Corporate Social Responsibility

Corporate social responsibility (CSR) helps organisations to conduct their business in a way that brings them benefits while also benefiting those who are affected by their activities – their many "stakeholders".

CSR has a number of strands: economic, environmental and ethical as well as social. The word "social" is sometimes dropped, leading to CR for corporate responsibility, but the scope remains the same. There are other terms too; all imply a duty or compliance focus. But corporate social responsibility is also about creating opportunities for business in new socially aware markets.

A business needs to satisfy investors of capital, but companies are not just profit-making vessels for shareholders. They have other responsibilities. These include treating employees with respect, limiting damage to the environment, and acting with integrity towards customers. This formula is good for the business and its investors, as well as for society.

Who are the stakeholders?

Stakeholders are any interest group with a direct or indirect stake in the business. They may affect, or be affected by, business operations – i.e. they may either contribute to the success of the business or be impacted (often negatively) by the way the business conducts its trade. The basic list of stakeholders includes:

investors employees customers suppliers the wider community. Beyond this core group, any particular business will have a wider list of stakeholders. They might include:

industry regulators local media retired staff in receipt of a company pension. All have an interest in how the company behaves. The needs and the potential contribution of such groups are worthy of a company's thoughtful analysis and engagement. Some stakeholders may have their interests represented by pressure groups or other representatives.

Is corporate social responsibility a new idea?

The term is relatively new in management circles, but many of the underpinning ideas and elements have been around for a long time without being called CSR. Making philanthropic donations to charitable causes, for example, has a long tradition. Other elements, such as employee health and safety and fully transparent financial reporting, are well understood and enshrined in law, if not always practised.

What is new is a shift away from a narrow focus on how a company spends its money for social benefit (e.g. making donations) in favour of how a company earns its money (e.g. not exploiting the planet's scarce...