Customers and employees increasingly consider a firm’s corporate social responsibility (CSR) performance when making purchase and employment decisions. Businesses cannot be successful without considering the social and environmental systems they belong to. CSR has become a must for businesses to thrive.
During this webinar, Ann Terlaak explains the CSR model, how it has changed over time, and the way businesses should put it into practice.
What is corporate social responsibility?
Corporate social responsibility (CSR) is a business model that helps keep companies accountable by focusing on how they interact with society and the environment. By making positive commitments to CSR, companies can make an impact on economic, environmental, and social aspects of society. These three components of CSR are interdependent on one another. For example, a business will not thrive in a society that is unjust, and a society is not fair if climate change has a disproportionate impact on lower income communities.
How has CSR changed?
In 2019, the Business Round Table, an association of America’s leading CEOs, announced that the organization would commit to leading their companies for the benefit of all stakeholders including customers, employees, suppliers, communities, and shareholders. This shift moves away from shareholder primacy and includes commitments to stakeholders that weren’t there before. This statement is the result of changes in the business landscape, making CSR central for continued success.
Consumers, workforce, and the broader community are consistently asking for companies to make stronger commitments to CSR. By 2025, 75% of the workforce will be Millennials, and 64% of that group will not work for a company that doesn’t value CSR (Brookings, 2014).
Putting CSR into practice
Businesses have moved away from diversified definitions and enactment of CSR, like requiring recycling or companywide volunteer days, to relying on accounting and reporting standards for defining and measuring CSR. Looking to these standards can help a company pinpoint the best way for them to practice CSR and define how they measure success and impact. There is a lack of overlap in standards across different consulting firms, so it’s important to choose what fits with the goals of your business.
Ann Terlaak is an associate professor of management and human resources at the Wisconsin School of Business. Terlaak directs WSB’s graduate certificate in business, environment, and social responsibility and the Nelson Institute for Environmental Study’s undergraduate sustainability certificate. Her research has been published in top tier academic journals, including the Academy of Management Journal, the Academy of Management Review, Organization Science, and the Strategic Management Journal. Terlaak received her PhD from the Bren School of Environmental Science and Management at the University of California-Santa Barbara in 2002.