Four Types of Corporate Social Responsibility

Corporate Social Responsibility (CSR) refers to the practices and policies implemented by corporations to provide a positive influence on the world.

Corporate Social Responsibility originated in the 1950s after economist Howard Bowen published a book, Social Responsibilities of the Businessman, which called for profitable businesses to help assist their own communities. Bowen’s ideas took off and remain popular to this day.

This idea was expanded in 1979 when Archie B. Carroll created Carroll’s Pyramid, a hierarchy of corporate social responsibility. The four main types of CSR models mentioned by both Bowen and Carroll are:

• Environmental Responsibility
• Ethical Responsibility
• Philanthropic Responsibility
• Economical Responsibility

Carroll’s Pyramid shows the four obligations of businesses. The primary obligation is economical, since all businesses earn financial revenue first and foremost. After economic responsibility, corporations should take legal responsibilities and obey the law of whatever countries they operate within.

Thirdly, they should take ethical responsibility. This ethical approach means that businesses should do what is right. The fourth responsibility is philanthropic responsibility, or being a good corporate citizen.

Sociologists later modified Carroll’s Pyramid to create the Intersecting Circles Model, which takes away the hierarchy of responsibility and incorporates all aspects of CSR as interlocking sections of obligations. These obligations are something all businesses share.

The four types of corporate social responsibility

The most basic parts of corporate social responsibility take from Carroll’s Pyramid and the Intersecting Circles. These types – economical, ethical, philanthropic, and environmental – encompass the aspects that make a company run.

The recent enforcement of businesses being held accountable for their practices has made practicing CSR and following through on CSR models imperative for companies to maintain their customer base.

Environmental responsibility

The most relevant type of CSR nowadays is environmental responsibility. This responsibility means that corporations must be responsible for how they use the environment and how their products will impact their environment. This responsibility means ensuring that future products will not end up in a landfill, as well as rectifying past environmental wrongdoings.

To rectify environmental detriments, we need to create stronger processes of collecting and getting rid of trash from city landfills and recycle or reuse them. Additionally, corporations can mitigate future environmental issues by using biodegradable raw materials and offsetting material usage by planting trees.

Ethical responsibility

Ethical responsibility focuses on corporations’ treatment of people and animals while operating their business. This type of corporate social responsibility combines the previous tiers of ethical and legal responsibility and ensures that businesses do what is right legally and socially.

Types of ethical responsibility include giving fair wages and benefits to workers and providing them with a safe work environment. It also includes avoiding using animals during product testing, ensuring their products and all ingredients used are safe for consumers, and not purchasing products manufactured by slave labor or child laborers.

Philanthropic responsibility

Philanthropic responsibility is the responsibility of corporations to give back to the less fortunate.

The most common philanthropic CSR is the creation of foundations that fund a variety of platforms and people. Additionally, companies will offer scholarships for teenagers or organizational sponsorships for small businesses. Companies will also participate in community engagement efforts like drives for school supplies, food, and toiletries for the poor.

However, philanthropic responsibility also means making sure the efforts they make are in compliance with the other three types of corporate social responsibility. For many companies who had philanthropic programs grandfathered into their companies’ earnings, philanthropic responsibility also meant evaluating the effectiveness of their philanthropic efforts and severing ties, even those that were generations old, to uphold their corporate social responsibility.

Economic responsibility

Economic Responsibility is the responsibility to ensure that all monetary gains and losses are from ethical means. Economic responsibility encompasses all other types of CSR since it forces companies’ revenue to come from reputable means.

Economic responsibility usually includes transparency with customers about where a corporation’s money comes from. Examples of economic CSR include corporations committing to not using products that are manufactured in countries known for using slave or child labor, using organic or vegan substitutes for common materials, and companies stepping away from harmful practices even if it costs them more.

Benefits of practicing corporate social responsibility

Given the current world issues constantly swirling around the internet, there are many benefits for companies that practice corporate social responsibility. The most common reason provided is that corporate social responsibility is just the right thing to do. Yet, as corporations began to make these changes within their companies, they also found other benefits.

Since the 1970s when companies began to corporate social responsibility, they had found there were many other benefits from doing so. Research later done into consumer approval and satisfactions later found that:

• Companies who implement CSR tactics found a higher approval rate from customers
• Companies with policies reflecting CSR principles received more job applications
• Consumers remained loyal to companies that have made policy changes to take more socially accountability
• Consumers have positive associations with brands that are known to practice CSR
• Consumers tend to spread the word about companies that practice CSR

By evaluating their practices, corporations not only clean up their image, but many find that they have to come up with innovative ways to replace ingredients, become more inclusive spaces for workers, and figure out how to decrease their waste and output.

Conclusion

Engaging in corporate social responsibility can provide great benefits to the corporation and everyone they engage with. Corporations play a major role in current global issues and should begin to take responsibility for their part by looking into incorporating CSR models.

Companies looking to include programs to establish corporate social responsibility can start in many ways. Corporations can create programs in their neighborhoods, donate money and supplies to foundations, and provide benefits for workers.

Collaborating with our team at Second Life can help your organization implement CSR programs, such as helping reduce plastic waste around the world. You can learn more about how you and your organization can offset your plastic footprint here.