# Corporate Social Responsibility: Types, Examples, and Business Impact

> **Definition**
>
> Social responsibility is the principle that individuals and corporations should operate in a way that has a positive impact on society and the world.

## What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility involves ethically-focused business practices that can affect societal and environmental well-being in positive ways. Growing numbers of investors and consumers seek to invest their money in companies concerned not just with increasing shareholder value but with ethical and sustainable business choices, as well. Critics have argued that sound business doesn’t consider society to be a [stakeholder](https://www.investopedia.com/terms/s/stakeholder.asp), but consumers are affecting the profitability of companies that ignore CSR by spending elsewhere.

### Key Takeaways

*   Growing Importance of CSR: As investors and consumers increasingly prioritize ethical practices, businesses are adopting corporate social responsibility (CSR) to meet these expectations and benefit society and the environment.
*   Dual Benefits of CSR: Implementing CSR not only positively impacts society and the environment but can also enhance a company's financial performance and brand reputation, thus benefiting shareholders.
*   Diverse CSR Practices: Companies engage in CSR through various means such as environmental efforts, ethical labor practices, philanthropy, and community volunteering, highlighting the flexibility and breadth of socially responsible initiatives.
*   Criticism and Challenges: Despite its advantages, CSR faces criticism for potentially conflicting with the profit-maximization purpose of businesses and suspects of inadequate rigor and accountability.
*   Role of Generations: Younger generations, including millennials and Gen Z, are playing a significant role in driving the adoption of CSR by aligning their consumer and investment choices with socially responsible companies.

![Social Responsibility in Business](https://www.investopedia.com/thmb/fHe1b35PtjeBM5B9RYxuz6BZv6s=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Socialresponsibility-ebcbc38e095840d59226dc3b0e2c2abb.jpg)

*Social responsibility can lead to positive brand perception and customer retention. — Michela Buttignol / Investopedia*

## The Core Principles of Social Responsibility

Social responsibility requires that individuals and companies act in the best interests of the environment and society as a whole. Social responsibility is referred to as [corporate social responsibility (CSR)](https://www.investopedia.com/terms/c/corp-social-responsibility.asp) when it applies to businesses, and it’s becoming more popular due to shifting social norms. Many companies have made CSR an integral part of their [business models](https://www.investopedia.com/terms/b/businessmodel.asp) without compromising profitability.

A Massachusetts Institute of Technology meta-analysis of 200 surveys over 20 years talked with business leaders in more than 70 countries, and there was a high level of interest in the topic. The report called CSR a “halo strategy” and concluded that “by presenting themselves as true believers in CSR (saints), businesses seek to improve the overall corporate image (the halo) and expect broad benefits from diverse stakeholders to follow (the warm glow).”

The core of CSR is policies that balance making profits with benefiting society. These policies can be enacted by commission such as through donations of money, time, or resources, or by omission practices such as by “going green,” reducing greenhouse gases, or abiding by U.S. Environmental Protection Agency regulations to limit pollution.

More [consciously capitalistic investors](https://www.investopedia.com/terms/c/conscious-capitalism.asp) and consumers are considering a company’s commitment to CSR practices [before making an investment](https://www.investopedia.com/invest-in-socially-responsible-roth-ira-5220521) or purchase. Embracing CSR can benefit the prime directive: maximization of shareholder value.

Actions or the lack of them will affect future generations. CSR is good business practice, and a failure to execute it can hurt the [balance sheet](https://www.investopedia.com/terms/b/balancesheet.asp). It can boost company morale, especially when a company can motivate its employees through social causes.

> **Important**
>
> CSR is generally more effective when a company takes it on voluntarily rather than waiting for the government to require it through regulation.

## Key Focus Areas in Corporate Social Responsibility

The [International Organization for Standardization (ISO)](https://www.investopedia.com/terms/i/international-organization-for-standardization-iso.asp) emphasizes that a business’s ability to maintain a balance between pursuing economic performance and adhering to societal and environmental issues is a critical factor in operating efficiently and effectively. Companies can adopt CSR by engaging in philanthropy, promoting volunteer work, and committing to ethical labor and environmental practices.

Companies focused on their environmental impact might aim to reduce their carbon footprint and limit waste. There’s also a responsibility to treat employees ethically, such as by offering a fair wage even when there are limited employee protection laws.

## Real-World Examples of CSR in Action

CSR takes on different meanings within certain industries and companies:

*   Starbucks Corp. ([SBUX](https://www.investopedia.com/markets/quote?tvwidgetsymbol=SBUX)) has committed to CSR from the start, including sustainability and community welfare. It purchases Fair Trade Certified ingredients to manufacture products, and it actively supports sustainable farming in the regions where ingredients are sourced.
*   Ben & Jerry’s Homemade Holdings Inc. has integrated CSR into the core of its operations. Like Starbucks, the company purchases Fair Trade Certified ingredients.
*   Salesforce.com Inc. ([CRM](https://www.investopedia.com/markets/quote?tvwidgetsymbol=crm)) developed what it calls the “1-1-1 model.” The company dedicates 1% of its equity, 1% of its product, and 1% of its employees’ time back to the community.
*   Big-box retailer Target Corp. ([TGT](https://www.investopedia.com/markets/quote?tvwidgetsymbol=TGT)) is also well known for its social responsibility programs. It has donated money to communities in which the stores operate, including education grants.

## Examining the Criticisms of CSR

Not everyone believes that businesses should have a social conscience. Economist [Milton Friedman](https://www.investopedia.com/terms/m/milton-friedman.asp) stated that the “‘social responsibilities of business’ are notable for their analytical looseness and lack of rigor.” Friedman believed that only individuals can have a sense of social responsibility. By their very nature, businesses cannot. Some experts argue that CSR goes against the primary goal of businesses, which is to maximize profit.

