What is CSR and Why is it Becoming More Important for Businesses?

By now, we’ve all heard about CSR. But what exactly is it? And why is CSR becoming more important? We explore the ins and outs of this increasingly important practice in our latest guide. 

Corporate Social Responsibility (CSR) is a business model first officially adopted in 1953 as a way of helping businesses be more socially and environmentally conscious, conducting themselves in a way that benefits the wider community. 

CSR can be split into four main categories; environmental responsibility, ethical responsibility, philanthropic responsibility, and economic responsibility.  

Environmental responsibility is the belief that businesses should operate in the most environmentally friendly way possible, for example, reducing energy consumption and other harmful emission-producing practices.  

Ethical responsibility focuses on operating in a fair manner, treating employees, suppliers and customers in an ethical way. This includes practices like introducing a ‘living wage’ for employees and ensuring products purchased are from ethical suppliers, avoiding things such as child labour in production.  

Philanthropic responsibility involves business actively benefiting the community through their actions, such as charitable donations and raising awareness for good causes.  

Economic responsibility means that businesses are not just operating with profit in mind but are making financial decisions with the intention of benefiting the wider society. 

In this guide, we cover the importance of social responsibility for businesses and how companies can become more socially responsible amongst changing attitudes to the way businesses should be operating. 

CSR was originally based around the intention of prompting economic growth and business ethics. However, in recent years, due to growing concerns around climate change and social inequality, businesses have begun adopting new CSR initiatives covering areas such as philanthropy and environmentalism. 

Today, the importance of social responsibility in business acts as a way to create and maintain stronger relationships with customers, employees and the wider community. 

Another factor adding to the increased importance of corporate social responsibility in businesses is the benefits of incorporating these new initiatives for the business itself, as well as the community. 

Brand Image

By behaving in more socially responsible ways, you are helping to create a positive image for your brand. If customers and potential customers see that you are taking steps to reach your CSR goals, this gives them the confidence that by supporting your business, they are supporting a good cause. 

Customer Loyalty

As well as boosting brand perception, a business will also be more likely to retain customers by aligning its values with theirs. According to a study by Vericast, 52% of consumers said it is important for them to buy from companies with values that match their own. 

Improve employee experience and retention

Improving your CSR can also make your business a more desirable place to work, and many potential employees are now factoring a company’s commitment to CSR into their decision when choosing a place of work. A LinkedIn Workplace Culture Report found that a whopping 71% of professionals would consider taking a pay cut if it meant working for a company whose values aligned with their own.  

Future-proofing your business

As CSR is becoming more important and holding more weight in a customer’s decision on where to shop, introducing these new initiatives is a great way to future-proof your business. 

If you’re looking for ways for your business to become more socially responsible, it is important to take a holistic approach, looking at your business from all angles and identifying areas where you may be lacking CSR, or where improvements can be made. 

Becoming more environmentally responsible

A great way to start your CSR journey is by tackling your environmental impact. Consider the way you use energy and the waste your business processes produce.  

Switching your energy to renewable sources and powering your business with green energy is one of the most effective ways you can boost your environmental CSR. At Yü Energy, we offer green business energy plans, providing our customers with 100% renewable energy and carbon neutral gas.  

Another great way to help your business be better for the environment, is to switch your transport to electric. Not only will this reduce the emissions produced by your business transport, but you can also install EV chargers on your business site for your customers to use. This will help contribute to the growing EV infrastructure available to the community but will also demonstrate to your customers that you are taking steps towards your environmental goals. 

Becoming more ethically responsible

Your ethical responsibility should focus on the people involved in making your business succeed, from employees to stakeholders to customers.  

A good place to start is by looking at your partnerships. Are your producers and suppliers operating ethically and sustainably? Look for certifications to prove that they are adhering to laws and regulations surrounding their practice. 

Your employees are a vital part of your business, so it’s important to extend your ethical practices to your employee policies. For example, ensuring your staff are paid a liveable wage with sick pay, and offering benefits such as annual leave, subsidised transport, and healthcare.  

Ethical responsibility should also play a role when expanding your business with new hires. You should strive to create a diverse and inclusive hiring process, so that your workforce reflects the makeup of the community around you in demographics such as age, sex, race, religion and socio-economic background. By doing this, you will be creating a more vibrant workplace that benefits from a broader range of skills and experience whilst boosting morale and encouraging employee engagement.  

Becoming more philanthropically responsible

Philanthropic responsibility is all about giving back to the community and striving to better society through your business’s actions. This will also help position your business as a key figure in your local community.  

A popular way of engaging in philanthropic actives is to get involved in charity work. This could be fundraising for local causes or partnering with a registered charity and raising money through various activities. Encourage your staff to get on board and make suggestions for things you could do together as a team. Some great examples of philanthropic CSR initiatives include sponsored activities such as marathons/half marathons and skydives or getting involved in community events such as fun days and fairs.  

You should also consider offering employer-supported volunteering (ESV) to your employees. This means allowing employees to take paid leave from work if they wish to take time off to participate in charity fundraising.  

Becoming more economically responsible

Economic responsibility can feed into other aspects of CSR and involves combining your business values with your financial decisions, ensuring that your investments and partnerships are ethical. 

This may involve prioritising ethics over profits and spending more money on ethically sourced products such as fairtrade ingredients or packaging made from recycled materials.  

If you’re looking for inspiration on how your company can become more socially responsible, these examples of CSR from well-known companies help highlight the importance of social responsibility. 

• Coca Cola – In 2018, soft drink manufacturers Coca Cola announced their new ‘world without waste’ campaign, pledging to make all of their packaging 100% recyclable by 2025 and use refillable/returnable packaging for at least 25% of their beverages by 2030. 
• Google – Tech giant Google has been carbon neutral since 2007 and has since expanded their CSR to incorporate more philanthropic aspects, such as committing 40 million dollars to support racial justice causes. 
• Netflix – As part of their ethical CSR, Netflix has strived to diversify voices both on-screen and in the workplace, as well as developing digital accessibility features for its viewers. They also offer their employees 52 weeks of paid parental leave (compared to an average of 18 weeks for similar companies). 
• Ben and Jerry’s – Since 2005, Ben and Jerry’s ice cream makers have been using fair trade ingredients and have also created a company mission that supports social justice programs such as climate change campaigns and LGBTQ+ rights. 

It’s clear that CSR is becoming more important, and many companies are beginning to take it more seriously by introducing social responsibility initiatives into the running of their businesses. CSR can take many different forms and it is important to choose the right ones for you, so your business can help create a brighter future. 

If you’re looking to improve your CSR credentials, why not start by switching to one of our green business energy plans? Or for more ways to go green, check out our full range of sustainability guides.