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Corporate Social Responsibility and Why It Matters

Aug 15, 2024

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Key Insights

  • Corporate social responsibility has evolved over the years, expanding from community impact to include responsibilities toward employees, customers, and stakeholders.
  • Incorporating strategic social responsibility can benefit both the organization and society at large. 
  • A comprehensive Corporate Social Responsibility (CSR) strategy encompasses several key aspects, including environmental, ethical, philanthropic, and economic responsibilities. 
  • CSR practices enhance a company’s reputation, attract customers, and help recruit and retain top talent, contributing to both immediate and long-term business success.
  • Partnering with philanthropic professionals, like Greater Houston Community Foundation, can help organizations develop effective CSR and corporate giving programs tailored to their specific needs.

Table of Contents

While many organizations are just finding out about, and beginning to develop programs for, corporate social responsibility (CSR), the concept has been in existence for over a century. Over time, expectations and accountability for organizations have significantly increased, along with a broadening of the issues that CSR aims to address.

Let’s explore the philanthropic side of corporate social responsibility, detail how it is changing, and explain why it matters for organizations, small and large. Continue reading for a crash course on corporate giving programs, or contact Greater Houston Community Foundation today to start building a comprehensive corporate giving strategy for the CSR program at your organization. 

What is corporate social responsibility and why is it important?

Corporate social responsibility is, broadly, the responsibility that businesses and other organizations hold to the communities that sustain them. CSR was initially focused on organizations impacting their local communities and society at large, but has since expanded to include organizational responsibility to employees, customers, and stakeholders. 

Corporate Social Responsibility is a way for companies to actively consider the social and environmental impact of what they do — a way to make a continued commitment to operating in a socially, environmentally, and economically sustainable manner. 

Operating in a socially responsible, sustainable way is important on a macro level, but CSR practices can also mean immediate and long-term benefits for businesses themselves. 

Continue reading: What is corporate citizenship?

The history of corporate social responsibility

Corporate social responsibility has grown in scope along with our understanding of how corporations intersect with society. For context on how these ideas developed, a brief history of CSR is as follows. 

  1. Some of the most famous industrialists in history are also some of the first corporate philanthropists. Andrew Carnegie and John D. Rockefeller, under pressure from growing concerns about working well-being, donated hundreds of millions of dollars. 
  2. Corporate social responsibility as we know it was coined by Howard Bowen in 1953, in his book Social Responsibilities of the Businessman. In it, Bowen argued that businesses have an obligation to operate in a way that benefits society. 
  3. In 1971, the Committee for Economic Development introduced the idea of a social contract between businesses and society, arguing that because businesses exist only because of public consent, they have an obligation to the public. 
  4. In 1991, Donna J. Wood (Corporate Social Performance Revisited) and Archie B. Carroll (The Pyramid of Corporate Social Responsibility) published two essential pieces for practical CSR building, giving businesses a framework for implementing real change. 

Carrol’s Pyramid introduced a hierarchy of corporate responsibilities, suggesting that economic and legal responsibilities are the foundations that allow corporations to fulfill their ethical and philanthropic responsibilities as well. 

Types of corporate social responsibility

What are the 4 types of CSR? Building on Carrol’s Pyramid, and adapting to address unavoidable environmental responsibilities, modern corporate social responsibility is generally divided into four categories. 

1. Environmental responsibility

Environmental responsibility focuses on a company’s impact on the environment. It involves efforts to minimize the ecological footprint of doing business by adopting sustainable practices like reducing waste, conserving energy, and using renewable resources. Environmental responsibility also includes initiatives aimed at mitigating climate change, preserving biodiversity, and promoting environmental awareness.

2. Ethical responsibility

Ethical responsibility refers to a company’s commitment to conducting business in an ethical manner. This includes ensuring fair labor practices, respecting human rights, and maintaining transparency and integrity in all business dealings.

3. Philanthropic responsibility

Philanthropic responsibility involves an organization’s efforts to give back to society through charitable donations, community engagement, and support for social causes. Philanthropic initiatives can look like funding education programs, supporting disaster relief efforts, or sponsoring cultural and artistic events.

