Corporate Social Responsibility: What is it?

What is Corporate Social Responsibility? As the decade approaches, businesses and consumers alike have concluded that the old business methods are not sustainable. More and more focus is being brought on how a business allocates its money and whether or not they are making efforts to enact positive social change or, at the very least, function as a societally productive entity. 

Deciding to invest ethically, divesting from unethical investments, and championing reformed corporate taxation is becoming more acceptable in the business world, benefitting the world instead of just the businesses themselves.

Attitudes Are Shifting

Any good business owner understands the importance of resource management and allocation. Knowing what resources a business does and does not need and how to use those resources effectively can transform a business into a well-oiled machine that operates efficiently with as little waste as possible. This is becoming an even more important tool for business owners as Corporate Social Responsibility (CSR) is gaining popularity among millennial consumers.

Millennials think corporations should use immense resources to help improve the world around them. Businesses that practice Corporate Social Responsibility actively work to reduce their carbon footprint, participate in fair trade, improve labor policies within their corporate structure and throughout their field, and enact corporate policies that benefit both the environment and society. CSR isn’t a radical idea, considering business giants like Ford, Coca-Cola, Google, General Electric, and Starbucks have all tried to enact good CSR programs over the last few years.

This invigorated sense that corporations and business entities need to take responsibility for the world around them and the society that allows them to exist is a welcome change to the status quo. For years, businesses operated under the idea that, as long as they remained profitable, the ends justified the means — no matter who or what was harmed. Consumers, meanwhile — millennials, in particular — are now flexing their economic muscles, sending a clear message that CSR is vital to the continued success of a business. 

Divestment Is Becoming More Popular

The stock market can seem complex and esoteric to the average person that doesn’t have the financial capability to make any meaningful investments. However, this is not the case for huge companies with a large amount of capital to invest. Companies that choose to invest in the stock market often do so with little regard as to the impact that their investment might have, choosing to back industries that have devastating environmental impacts.

Divestment from harmful industries, such as the fossil fuel industry, is only now gaining traction among wealthy institutions due to the efforts of environmental activists. Entities like Harvard University, for example, use capital to make unethical investments. In the case of Harvard, those that provide that capital, the student body are now speaking up to voice their displeasure in using the funding they provide. This can also be done with corporations through organized boycotting and petitioning of the corporate entity.

Governmental divestment of public pension funds is perhaps the most common example of divestment. This method of divestment can often be a double-edged sword, as divestment occurs from what legislators see as harmful industries, a decision often driven by constituents and lobbyists alike. The court of public opinion often drives this divestment, which can result in religious organizations holding sway over the investment of public funding in immoral industries such as the alcohol or marijuana industry.

Ethical Investment Is A Good Strategy

Encouraging businesses to engage in ethical investing is a positive step in ensuring that the economy of the United States works to benefit the majority of Americans instead of a select few. When companies make ethically driven investments, they effectively invest in America’s future and US citizens’ long-term health. Investments prioritizing the environment have the added benefit of helping ensure Americans have clean air and breathe water. This is a compact or Corporate Social Responsibility.

Investing in renewable energy sources and other ethically sound industries isn’t just about pleasing consumers or cultivating a positive corporate image. Ethical, sustainable green investments produce commercially viable returns, making these investments even more appealing to large companies and corporations that are reticent to leave profitable yet ethically dubious investments behind.

While the average American can make a sizeable and ethically sound investment if they run into a large amount of money or refinance their home to capitalize on falling interest rates, the real change must come from huge companies. The simple fact is that while individuals might have the drive and willingness to put their money behind socially and environmentally beneficial investments, the amount of capital needed to make any real impact is currently held by business entities and wealthy institutions.

At the end of the day, consumers do have real power. They can voice their concerns and choose to patronize businesses that choose to make ethical investments and divest from more dubious sources. Americans need to stand up and let their voices be heard.