Corporate Social Responsibility, or CSR, is the recognition by businesses of every size that their activities have an impact on consumers, society in general, the environment, employees, customers, suppliers and shareholders.
Sometimes, the impact is neutral or occasionally even beneficial, but in some cases is harmful to other people and the environment.
CSR is all about businesses accepting their responsibility toward others when going about their legitimate activities.
There are laws that affect the way in which businesses act. In some jurisdictions, they are more stringent than in others and some governments are more rigorous than others in their enforcement. Consequently, much CSR boils down to corporate self-regulation.
The UK Government recognises that business has a major role to play in its own sustainable development goals. According to the Department for Business Innovation and Skills (BIS):
"The Government sees CR as the business contribution to our sustainable development goals. Essentially it is about how business takes account of its economic, social and environmental impacts in the way it operates – maximising the benefits and minimising the downsides."
BIS goes on to say:
"Specifically, we see CR as the voluntary actions that business can take, over and above compliance with minimum legal requirements, to address both its own competitive interests and the interests of wider society."
In previous generations, much of business has pursued profit regardless of any adverse impacts. Although there have been a few notable exceptions, there have been few incentives for most organisations to consider others in their business decisions.
Today, the difference is the strength of public opinion that is affected by concerns over the environment, fears of global warming and pressure on dwindling natural resources.
Governments are also playing a role by introducing environmental legislation, though few have attempted to regulate directly on CSR. One notable exception is the Danish Government, which has introduced a law requiring the largest companies to include a comprehensive statement about CSR in their annual financial reports. The information must include the organisation's CSR policy, how it is implemented and the results they have seen.
We are unlikely to see much more CSR legislation in the near future due to the sheer complexity and variety of business activities that would have to be taken into account. However, the simple requirement for organisations to publish their CSR activities brings them to the attention of investors, the media and the general public – all of which can exert powerful influences on businesses.
The result is that organisations need to aim for more than simply improving profit for shareholders. To be truly profitable companies must now have a triple bottom-line of Profit, People and Environment.