Corporate Social Responsibility in companies

What is Corporate Social Responsibility (CSR)?

The idea of Corporate Social Responsibility emerged in the USA and Europe as a reaction to the neoliberal “shareholder value” philosophy of the late 1990s. Social and environmental impacts of entrepreneurial activity were not sufficiently considered at that time. In 2001, the EU presented a first green paper “European Framework Conditions for Corporate Social Responsibility.” For the first time, they defined CSR as a concept “that serves as a basis for companies to integrate social and environmental concerns into their business operations and interactions with stakeholders on a voluntary basis.”

What does a Corporate Social Responsibility concept include?

Following the Corporate Social Responsibility framework of American academics, a company has:

1. Economic responsibility: It must at least cover its costs. This also includes the right to appropriate profits or interest on the capital invested.
2. Legal responsibility: It must abide by the law and not tolerate illegal business practices.
3. Ethical responsibility: It should go beyond the legal requirements to behave fairly towards its stakeholders and generally act according to high ethical standards.
4. Philanthropic responsibility: As a “corporate citizen,” it should be committed to social ideals and welfare beyond general expectations.

Even though the topics sustainability and environmental protection are seemingly missing in this CSR framework, they are equally aligned with social and societal responsibility. While the natural foundations of human life such as soil, water, air, or biodiversity do not have legal personalities, they indirectly attain equal status as stakeholders through the people who are affected by environmental damage.

How important is Corporate Social Responsibility?

Companies are under a lot of pressure from their stakeholders. Besides shareholders and partners, customers, suppliers, neighbors, partners, politics at the local, state, and federal levels, as well as non-governmental organizations (NGOs), place high demands on entrepreneurial action. Due to the internet and mobile communication in social media, misconduct is spreading faster and faster. Even the smallest misconducts quickly gain a lot of publicity. The consequences: reputational damage, customer and profit loss, poorer rankings for financing. In the worst case, a serious breach of laws and ethical standards can also lead to insolvency. That is why more and more companies from SMEs and corporate groups are integrating CSR into their corporate strategy. They establish a systematic Sustainability Management System that defines CSR goals across all corporate divisions, departments, and supply chains and monitors compliance.

For more information, read our text on sustainability management.

What Corporate Social Responsibility measures are there in companies?

There is a wide range of CSR measures, which are even part of the business model depending on the size of the company. Analogous to the four levels, the measures include:

1. Economic responsibility: Supervisory bodies for and reporting on responsible corporate governance, transparency in the appropriation of earnings.
2. Legal responsibility: Guidelines for management on how to implement legal requirements, management systems for setting up and monitoring guidelines according to ISO standards.
3. Ethical responsibility: Guidelines on anti-corruption, employee well-being, occupational health and safety, fair competition, respect for human rights throughout the company’s supply and value chain.
4. Philanthropic responsibility: Sponsoring of sports, culture, environmental protection and nature conservation, as well as social associations for the promotion of the common good.

For Corporate Social Responsibility Management, some companies now appoint a sustainability manager.

For more information, read our text on sustainability managers.

Examples for Corporate Social Responsibility

The most visible examples of CSR are sponsoring measures. Companies advertise these according to the motto: “Do good and talk about it.” Trends in Corporate Social Responsibility include:

• CO2 and climate neutral company programs
• Circular economy and recycling
• Promoting the mental health of employees
• Measures for the inclusion of marginalized groups, global justice, and diversity
• Volunteering by employees in social and environmental projects during working hours
• Support measures for refugees
• Support of startups and small businesses
• Measuring the impact of CSR measures

Who needs a Corporate Social Responsibility framework?

In Germany, CSR is mainly established with corporate groups so far. Medium-sized companies are increasingly discovering the topic for themselves because they want to become active as service providers or suppliers for corporations. Corporate clients are increasingly demanding sustainability management from their partners. The industry, especially car manufacturers, carries out an audit before awarding a contract. In doing so, they ask for self-assessments and documents that prove the CSR and sustainability strategy of their new partners. The car manufacturers have introduced the Self-Assessment Questionnaire (SAQ 4.0) for this purpose.

For more information, read our text on the SAQ 4.0.

Who can advise on Corporate Social Responsibility?

Some management consultancies like Memex Consulting GmbH from Munich have specialized in CSR. We advise in a holistic sense on the development, establishment, and implementation of CSR concepts.

If you want to know more about CSR in your company, arrange a free initial consultation with Memex Consulting GmbH.