A conservative backlash to diversity, equity, and inclusion (DEI) policies has appeared, and this can affect employment initiatives that are part of CSR. Florida banned the practice in state-funded colleges in May 2023 under the leadership of Gov. Ron DeSantis. Phil Lyman, a state representative from Utah, blamed the collapse of Baltimore's Francis Scott Key Bridge on DEI.

The Wharton School of the University of Pennsylvania noted in its house journal, Knowledge at Wharton, that “DEI is under attack.” It started “the Relationships Across Differences Roundtable (RADs), a coalition of more than 70 academics and industry leaders committed to advancing inclusivity in all its forms—race, gender, ethnicity, religion, ability, neurodiversity, and age. They are partnering to share science-backed insights and best practices, strategize on common problems, and find ways to engage all stakeholders, even the ones who don’t believe in DEI.”

Some CSR policies continue to join the mainstream despite such opposition, and they’re practiced among a wide range of companies. Generations such as [millennials](https://www.investopedia.com/terms/m/millennial.asp) and [Gen Z](https://www.investopedia.com/generation-z-gen-z-definition-5218554) are embracing it and driving change in the workplace and as consumers.

## What Are Some Examples of Social Responsibility?

CSR includes companies engaging in environmental preservation efforts, ethical labor practices, philanthropy, and promoting volunteering. A company might change its manufacturing process to reduce carbon emissions.

## What Are the Main Benefits of Social Responsibility?

Benefiting society and lessening the negative impacts on the environment are among the main benefits and goals of CSR. Consumers are increasingly looking to buy goods and services from socially responsible companies, and this can have a positive impact on their [bottom lines](https://www.investopedia.com/terms/b/bottomline.asp).

## How Does Social Responsibility Benefit Companies?

Companies that implement social responsibility programs can potentially increase their bottom lines and boost their [brand image](https://www.investopedia.com/ask/answers/032615/how-does-brand-image-and-marketing-affect-market-share.asp) as well. Social responsibility programs can also have a positive impact on morale among employees.

## The Bottom Line

Corporate Social Responsibility (CSR) can be integrated into business models without sacrificing profitability. Its dual benefits are advancing the welfare of society and enhancing shareholder value. [Socially responsible companies](https://www.investopedia.com/terms/s/social-audit.asp) with successful CSR practices include Starbucks and Ben & Jerry's. Consumer demand for CSR-conscious businesses can affect company profitability and brand image. This impact can be positive if a company adopts a CSR approach.

> **Article Sources**
>
> 1.  Massachusetts Institute of Technology, Sloan Management Review. “[Why Companies Practice Corporate Social Responsibility](https://sloanreview.mit.edu/article/why-companies-practice-corporate-social-responsibility/).”
>     
> 2.  Lu, Hao, et al. “[How Do Investors Value Corporate Social Responsibility? Market Valuation and the Firm Specific Contexts](https://www.sciencedirect.com/science/article/abs/pii/S0148296320308237).” _Journal of Business Research_, vol. 125, March 2021, pp. 14–25.
>     
> 3.  International Organization for Standardization. “[Standards](https://www.iso.org/standards.html).”
>     
> 4.  International Organization for Standardization. “[ISO and Small & Medium Enterprises](https://www.iso.org/iso-and-smes.html).”
>     
> 5.  Starbucks. “[Starbucks Ethical Sourcing of Sustainable Products](https://www.starbucks.com/responsibility/sourcing/).”
>     
> 6.  About Starbucks. “[Giving More than We Take](https://about.starbucks.com/sustainability/).”
>     
> 7.  Ben and Jerry’s. “[Fairtrade](https://www.benjerry.com/values/issues-we-care-about/fairtrade).”
>     
> 8.  Ben and Jerry’s. “[Our Values, Activism, and Mission](https://www.benjerry.com/values).”
>     
> 9.  Salesforce. “[How Far Can the 1-1-1 Model Go? This Tech Darling Has a Unique Approach](https://www.salesforce.com/news/stories/how-far-can-the-1-1-1-model-go-this-tech-darling-has-a-unique-approach/).”
>     
> 10.  Target Corporate. “[Offering Debt-Free Degrees To More than 340,000 Target Team Members? Now That’s a Smart Move](https://corporate.target.com/news-features/article/2021/08/target-tuition-assistance).”
>      
> 11.  Target Corporate. “[Sustainability & Governance/People, Planet, Business](https://corporate.target.com/sustainability-ESG).”
>      
> 12.  The New York Times. “[A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits](https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html).”
>      
> 13.  National Public Radio. “[Florida Gov. Ron DeSantis Signs a Bill Banning DEI Initiatives in Public Colleges](https://www.npr.org/2023/05/15/1176210007/florida-ron-desantis-dei-ban-diversity).”
>      
> 14.  Utah News Dispatch. “[Lyman Blames DEI For Baltimore Bridge Collapse, but Admits He Didn’t Write Social Media Post](https://utahnewsdispatch.com/2024/03/27/utah-governor-candidate-phil-lyman-blames-dei-for-baltimore-bridge-collapse/).”
>      
> 15.  Knowledge at Wharton, Wharton School of the University of Pennsylvania. “[Is DEI Going Away? Here’s What Experts Say](https://knowledge.wharton.upenn.edu/article/is-dei-going-away-heres-what-experts-say/).”
>      
> 16.  Massachusetts Institute of Technology, Sloan School of Management. “[Social Responsibility Matters To Business—A Different View from Milton Friedman from 50 Years Ago](https://mitsloan.mit.edu/experts/social-responsibility-matters-to-business-a-different-view-milton-friedman-50-years-ago).”