Corporate Social Responsibility
Corporate Social Responsibility (CSR) is a concept within “business ethics” that focuses on the role of companies in society. It represents a set of duties and obligations that a company must fulfill to preserve, protect, and assist the community in which it operates.
The demand for organizations to “act responsibly” towards society has intensified in recent decades, driven by their growing influence on the pillars of sustainable development: “economy,” “society,” and “environment.” This has led to the emergence of the concept of Corporate Social Responsibility or CSR in the world of management. In a simple definition, CSR means that organizations are responsible for the society in which they operate because they utilize its human, natural, and economic resources.
Contrary to the traditional view of management and business, organizations are no longer solely accountable to their shareholders and should not focus exclusively on maximizing short-term shareholder profits. Therefore, it is expected that organizations, which interact with other stakeholders as well, will also consider their legitimate demands. Corporate social responsibility or social obligations of a company have been divided into four aspects: environmental, human capital, philanthropic, and ethical social responsibility, with environmental social responsibility being the most important.
Corporate social responsibility is of great importance in various countries, and specific laws and regulations have been developed and implemented in each country to ensure the application of its principles. Examples include the United States, Japan, Turkey, the United Arab Emirates, and the European Union. In Iran, a draft law on corporate social responsibility or organizational social responsibility with number 21019174, dated 4/5/1402, has been prepared and developed by the Social Studies Office of the Research Center of the Parliament.
What is Corporate Social Responsibility (CSR)?
While it’s undeniable that companies operate with the primary goal of maximizing profits, maintaining positive relationships with the communities they operate in is crucial. Businesses that can demonstrate a social conscience stand a better chance of success, and this is where corporate social responsibility comes into play. The largest companies invest in their social responsibility and have dedicated departments or branches tasked with addressing their CSR-related matters.
3. CSR Increases a Company's Assets
- Corporate social responsibility allows a company to cultivate its assets, which include goodwill, trust, and a good reputation. Businesses consider their good name and brand to be one of their most valuable assets, and by demonstrating that they take their social responsibility seriously, they encourage the public to take them seriously as well. As a result, they will build a stronger brand.
2. CSR Improves a Company's Profit Margin
A socially responsible company demonstrates that it incorporates ethical practices into how it conducts business. Customers are increasingly aware of local, national, and global issues, and it’s undeniable that their purchasing decisions are now heavily influenced by these issues. Therefore, they tend to buy more from companies that demonstrate their concern and action on issues that customers care deeply about. This will foster customer loyalty, resulting in higher sales and profits.
1. CSR Improves a Company's Public Image
Successful businesses have a deep understanding of the need for a positive perception from their audience. Of course, their primary responsibility is to deliver value for the money they receive, offering high-quality products and services, followed by good after-sales support, customer service, and civic goals. As a result, they demonstrate how the company values its customers, the environment, and society as a whole. If you’ve noticed, companies with good CSR policies receive more and better media coverage, making it a great way to promote their business. At Tractor Manufacturing Forge Company, we’ve made every effort to take positive and effective steps in this area.
Types of Corporate Social Responsibility (CSR)
We’ve established that Corporate Social Responsibility (CSR) means a company should define its actions in a way that is socially accountable to its customers, shareholders, and the world. But what does this really mean in practice? Let’s break this down by exploring the different types of corporate social responsibility.
1. Environmental Social Responsibility
For companies committed to CSR, it’s important to have environmentally friendly practices. Corporations can contribute significantly to greenhouse gas emissions, pollution, waste, and the depletion of natural resources. But by committing to environmental responsibilities, a business takes ownership of its impact on the environment.
2. Ethical Social Responsibility
Ethical responsibility means ensuring that a business engages in fair business practices in all its dealings. This includes things like treating all employees, stakeholders, and customers ethically and respectfully, or setting higher minimum wages.
3.Philanthropic Social Responsibility
In today’s world, it’s almost expected that businesses will donate to the communities they operate in and to causes that align with their company mission. When businesses do this, they are pursuing their philanthropic responsibility.
4.Economic Responsibility
When a business acts with economic responsibility in mind, it will make financial decisions that prioritize doing good, not just making more money. This means that this type of CSR is intertwined with the other types above. For example, it could mean that a company contracts with a supplier that uses environmentally friendly materials, even if it costs more
Corporate Social Responsibility Guidelines
The International Organization for Standardization (ISO) released a set of voluntary guidelines in 2010 to assist in implementing corporate social responsibility. These standards provide recommendations and guidance for CSR (due to the qualitative rather than quantitative nature of CSR). This guideline explains the concept of corporate social responsibility and helps organizations translate CSR principles into practical actions. The standard is intended for all organizations, regardless of their activity, size, or location. Furthermore, as many key stakeholders from around the world participated in the development of ISO 26000, it can be considered an international consensus.
How to Implement CSR in Your Business
Now, let’s explore what needs to be done to implement CSR:
1.Assess Your Current Efforts
You’ve likely already taken some steps towards corporate social responsibility, even if you weren’t aware of it. Review your company’s environmental and social practices and consider their impact on your products and services.
2.Define Your CSR Goals
Next, try to define your specific CSR goals and consider your company’s mission, values, and business plan.
3.Identify Your Priorities
Now, select a set of logical tasks with higher priorities. It’s important to seek input from employees, partners, and shareholders.
4.Create an Action Plan and Follow-up
Finally, develop an action plan to implement your priorities. This plan should include a detailed timeline, a list of people responsible for tasks, and dedicated resources for the project. Schedule regular follow-up meetings to monitor the implementation of the action plan, identify strengths and weaknesses, and make necessary decisions.