04 Main Components of Corporate Social Responsibility

04 Main Components of Corporate Social Responsibility

Corporate Social Responsibility (CSR) is one of the most popular topics in the modern business world. Since the competition between products and services is getting fierce and the customers are getting more and more educated about the contribution of the business organizations to the improvement of the world, the use of the corporate social responsibility concept has become more important.

Corporate Social Responsibility (CSR) is identified as the self-regulation of businesses with the aim of making profits while being socially accountable. there is no guideline or right way of conducting corporate social responsibility activities. Based on the type of the business and the type of the business environment, the corporate social initiatives conducted by the businesses can differ from one organization to another.

In today’s socially conscious business environment, customers are more aware of the organizational activities and they tend to show more interest in the businesses that are socially responsible and provide a value to empower and uplift the social and environmental status of the world.

There are different models of corporate social responsibility that exist in the business world However, there are four main components that can be identified commonly.

Economic Social Responsibility

The most common goal of many business organizations is to make profits. Economic social responsibility also starts with being profitable. It is identified that, before giving anything back to society, the business must make enough income for survival and growth. This sustainability concept includes paying what is necessary for the stakeholders of the business such as providing profits to shareholders of the business, paying wages to employees, tax payments to the government, and making payments related to the supply chain of the business.

The businesses can show their economic social responsibility by being transparent to all the interested parties regarding the financial status of the business. This can be achieved by providing true and accurate details about the financial status of the business to the required parties.

Legal Social Responsibility

In the modern business world, customer loyalty is the main method of creating a long-term customer base for the product. Consumers are more likely to purchase the products from the brands they can trust and most of the customers are willing to pay more than the competitor price to purchase from trustworthy brands.

The process of building customer trust is a part of a legal obligation the businesses have to fulfill. Engaging in legally accepted business activities, paying required taxes, providing true information about the products to the customers, and securing confidential customer details can be identified as a few examples of the legal requirements for any type of business organization.

Not being attentive to the legal requirements can create financial as well as reputational damages to the business. Most importantly, the business can lose its customer trust and the ability to achieve a competitive advantage in the market.

Discretionary Social Responsibility

Most business organizations use their resources and time for the benefit of society by conducting initiatives to improve society and the environment. These types of corporate social responsibility initiatives are considered discretionary social responsibility activities. These activities are mostly carried out in a way that is meaningful for the community as well as to the brand.

The initiatives can be conducted by providing opportunities for the employees to contribute their time, money, or skills for the activities, or the initiative can happen through charitable organizations that are linked to the company’s vision and mission.

These types of corporate social initiatives ensure to convey a message to the public that the business is not only considerate about achieving profits but also to make the world a better place for the present and future generations. This can lead to creating a strong positive impact on the potential customers of the products.

Ethical Social Responsibility

Ethical social responsibility is doing the right thing at all levels of the business. This can be identified as a combination of economic and legal social responsibilities. From the beginning of the supply change management process to ensure customer satisfaction, the entire business process should ensure ethical practices such as making payments on time, minimizing the environmental impact from the business, careful utilization of resources and consideration to use recycling options, etc.

Adhering to ethical practices in every level of business can create a positive impact on the customers and it can lead long term positive customer relationships to the products or services. 

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