Business leaders and entrepreneurs often ask me to explain Corporate Social Responsibility (CSR) and after recently lecturing on the topic at the USC Marshall School of Business, I am inspired to write again about the intersection of business and the communities and stakeholders they serve. Although there are many components to CSR, and multiple ways to define it, a commonly referenced definition of CSR is the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large (World Business Council for Sustainable Development). CSR is often viewed simply as the interaction of people, planet, and profits. People can refer to employees, consumers/customers, and community members living in the area (or beyond) where your product is produced. Planet can refer to your product’s/processes/services impact on the environment, including the supply chain it follows. Profit refers to the interconnected nature of business as ‘corporate citizens’, and the ongoing tension of drawing ethical profits.
When I think of a comprehensive CSR strategy, it encompasses not only philanthropy (corporate contributions) but also the many human resources (HR) components that come to play including employee engagement, volunteerism, human rights and fair labor practices, health and wellness programs. It can also include a company’s environmental impact, sustainability, governance, and supply chain management. Additionally, it includes how a company chooses to message this commitment internally and market it externally.
CSR can take many shapes depending on the company, the founder, and its unique circumstances. Each on its own may be considered CSR, or several in concert may be a CSR program or strategy. Increasingly, we are focusing on “the sweet spot”, or where it all makes sense and the CSR programs are germane to a company’s product, founding story, and purpose.
There are a variety of CSR awards and rankings now that it has become more prevalent. Forbes utilizes the rankings provided by the Reputation Institute, the 18-year-old Boston and Copenhagen-based consulting firm that measures corporate reputations around the globe. According to the Reputation Institute, the most successful firms combine four attributes: alignment, leadership, sincerity, and engagement. Alignment occurs when CSR is part of a company’s organizational DNA and the CSR strategy is aligned and fully integrated into the business model. Strong leadership support and buy-in for CSR, and leaders who are actively leading by example and communicating internally and externally on CSR, is key to success. Sincerity describes authentic and genuine programs that reflect corporate heritage and culture, detailed and transparent documentation of CSR programs and performance, and focus on true societal impact. Finally, the best CSR companies have employees and other key stakeholders who are aware of, engaged in, and share the strategy and goals of the CSR plan.
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