Corporate social responsibility (CSR) is business decisionmaking linked to ethical values, compliance with laws and regulations, and respect for people, communities, and the environment. A relatively new concept in western capitalism, CSR recognizes that CORPORATIONs are a legal entity chartered by society. To operate (legally) in the United States, all businesses are required to have a business license, whether from a city, county or state government. Some corporations perceive social responsibility to be part of PUBLIC RELATIONS, any action or contribution that makes the company “look good” in the minds of the public. Advocates of CSR consider it to be policies, practices, and programs integrated into business decision making. Some of the most widely quoted examples of CSR include
• Ben & Jerry’s company policy of donating 7.5 percent of PROFITs to charity
• Levi Strauss exiting business in China as a protest of human rights violations
• Body Shop’s decision to use natural ingredients harvested using environmentally responsible methods
• Calvert Group’s decision to exclude investment in companies producing guns, cigarettes, and vodka
Supporters of corporate social responsibility suggest these practices benefit companies in a variety of ways. Several studies have correlated socially responsible business practices with improved financial performance. CSR efforts to reduce wastes frequently result in reduced COSTS. Similarly, reduced wastes improve productivity and product quality. Corporate social responsibility improves BRAND images and company reputations, resulting in increased CUSTOMER LOYALTY. Companies practicing CSR find it is easier to attract and retain employees. In the 1990s CSR supporters developed standards and awards. Some of these groups include the following:
• The Global Reporting Initiative, established in 1997, designed guidelines for preparing enterprise-level sustainability reports.
• Social Accountability 8000, developed by the Council on Economic Priorities Accreditation Agency, has set standards that include monitoring child labor, forced labor, nondiscrimination, wages and benefits, working hours, health and safety, freedom of association, and MANAGEMENT systems.
• The Caux Round Table, a group of senior business leaders from around the world, produced “Principles of Business,” a document expressing their standards for ethical and responsible business practices.
• The Interfaith Center on Corporate Responsibility published “Principles for Global Corporate Responsibility,” a “collective distillation of the issues of concern” to religious- oriented institutional investors.
• The Sunshine Standards for Corporate Reporting to Stakeholders developed a list of information that the creators believe should be included in ANNUAL REPORTs to STAKEHOLDERS, including customer, employee, community, and society information needs to evaluate corporate performance.
• The Keidanren Charter for Good Corporate Behavior, produced by the Japanese Federation of Economic Organizations, created a 10-point charter directing behavior by corporations.
The Business and Society Review has developed a remarkable website detailing examples of corporate social- socialresponsibility efforts, implementation steps, links to other CSR organizations, and model policies for companies considering CSR initiatives.
See also PYRAMID OF CORPORATE RESPONSIBILITY.