What is Corporate Social Responsibility? Why is it important for a company to adhere to it?

A corporation’s responsibility and commitment to its stakeholders is called Corporate Social Responsibility (CSR), and it means emphasizing the good and diminishing the bad contributions companies have on the varied interests of its stakeholders. Consumers want corporations to be accountable for implementing social change among their beliefs, practices and profits. According to Business News Daily, 75 percent of consumers will refuse to buy from a company if they learn it supports an issue contrary to their own beliefs. Ultimately, employees and consumers only want to work with a company that they respect and share the same values with.

Dr. Archie B. Carroll, a business management author and professor, discusses a four-part definition to describe how companies can implement CSR in his article “The Pyramid of Corporate Social Responsibility”. The pyramid explains the essential duties a business has to its stakeholders and ways they can be implemented. The four areas that make up the pyramid are Economic, Legal, Ethical, and Philanthropic.

Economic Responsibility:  Companies have the responsibility of providing investors with maximized returns. The key take-away here is companies need to be profitable by maximizing sales and minimizing costs through strategic decision making.

Legal Responsibility:  Companies are responsible for obeying the law and complying to all regulations which include environmental and consumer laws, laws protecting employees, fulfilling all contractual obligations and honoring warranties and guarantees.

Ethical Responsibility:  This is a company’s commitment to do what is right, just, and fair to avoid or minimize harm to their stakeholders. The responsibility is to avoid questionable practices and to assert ethical leadership.

Philanthropic Responsibilities:   Companies are expected to be good corporate citizens by fulfilling their philanthropic responsibility of contributing to financial and human resources within their community to improve the quality of life. Companies have the responsibility of providing programs that support the community and to promote and engage in volunteerism.

Implementing the four areas of the pyramid into your company’s practice will ensure transparency with stakeholders while having a positive impact on society and the environment.

 

Homeowners Management Company (HMC) takes corporate social responsibilities very seriously and prides itself on being transparent and available to its clients. If you are interested in learning more about corporate social responsibilities, we invite you to listen to our CEO, Jason Brown and Laura Ravazza, HMC Sr. Community Association Manager discuss how to develop a corporate social responsibility program and how rewarding it can be for the company.

 

 

 

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