4. Economic responsibility

Economic responsibility extends beyond the confines of the C-suite; it encompasses a holistic approach to ensuring that success brings tangible benefits to employees, shareholders, and the communities where the business operates. This means actively fostering an inclusive environment that prioritizes fair wages, job security, and professional growth for employees, thus promoting their overall well-being and satisfaction.

Although the pyramid may be the genesis of this multi-faceted approach to CSR, the four main categories should not be thought of as tiered. Instead, the four categories of CSR should all be considered in order to form a comprehensive and sustainable plan for responsible business practices. 

Benefits of corporate social responsibility

The benefits of corporate social responsibility practices extend to the communities and individuals surrounding the businesses and also to the businesses themselves. A few of the major benefits of CSR practices include:

  1. Improved reputation: Operating ethically and responsibly can bolster your reputation with everyone who knows you, not just in the eyes of your customers and employees. 
  2. Attracting and retaining customers: Now more than ever, customers make purchasing decisions based on a company’s record of CSR practices — even if they’ve never heard of CSR in their lives. 
  3. Bringing in top talent: Committing to operating in a socially responsible way is also a significant decision-driver for the top of the talent pool. If your organization and another offer similar salaries and benefits, a culture of caring can go a long way in breaking a tie for top talent in the job market. 

CSR programs can give your organization access to new opportunities, and a well-designed corporate giving program can even benefit your organization’s bottom line, impacting the success of your organization immediately and tangibly. 

Corporate social responsibility: examples and stories of success

Greater Houston Community Foundation has established philanthropic initiatives that enhance CSR strategies, resulting in positive outcomes for communities nationwide.

Mustang Cat

Mustang Cat, a privately held Caterpillar (Cat) Dealer headquartered in Houston, exemplifies corporate social responsibility through a culture of servant leadership that extends far beyond their business operations. 

With the help of Greater Houston Community Foundation, they established the Mustang Cat Charitable Foundation, which has donated over $4.5 million to support food banks, crisis centers, and neighborhood ministries across Texas. 

Additionally, they’ve created an employee disaster relief fund and a scholarship program to support its employees and their families. Through these initiatives, Mustang Cat demonstrates a commitment to enriching the communities it serves and aligning its business success with meaningful social impact.

Enbridge

Enbridge has long demonstrated its commitment to corporate responsibility through many community support initiatives. Since 2001, Enbridge has granted over $25.4 million with the help of Greater Houston Community Foundation, establishing a disaster relief fund and a corporate donor advised fund to address community needs. 

Enbridge’s corporate citizenship program, Fueling Futures, focuses on safety, vibrancy, and sustainability within communities, supporting local safety initiatives, inclusive programs, and environmental preservation. They have partnered with organizations like United Way of Greater Houston, Friends of RGV Reef, YES Prep, and Buffalo Bayou Partnership to extend and amplify their impact across North America.

How community foundations can bolster your corporate social responsibility and good governance efforts

Community foundations like Greater Houston Community Foundation (Foundation) can be critical for your company to take charitable giving to the next level. Your business likely already makes donations, sponsors events, or engages in other forms of charitable giving, but formalizing these efforts into a corporate giving program can enhance your impact and benefits. 

A few ways that the Foundation can help you level up your philanthropic giving and contribute to your overall CSR strategy include:

  • Corporate foundations
  • Executive donor advised funds
  • Scholarship funds
  • Grantmaking administration and strategy 
  • Employee disaster relief funds

There is no one-size-fits-all solution for your organization’s philanthropic needs, which is why Greater Houston Community Foundation works with you to develop corporate giving programs from the ground up so that your business can impact the communities in which they operate and beyond.

Continue reading about how to start a corporate philanthropy program

Partner with Greater Houston Community Foundation to strengthen your corporate social responsibility strategy

Corporate social responsibility is increasingly recognized as a vital ingredient for organizations seeking to thrive in any industry. For businesses, incorporating charitable giving into financial planning not only reflects their commitment to positive social impact but also serves as a catalyst for growth.

By integrating corporate giving programs into your CSR and financial strategies, organizations can allocate resources effectively to philanthropic initiatives that align with their values and business goals. This dual focus on charitable giving and financial planning allows businesses to create meaningful programs that benefit both their communities and their bottom line. 

To build meaningful corporate giving programs made just for you, call Greater Houston Community Foundation at 713-333-2200 or reach out directly to get started.

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