What is Corporate Social Responsibility (CSR)?
Before diving into the complex history and evolution of Corporate Social Responsibility (CSR), it is important to understand what the term even means. CSR has meant very different things at different points in time, but at its core it refers to “business self-regulation with the aim of being socially accountable.” This definition includes improving working conditions, reducing carbon footprints, participating in Fairtrade, and many more actions. On its most basic level, CSR is a manifestation of a business’ recognition of a duty to the world and the potential to be a power for good.
The Origins of Corporate Social Responsibility
While widespread adoption of CSR has been relatively recent, the concept itself has been around for over a century. It has its roots in the late 1800s, when the rise of philanthropy combined with deteriorating working conditions made some businesses reconsider their current production models. Business tycoons began donating to community causes, and some business owners (although somewhat reluctantly) reduced working hours and improved factory conditions, laying the foundation of responsible corporations.
The term “Corporate Social Responsibility,” however, was not coined until 1953, when American economist Howard Bowen published Social Responsibilities of the Businessman. In this book, Bowen identified the great power of corporations and recognized that their actions had a tangible impact on society. Therefore, he argued, businessmen have an obligation to pursue policies that are beneficial for the common good.
From Philanthropy to Profit-Making
Although the concept of Corporate Social Responsibility has been around for a long time, it has changed dramatically since its inception. Most notably, the scope of CSR started extremely narrow, but has since widened to include many more issues and impact a wider range of business decisions. What started as a movement for businesses to give to charity and reduce working hours has blossomed into an initiative that has changed the way business is done and affects every aspect of a business’ operations.
This transformation began in the 1960s, when scholars began to approach CSR as a response to the emerging problems of the new modern society, and businesses in turn started implementing these practices. Yet, as before, CSR was viewed through a relatively narrow lens, with many scholars claiming that companies are not responsible for addressing large-scale social problems. Instead, their responsibility extends only to the direct consequences of their decisions and business actions. So while the 1960s did mark progress in the CSR movement, it in no way mirrored our current understanding of corporate responsibility.
Business adoption of CSR continued steadily in the 1970s and 80s, and became all the more important in the 80s due to greater deregulation of business, meaning corporations had to engage in more self-regulation and take responsibility for the social impact of their operations. However, CSR during this time was mainly limited to human and labor rights, pollution, and waste management.
Increasing globalization in the 1990s was instrumental in widening the scope of CSR, and laid the foundation for how we understand Corporate Social Responsibility today. A wide array of international events and agreements occurred in the 90s, namely the adoption of Agenda 21, the United Nations Framework Convention on Climate Change, and the Kyoto Protocol. These events increased CSR concerns for multinational corporations, and for the first time made businesses consider their impact on the world as a whole compared to just their local community. Throughout the 90s and into the early 2000s, the rhetoric of CSR began to shift from minimizing local harm to tackling global issues.
CSR Today: The Way to Do Business
Today, businesses are missing out if they aren’t participating in CSR. It has become an integral part of doing business, and is increasingly driving consumer choice. For instance, nearly 90% of consumers would purchase a product because a company supported an issue they care about, while 75% would refuse to buy a product if the company had a different stance on an issue. CSR is also a big factor in attracting talented employees, as people want to work for a company that upholds strong values. Further, a comprehensive CSR program can have the benefits of “increased brand reputation and credibility, improved risk and supply chain management, cost savings from efficiency improvements, and increased revenue.” Companies are thus discovering that CSR is not only better for society, but in many cases better for business as well.
The scope of CSR has also never been wider. Now, companies craft their CSR programs around the UN’s 17 Sustainable Development Goals, ranging from gender equality to protection of ocean life. CSR is also increasingly related to growing Diversity, Equity, and Inclusion initiatives, as socially responsible corporations must foster a welcoming work environment and combat discrimination. While not every corporation follows CSR principles and those that do are far from perfect, it is encouraging that businesses are beginning to recognize the myriad of ways that they affect society and can change it for the better.
What the Future Holds
CSR is here to stay. As improving technology allows for increased corporate transparency and scrutiny, the incentive to be socially responsible will continue to grow. Also, the increasing severity of climate change and inevitable resource shortages that are in store will reward companies that are sustainable and have a small carbon footprint. Overall, CSR will likely continue to evolve down the line, and will only become more important in our uncertain future.
Ecolytics has all the tools to help your business participate in effective CSR! With Ecolytics, you can understand and reduce your environmental impact through our custom recommendations. We also connect your business with reputable certifications and make it easy to share your data with customers, ensuring the highest levels of transparency. Follow us on social media (linked below) to check out our series on CSR myths, or try out our demo to learn more.