What Is Corporate Social Responsibility?

Corporate social responsibility, or CSR, is a corporation's obligation to its stakeholders, which are any groups/people that have a stake or interest in a company's success and products. This includes customers, employees, suppliers, investors and the communities surrounding the business. Stakeholders have varying needs to be met. Whereas a customer's greatest concern may be the safety of a company's products, an employee's need might be for a fair wage and safe working conditions. An investor may be concerned with profits and the bottom line, while the community may care about a business limiting the pollution it causes. Thus, corporate social responsibility means maximizing the good and minimizing the bad effects your company has on these stakeholders' diverse interests.

Facets of CSR

In his 1991 article "The Pyramid of Corporate Social Responsibility," Dr. Archie B. Carroll, a business management author and professor, identifies four areas that make up a corporate social responsibility pyramid: legal, economic, ethical and philanthropic. This pyramid has become widely used and is meant to explain the main areas that a business's duties to its stakeholders fall under.


Corporations must ensure that their business practices are legal. Obeying regulations helps protect consumers, who rely on a business to be truthful about the products it sells, and investors, who stand to lose profits if a company is penalized or shut down because of illegal practices.


According to the 2011 book "Business Ethics," a company's economic responsibilities include being profitable in order to provide a return on investment to owners and shareholders, to create jobs in their communities and to contribute useful products and services to society. Part of being economically responsible means streamlining processes to find the most efficient ways to run your business and innovating your product offerings and marketing to increase revenue.


Beyond abiding by the letter of the law, an organization's ethical responsibilities include managing waste, recycling and consumption. These areas are sometimes regulated by city, state or federal governments, but often a company can go further than what the law requests and institute policies that help sustain the environment for future generations. Other ethical responsibilities come in the form of advertising, as in not stretching the truth to a customer just to get them to make a purchase, and treatment of employees. A company can provide more than minimum wage and minimum safety precautions for employees; it can provide excellent benefits, insurance and invest resources in building a clean and safe workplace where employees will be happy to come each day.


The authors of the 2011 "Business Ethics" also suggest that part of the philanthropic responsibility corporations face is to promote the welfare of humans and to spread goodwill. An example of this is The Xerox Foundation's "Xerox Employee Matching Gifts Program" in which Xerox matches its employees' contributions to higher education institutions up to $1,000. Similarly, the PepsiCo Foundation has committed over $2 million to World Food Program USA, which helps fight hunger in "vulnerable communities around the globe."