ESG / CSR
Industries
Ecology
Greenly solutions
Corporate Social Responsibility (CSR) means integrating environmental, social, and economic values into how a business operates. Companies that embrace CSR strive to make a positive impact on society and the environment through sustainable practices. These businesses not only focus on financial success but also track and report their progress on non-financial goals.
The field of CSR has grown to include various standards and practices that guide corporate activities. However, many companies, especially smaller ones, have yet to embrace CSR due to a perceived lack of value in such practices.
This article will help dispel these misconceptions by highlighting the tangible benefits of CSR and providing practical guidance for integrating these practices into business models.
👉 This article defines Corporate Social Responsibility (CSR), explains why businesses can benefit from a CSR strategy, provides examples of successful CSR initiatives, and offers practical tips for implementing best practices.
Corporate Social Responsibility (CSR) is a business approach that focuses on integrating social, environmental, and economic concerns into a company’s operations and core strategy. It aims to create a positive impact on society while ensuring sustainable business practices.
CSR initiatives often involve activities such as reducing carbon footprints, improving labor policies, engaging in fair trade, and contributing to community development. The progress and impact of these initiatives are usually documented and shared in an annual CSR report, which highlights the company's commitment to social and environmental responsibility.
Several related terms have roughly the same meaning as CSR:
Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) both aim to promote sustainable and ethical business practices, but they differ in focus and application. CSR is a broad concept that involves companies taking responsibility for their impact on society and the environment, often through voluntary initiatives and philanthropy. It emphasises the company’s commitment to positive social and environmental outcomes.
ESG, on the other hand, is a framework used primarily by investors to evaluate a company’s long-term sustainability and risk management practices. ESG criteria focus on quantifiable metrics in three areas: environmental (e.g., carbon emissions), social (e.g., labor practices), and governance (e.g., board diversity). ESG assessments are data-driven and integrated into financial analysis, making them crucial for investment decisions and corporate transparency.
👉 CSR is about the company’s voluntary actions and ethical commitments, ESG provides a structured, data-oriented approach to assessing and improving sustainability and governance practices, often driven by investor expectations.
The concepts of CSR and sustainable development are closely linked. ISO 26000, a widely recognised CSR standard, defines CSR as a business's responsibility for its social and environmental impacts through transparent and ethical behavior that contributes to sustainable development.
The 17 UN Sustainable Development Goals (SDGs) provide a comprehensive framework that aligns with CSR strategies. These goals encompass a wide range of activities, such as eradicating poverty, promoting gender equality, developing sustainable cities and communities, taking climate action, offering free educational services, ensuring clean water access, and protecting biodiversity, both underwater and on land. By integrating these goals into their CSR strategies, businesses can significantly contribute to global sustainable development.
CSR has roots that stem from corporate philanthropy and religious charitable giving, which grew popular in the late 1800s. However, the term “corporate social responsibility” wasn't coined until 1953, when economist Howard Bowen wrote about the concept.
Contemporary CSR standards began to take shape in the 1990s within academic circles. By 2000, the Global Reporting Initiative (GRI) standards were established, quickly becoming one of the most widely adopted CSR frameworks. This period saw a significant rise in CSR reporting; between 2000 and 2010, the number of the world's 250 largest corporations producing CSR reports surged from about 1% to over 90%.
In addition to GRI, numerous other standards and frameworks have been developed, including the UN Global Compact (UNGC), the Sustainable Accounting Standards Board (SASB), the International Sustainability Standards Board (ISSB), and ISO 26000. More on these later!
While CSR began with large corporations, many small and medium-sized businesses are now reporting their environmental and social performance, often through certifications like B Corp.
Some critics argue that CSR can delay or distract from the establishment of regulatory measures for environmental and social issues. However, voluntary CSR reporting has also served as a testing ground for developing related policies. The need for consistency in reporting has led to new governmental regulations, such as the Sustainable Financial Disclosure Regulation (SFDR) in the EU, which includes climate change and human rights reporting requirements.
Environmental responsibility focuses on preserving the natural environment. Companies can pursue this by reducing pollution and emissions, recycling materials, replenishing natural resources, or creating eco-friendly product lines. Examples include implementing energy-efficient processes, sustainable sourcing and effective supply chain management, and waste reduction initiatives.
Ethical responsibility involves fair and ethical treatment of all stakeholders. This includes ensuring fair labour practices, providing equal opportunities regardless of age, race, culture, or sexual orientation, and maintaining transparency with investors. Companies practicing ethical responsibility commit to honesty, integrity, and fairness in their operations.
