Corporate social responsibility (CSR)

CSR refers to organisations considering and managing their impact on a variety of stakeholders. It is widely accepted that organisations have responsibilities beyond simply making a profit; their actions can affect those outside the organisation and  hence they should take responsibility for that behaviour. Additionally, the concept  of ‘enlightened self interest’ suggests that organisations which act in a socially responsible manner may be rewarded with increased customers.

Carroll devised a four-part model of CSR: economic responsibility, legal  responsibility, ethical responsibility and philanthropic responsibility. True CSR  requires satisfying all four parts consecutively.

Considering Carroll’s model in more detail:

Economic responsibilities relate to the ability of the organisation to stay in  business and therefore satisfy its stakeholders, such as providing a return to  shareholders and products at a fair price to customers.

The economic responsibility must be achieved in order to attain higher level responsibilities.

Legal responsibility implies that an organisation will follow the laws of the  jurisdiction in which it is based as well as any internal moral views or objectives that the organisation has set. Not complying with the law results in lack of social  responsibility, and has been demonstrated by organisations taking part in illegal  activities such as price-fixing or anti-competitive behaviour.

Legal responsibilities may therefore limit economic responsibilities by providing  some social stance to organisations.

Ethical responsibilities relate to what is expected by society from organisations,  i.e. to doing what is seen to be right compared with doing what is simply legal. At  this level organisations start to act in the better interests of society by reducing  carbon emissions, or avoiding activities that would result in damaging  environmental consequences.

Ethical responsibilities are therefore higher than both economic and legal  responsibilities.

Philanthropic responsibilities generally concern actions desired of organisations  rather than those required by organisations. These may include charitable  donations and community support programmes. Activities are carried out more  because the organisation believes it is the correct thing to do rather than because it  must.