Takes into account the expectations of stakeholders;
- Is in compliance with applicable law and consistent with international norms of behaviour;
- Is integrated throughout the organization and practised in its relationships
Responsible business is one that puts creating healthy communities and a healthy environment at the centre of its strategy to achieve long-term value.
CSR refers to a company's responsibility for its impact on society. This includes social, environmental and economic aspects, as outlined in the internationally recognised reference documents on CSR
More specifically, CSR for example involves fair business practices, staff-oriented human resource management, economical use of natural resources, protection of the climate and environment, sincere commitment to the local community and also responsibility along the global supply chain.
“Corporate social responsibility is the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.”
Corporate social responsibility encompasses not only what companies do with their profits, but also how they make them. It goes beyond philanthropy and compliance with the law and addresses how companies manage their economic, social, and environmental impacts, as well as their relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm.
'Enterprises demonstrate social responsibility and create value both for the enterprises and society by engaging in dialogue with their stakeholders and addressing social, environmental and economic challenges in alignment with international acknowledged principles'.
Despite the varieties of the definitions, they all are based on the same vision - Corporate Responsibility means doing business with consideration of social, environmental and broad economic objectives.
The concept of Corporate Social Responsibility is inseparable from the concept of sustainable development. In general, Corporate Responsibility is considered as the business’ contribution in achieving sustainable development goals.
Both CSR and Sustainable Development embrace three areas – economic, social and environmental.
Quite often, terms “corporate sustainability” and “corporate responsibility” are used interchangeably.
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Corporate Responsibility and Sustainable Development
First of all, the company’s social responsibility means a full compliance of its operations with current social, economic and environmental legislations, and taking additional and voluntary responsibilities on this basis. In countries where there are no minimal social and environmental standards in place, responsible companies should follow commonly recognized international norms and regulations.
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“Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility”
Corporate Responsibility is an inseparable part of the company’s core business operations, and not an “additional” activity with marketing or PR communication objectives. This is a new method of doing business, which implies to considering social and environmental issues in business strategy as well as in all business operational components on the policy, management systems and activity levels.
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“To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders”.
In the modern understanding, Corporate Social Responsibility is a far wider concept than charity, sponsorship and philanthropy (however, the latter are seen as components of CSR).
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„At present, corporate social responsibility goes beyond the previous century’s corporate philanthropy, when, at the end of fiscal year, companies would donate some money for charity. Social responsibility is the business's constant ongoing responsibility for the environment, the creation of better work places and consideration of public interests. It is based on the understanding that the company image depends not only on the quality and price of its product, but on the ways it interacts with its employees, the public and the environment”.
CSR concept was created and introduced in Western developed industrialized countries. However, at present, Corporate Social Responsibility definitely is not a privilege of the highly developed countries only. Recently, there are steadily growing trends of introducing CSR in African, Asian, Latin American, as well as in Eastern European States with developing and transitioning economies.
Corporate Responsibility is no longer a result of a personal choice of individual business owners. Rather, it is already a commonly recognized form of doing business. More so ever, responsible business activity is viewed as a pre-requisite for the company’s sustainability and success.
Dozens of international standards have been created, defining the principles and forms of the business responsibility in various areas
CSR concept was created and introduced in Western developed industrialized countries. However, at present, Corporate Social Responsibility definitely is not a privilege of the highly developed countries only. Recently, there are steadily growing trends of introducing CSR in African, Asian, Latin American, as well as in Eastern European States with developing and transitioning economies.
Corporate Responsibility is no longer a result of a personal choice of individual business owners. Rather, it is already a commonly recognized form of doing business. More so ever, responsible business activity is viewed as a pre-requisite for the company’s sustainability and success.
81% of global respondents feel strongly that companies should help improve the environment. This passion for corporate responsibility is shared across gender lines and generations.
68% of the Georgian businessmen believe that, along with business development, contributing to environmental and to public well-being issues is an important aspect for the company.
76% of global population believes CEOs should take the lead on change rather than waiting for the Government to impose it (positive change),
58 stock exchanges now require that the listed companies disclose their climate impacts. In parallel.
80% of mainstream investors now consider environmental, social and governance (‘ESG’) information when making investment decisions
3/4 Around three quarters of the large and mid-cap companies around the world issue CR reports
68% of the Georgian population would like to know more about the harm a company brings to the environment. 52%, or slightly more than a half, are interested how companies treat their employees, while 60% would like to know the programs that the businesses have implemented to help the public.
89% of US Business executives believe companies that lead with Purpose have a competitive advantage in today’s market
57% of surveyed companies around the world said they plan to increase expenditure on sustainability
85% The trend towards sustainability is only accelerating for businesses around the world due to Covid-19 crisis. Businesses see sustainability as fundamental to their success. 85% of businesses surveyed see environmental sustainability as a priority.
81% of global respondents feel strongly that companies should help improve the environment. This passion for corporate responsibility is shared across gender lines and generations. Nielsen’s Global Sustainable Shoppers Report 2018 Sustainable shoppers buy the change they wish to see in the world.
68% of the Georgian businessmen believe that, along with business development, contributing to environmental and to public well-being issues is an important aspect for the company. “Businesses in Georgia: Attitudes towards Corporate Social Responsibility and Civil Society Organizations”. Initiative for Civil Society Development, Tbilisi, 2018
76% of global population believes CEOs should take the lead on change rather than waiting for the Government to impose it (positive change), Edelman “Trust Barometer”, Global Report 2019
58 stock exchanges now require that the listed companies disclose their climate impacts. In parallel. Global Destination Sustainability Index, 2019 whitepaper. Creating better places to live, meet & thrive in
80% of mainstream investors now consider environmental, social and governance (‘ESG’) information when making investment decisions Global Destination Sustainability Index, 2019 whitepaper. Creating better places to live, meet & thrive in
3/4 Around three quarters of the large and mid-cap companies around the world issue CR reports The Road Ahead: KPMG Survey of corporate responsibility reporting. 2017
68% of the Georgian population would like to know more about the harm a company brings to the environment. 52%, or slightly more than a half, are interested how companies treat their employees, while 60% would like to know the programs that the businesses have implemented to help the public. "The Attitiudes of the Population of Georgia Towards Civil Society Organizations, Euro-integration and Business Companies”. Initiative for Civil Society Development, Tbilisi, 2018
89% of US Business executives believe companies that lead with Purpose have a competitive advantage in today’s market 2020 Porter Novelli Executive Purpose Study
57% of surveyed companies around the world said they plan to increase expenditure on sustainability HSBC Navigator, Made for the future Report 2019
85% The trend towards sustainability is only accelerating for businesses around the world due to Covid-19 crisis. Businesses see sustainability as fundamental to their success. 85% of businesses surveyed see environmental sustainability as a priority. HSBC Navigator, Resilience Report: Building back Better, 2020