Philanthropic responsibility involves contributing to the welfare of society. This can be through charitable donations, supporting community projects, encouraging employee volunteerism, or sponsoring events. Companies might align with suppliers and vendors who share their philanthropic values, enhancing their social impact.
Financial responsibility means backing CSR plans with financial investments. This includes funding programs that promote sustainability, diversity, equity, and inclusion (DEI), and social awareness initiatives. Investing in research and development for sustainable products, creating a diverse workforce, and implementing comprehensive CSR strategies are crucial aspects.
CSR boosts a company's perceived value beyond just financial metrics. By implementing and reporting on CSR initiatives, businesses can drive positive change, improve their reputation, and stand out as leaders in their industry. This commitment to sustainability and social responsibility can attract customers, investors, and partners who prioritise ethical practices.
Investors increasingly use CSR data to assess companies for social and environmental risks. Strong CSR performance signals a sustainable, long-term business strategy, which is appealing to investors. According to CECP's 2021 Giving in Numbers report, around 80% of businesses share CSR data with investors, highlighting the growing importance of CSR in financial decision-making.
Customers favor brands that care about social and environmental issues. A 2020 Kantar Purpose study found that brands with a positive impact grew in value by 175% over 12 years, compared to 70% for others.
Brands are beginning to recognise their role as change agents and use CSR as a tool to make an impact. Brands can adjust their operations, advocate for causes, and even lobby the government for social and environmental safeguards. Their financial performance often improves, as a result.
👉 Social media has become a forum where journalists and customers scrutinise and challenge unethical business practices through independent research and boycotts. It's important for businesses to manage their image in a way that recognises the demand for socially conscious business strategies.
CSR initiatives help attract and retain employees. A 2021 Deloitte survey found nearly half of millennials (44%) and Gen Z (49%) consider ethics when choosing employers. Companies with strong CSR programs retain employees at a much higher rate, with retention rates 40% better than their competitors. And since losing an employee costs more than 40% of their annual salary according to the Washington Center for Equitable Growth, effective CSR programs can lead to significant cost savings and a more committed, satisfied workforce.
Integrating CSR practices can also lead to operational efficiency. Sustainable practices, such as energy conservation and waste reduction, can lower operating costs and increase profitability. Companies that invest in sustainable technologies and processes often see long-term savings and reduced environmental impact.
CSR can drive innovation by encouraging companies to develop new products and services that meet societal needs. This focus on innovation can lead to the creation of new markets and opportunities, providing a competitive edge. Businesses that innovate in response to social and environmental challenges often find new ways to grow and succeed.
The GRI standards are among the most widely used frameworks for sustainability reporting, offering guidelines for reporting on economic, environmental, and social impacts.
This voluntary initiative encourages businesses to adopt sustainable and socially responsible policies. It focuses on human rights, labor, environment, and anti-corruption principles.
SASB develops sustainability accounting standards that help public corporations disclose material sustainability information to investors.
The IR framework combines financial and non-financial data to provide a holistic view of an organisation's performance, focusing on value creation over time.
This international standard provides guidance on social responsibility, covering areas like organisational governance, human rights, labor practices, environment, fair operating practices, consumer issues, and community involvement.
CDP helps companies and cities disclose their environmental impact, primarily focusing on climate change, water security, and deforestation.
B Corps are businesses that meet high standards of social and environmental performance, accountability, and transparency. Certified B Corps are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment.
SAI is a global standard-setting organisation that promotes human rights at work. The SA8000 Standard is a certification for decent workplaces, based on conventions of the International Labour Organization (ILO), international human rights norms, and national labor laws.
👉 These frameworks help businesses align their strategies with global standards for responsible business practices, ensuring comprehensive and transparent CSR efforts.
| Framework | Description | Primary Focus Areas |
|---|---|---|
| Global Reporting Initiative (GRI) | Widely used framework for sustainability reporting | Economic, environmental, and social impacts |
| UN Global Compact (UNGC) | Voluntary initiative encouraging sustainable and socially responsible policies | Human rights, labour standards, environmental practices, and anti-corruption principles |
| Sustainable Accounting Standards Board (SASB) | Standards for disclosing material sustainability information to investors | Industry-specific standards for environmental, social, and governance issues |
| Integrated Reporting (IR) Framework | Combines financial and non-financial data for a holistic view of performance | Value creation over time, integrating financial and non-financial metrics |
| ISO 26000 | Guidance on social responsibility | Organisational governance, human rights, labour practices, environment, fair operating practices, consumer issues, and community involvement |
| CDP (formerly Carbon Disclosure Project) | Discloses environmental impact with a focus on climate change, water, and forests | Climate change, water security, deforestation |
| B Corp Certification | Certification for businesses meeting high standards of social and environmental performance | Social and environmental performance, accountability, transparency |
| SA8000 (Social Accountability International) | Standard for decent workplaces | Human rights at work, based on ILO conventions, international human rights norms, and national labour laws |
Avoid treating CSR as a mere PR exercise. Genuine commitment to CSR means integrating it into the core values and operations of your company. Customers and stakeholders can easily detect insincerity, which can damage your reputation.
