The Importance of Corporate Social Responsibility

Corporate Responsibility

Jeff Bartel

Chairman and Managing Director

According to the 2022 Edelman Trust Barometer, individuals across the globe are looking to business and industry to take a more significant role in addressing climate change, racial injustice, and economic inequality, showing the importance of corporate social responsibility. This is fueled in part by trends of decreasing trust in governments and media.

Businesses can lean into these expectations from consumers and clients by engaging in corporate social responsibility, or CSR. These efforts help companies connect with customers, engage positively in their industries and the greater world around them, and potentially avoid current and future regulatory and public relations issues. For ethical firms, corporate social responsibility is not just crucial to the bottom line — it’s a duty of any good business.

The Importance of Corporate Social Responsibility on War

The war in Ukraine (and Russian aggression) paired with the global social consciousness afforded by 24-hour news cycles and social media has created an increasing role for businesses in times of war. Historically, governments often led the charge in sanctioning aggressors to limit war or warlike movements. Today, companies can — and are expected to — take a leading role in these efforts.

Volunteers helping Ukraine combat Russion aggression shows the importance of corporate social responsibility.

For example, nations can enact economic sanctions on aggressors, including embargoes, trade locks, and freezing assets. But governments are slow to act for numerous reasons, including a need to balance social responsibility with geopolitical protection of their own interests. In such cases, businesses may be the first to step up, refusing to trade with or within aggressing nations. They should also pressure companies helping aggressors by refusing to enter into supply, purchasing, or other agreements with them.

Companies should also leverage internal capabilities and resources to help impacted communities. That can range from diverting charitable donations for relevant causes to leveraging existing networks, such as supply chains, to help others deliver aid. Stepping up to model and lead such efforts can help encourage people and organizations of all types to follow suit.

How CSR Addresses Human Rights

Work — and under what circumstances it gets done — plays a massive role in the lives of billions of individuals across the globe. Yet, when it comes to human rights, corporate social responsibility starts in the workplace with factors such as fair labor practices, equal opportunity employment, and safe environments.

But the civil, economic, and community rights that businesses champion within the workplace should also be supported outside of a company’s in-house environments. Civil rights, for example, should be supported throughout customer service and sales channels by ensuring the mental and physical integrity of everyone with whom a business’s processes connect. Of course, that extends to communities and individuals; corporate social responsibility means ensuring a business’s processes are promoting positive results in the community — or at the very least not contributing to negatives.

Economic rights should be supported by avoiding unethical price gouging or providing avenues for success at all socioeconomic levels. A great example is pharmaceutical companies, which often sponsor grant programs to make more expensive medications available for those that could not otherwise afford them.

The Importance of Corporate Social Responsibility During Disasters

Disasters of various kinds demand corporate social responsibility to help cities and regions recover. One of the obvious ways businesses should engage in CSR in the wake of a disaster is to respond to community needs. Donating money, goods, or time is a common approach to CSR after a natural disaster like a hurricane.

But businesses should also invest in processes and infrastructure to help build community resilience for withstanding disasters or recovering more quickly after one. For example, financial organizations can create processes to ensure individuals and businesses within a community have access to cash flow and capital for disaster recovery efforts. This type of resilience is important in all industries — even the food industry. In the wake of disasters, the first needs of the community are often safe shelter, clean water, and food.

But corporate social responsibility doesn’t start during or after a disaster. It starts before it. Businesses should look for ways to mitigate future disasters by investing in measures like reducing climate change.

How CSR Aids the Fight for Social Justice

Evolving corporate social responsibility into corporate social justice can help businesses join the fight for social justice in ways that make sense for their brands and bottom lines. Human resources — from hiring to people management processes — is an obvious first internal step. Companies should ensure employees are trained to enact just processes within these areas.

But businesses must also engage with the community, going beyond philanthropic donations and virtue signaling via messaging. Companies that dig into their own impact on the community can create processes and products that better support social justice. They’re also able to bring their own resources to bear on the most critical issues for the community.

The Importance of Corporate Social Responsibility to the Bottom Line

Consumers today care about more than surface factors like quality and price — though obviously, those considerations do matter. But a business can have the best product at the best price and still lose out to a competing brand with better corporate social responsibility. Consumers want to buy from companies that make them feel good, align with their own values, and do good things in the world.

When it comes to the bottom line, CSR is a requirement. It can drive customer loyalty, powerful connections with business partners and consumers, and sustainable relationships lasting through market ups and downs. But CSR should also be seen as a duty for good companies that want to partner with others in the stewardship of resources and relationships around the globe.