Neglecting the perspectives and needs of stakeholders can lead to misaligned CSR initiatives. Engage with employees, customers, suppliers, and the community to ensure your CSR policies address relevant issues and garner support.
Setting overly ambitious or unrealistic CSR goals can lead to failure and disappointment. Establish achievable, measurable objectives that can be progressively scaled as your company’s CSR capabilities grow.
Failing to communicate your CSR efforts effectively can undermine their impact. Transparently share your goals, progress, and challenges with stakeholders through regular updates and reports.
Without measuring the impact of your CSR initiatives, it’s impossible to know what’s working and what isn’t. Use metrics to track progress and adjust your strategies accordingly.
CSR is a long-term commitment. Avoid policies that prioritise immediate benefits over sustainable, long-term impact. Consider the enduring effects of your initiatives on the environment, society, and your company’s reputation.
Consistency is key to successful CSR. Ensure that your CSR policies are applied uniformly across all departments and operations. Inconsistencies can lead to confusion and reduce the effectiveness of your initiatives.
Your employees are vital to the success of your CSR initiatives. Involve them in the development and implementation of CSR policies to enhance buy-in and participation.
👉 By avoiding these common mistakes, you can build a robust and effective CSR policy that enhances your company's reputation and contributes positively to society.
IKEA invests significantly in renewable energy projects and uses 83% recycled polyester in its textiles. Additionally, it introduced a plant-based meatball with just 4% of the carbon footprint of its traditional meatball.
LEGO is committed to climate change and waste reduction. The company focuses on reducing packaging, using sustainable materials, and investing in renewable energy to minimise its environmental impact.
Johnson & Johnson supports alternative energy initiatives and clean water and sanitation projects in communities worldwide, showcasing its commitment to global health and sustainability.
In 2020, Google matched 100% of its global electricity use with renewable energy investments. The company also focuses on green building practices for its offices to further reduce its environmental footprint.
Tesco, a UK supermarket chain, has reduced its greenhouse gas emissions by 54% since 2015. The company has donated 82% of its unsold food and removed 1 billion pieces of plastic from its packaging, demonstrating its dedication to sustainability and waste reduction.
These examples highlight how leading companies integrate CSR into their operations, benefiting both their business and the broader community.
Waiting for regulatory changes or reputational damage to drive change means missing out on opportunities to lead in your industry. Greenly helps you proactively engage in CSR, positioning your company as a leader in social responsibility and environmental stewardship.
Greenly offers a range of services to help you effectively manage your carbon footprint:
Greenly helps you engage suppliers and transition to low-carbon options, achieving greater transparency and effectively managing Scope 3 emissions. Our sustainable sourcing initiatives build greener partnerships and reduce emissions throughout your supply chain.
Our user-friendly platform simplifies the process of calculating and monitoring your carbon footprint. With Greenly, your business can effortlessly manage its environmental impact, meet ESG goals, and enhance sustainability.
Acting now on CSR prepares you for future regulations and positions your company as a proactive leader in sustainability. Greenly can help you seize these opportunities, transforming your business strategy from reactive to proactive and setting you apart from the competition.
Greenly offers comprehensive support for your CSR journey, from carbon measurement and custom action plans to supply chain decarbonisation and seamless platform integration. With our help, your business can significantly reduce its environmental impact and implement socially responsible business practices.
Contact Greenly today to start leading the way in CSR and build a greener future for your company.
As global warming continues to impact our daily lives, more and more people are attempting to transition to machines and resources that promote energy efficiency. Is improving energy efficiency an effective way to reduce emissions and rising global temperatures?
What is the corporate sustainability reporting directive, otherwise known as the CSRD? Why is it so important for the financial future of the European Union?
What is renewable energy, and why is renewable energy beneficial to the planet? Can renewable energy ultimately reduce climate change?
What are the 3 pillars of corporate sustainability and why are they important?
