Corporate social responsibility (CSR) was initially embedded in Roman & English law.
The CSR pyramid consists of 4 dimensions: economic, legal, ethical & philanthropic.
CSR positively impacts employee engagement, job satisfaction, & trust while reducing stress and burnout.
The days of businesses operating with impunity and prioritizing profit above all else are long gone. Increasingly, the public is asking more of big corporations and small businesses alike.
From clients to consumers to existing and potential employees, individuals are not only concerned with products or services but also how an organization conducts itself and whether it has a broadly positive impact on the planet.
With these emerging trends in mind, we explore the importance of corporate social responsibility not only as a legal obligation or another exercise in checking off boxes, but as a critical, active pathway to enhancing community and wellbeing.
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Social responsibility is not a new concept for organizations and institutions to be thoughtful about. In fact, the word “corporation” stems from the Latin word corpus, which in ancient Rome referred to the body of the people (Chaffee, 2017).
As such, corporations were seen as inherently social enterprises in Roman law and often organized for social purposes. This emphasis on social enterprise was reflected in English law right through to the Middle Ages (Chaffee, 2017).
After the Middle Ages, social responsibility dropped off the agenda and reemerged in earnest in the wake of the industrial revolution. In response to pressure from the church to repair the moral decline of society, social reform and concern over the welfare of workers became a prominent feature of business and scholarly discourse (Wells, 2002).
After World War II, the popularity of social responsibility was revived once more, in part due to concerns over how some organizations made substantial profits during the war. As a result, the Committee for Economic Development was created in 1942 to act as a safeguard against businesses profiting from morally dubious means. In essence, the committee promoted the social conscience of businesses (Frederick, 2006).
Academic interest in defining social responsibility appeared in the early 1950s, when Howard Bowen (1953) — the father of CSR — pondered in his 1953 book Social Responsibilities of the Businessman’ to what extent corporate interests and societal interests could ever align. Despite some pushback on Bowen’s perspective, in the decades since, corporate social responsibility has morphed into a flourishing scholarly discipline (Acquier et al., 2011).
What Is Corporate Social Responsibility?
CSR is being thought of in a more expansive way than as the legal and economic obligations of organizations.
According to McGuire (1963), corporations should take an interest in the social welfare of communities and company culture, which affect the general development and happiness of their employees.
Definitions of CSR
At its core, CSR stands for corporate social responsibility and is a contract between businesses and society (Chaffee, 2017). Specifically, scholars and practitioners are interested in the relationship between how an organization operates and how it impacts local communities, the environment, the economy, and society more broadly (Carroll & Brown, 2018).
Though the idea of social responsibility has been around for centuries, Carroll (1979, p. 500) proposed the first unified academic definition: “The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time.”
The CSR pyramid
In the early 1990s, Carroll developed the pyramid of corporate social responsibilities, comprising four dimensions. For a business to engage in CSR, it must meet the economic, legal, ethical, and philanthropic expectations set out by society (Carroll, 1991).
Economic
This is a baseline level of expectation set out by societies. Without profitable businesses, no added value can be made to the economy, and society more broadly would suffer.
Legal
These reflect fair business practice expectations laid out by society, which views businesses as unique economic entities. These expectations include meeting legal requirements for the selling of goods and services, and abiding by laws and regulations.
Ethical
Laws alone are not enough in any society, and so it is expected that businesses operate in an ethical fashion, which means adhering to the moral principles and codes of conduct set out by any society.
Philanthropic
This refers to expectations for corporations to give charitably. These activities are voluntary, but it is often expected for businesses to give back to society. In doing so, organizations can reap reputational benefits.
Leaders take note: These four dimensions represent the absolute minimum requirements for an organization to meet in order to be forerunners in CSR.
Examples of CSR
Examples of the types of measures that organizations might take as part of their commitment to corporate social responsibility include actively trying to reduce carbon emissions, improving labor policies, giving charitably, working with environmentally conscious partners, products and services, investing in diversity, equity, and inclusion, and achieving B Corp status.
One exemplar of a business with integrity is LEGO™, which received a special recognition award in 2024 for its sustainability efforts. The Danish company is well known for its focus on sustainability, with a number of flagship CSR projects already rolled out.
These include commitments to using more sustainable materials for the LEGO™ products, recyclable packaging, targets to reduce greenhouse gas emissions, and increasing female representation at senior leadership levels (LEGO Group, 2023).
To save children, we have to reimagine capitalism
Many organizations, such as LEGO™, have similar missions to create a positive impact for society. In the following video, economist Rebecca Henderson makes a compelling case for how businesses can save the planet if we engage more in CSR.
The Implications of CSR on Employee Mental Health
The link between corporate social responsibility and employee mental health is well documented. In fact, CSR is associated with a host of positive employee behaviors, including engagement (Glavas, 2016a), creativity (Hur et al., 2018), organizational citizenship (He et al., 2019), job satisfaction (Closon et al., 2015), performance (Sprinkle & Maines, 2010), and trust (Brieger et al., 2020), as well as reductions in stress and burnout (Ahmad et al., 2023).
One powerful way in which CSR can have an impact on employee health and wellbeing is through enhanced meaning. Aguinis and Glavas (2019) argue that CSR is an ideal conduit through which employees can find purpose and meaning in the workplace. This is largely because CSR offers individuals the opportunity to make an impact outside of their organization, often in deeply meaningful areas such as the climate or social justice issues.
Despite this positive burgeoning evidence, we recommend readers be thoughtful about how CSR is employed in their organizations. Evidence from Brieger and colleagues (2020) suggests that CSR can indirectly increase work addiction via organizational identification (the extent to which an individual identifies with their organization; Dutton et al., 1994).
The authors argue that greater identification with an organization can occur when perceptions of an organization’s CSR orientations are high. In turn, this positive association can promote over-engagement and overwork. To this end, organizations must model healthy work–life balance to their employees from the top down.
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According to Jones and colleagues (2017), CSR operates on three different levels:
The micro level, which involves psychological outcomes of individuals
The meso level, which involves the relationship between organizations
The macro level, which is an organization’s interactions with and impact on wider systemic structures such as governments
On the micro level, employees within an organization are often the primary stakeholders of interest in CSR initiatives (Jones et al., 2017). Here, research studies will assess employee psychological outcomes in relation to CSR.
One avenue through which CSR influences individual psychology is through variables such as organizational identification as outlined above and organizational citizenship behavior (OCB) — prosocial behaviors that go beyond an individual’s job role (Organ, 2014).
Though OCB is usually situated within organizational psychology, in recent years, a synergistic relationship between organizational psychology and CSR has emerged (Glavas, 2016b).
Synthesizing CSR & Positive Psychology for Collective Wellbeing
Given the historical roots of corporations as primarily social institutions, it is surprising that scholars have only recently begun to explore how organizations can play a fundamental role in creating societal happiness or collective wellbeing (Chia et al., 2020; Chia & Kern, 2021) — that is, happiness and wellbeing beyond the individual level.
The parallels between corporate social responsibility and the agenda of the third and fourth waves of positive psychology are quite clear, creating thriving communities and societies and a healthy, prosperous planet (Wissing, 2022).
To this end, Chia and Kern (2021) argue emphatically for more interdisciplinary approaches to the challenges we face in the world. Positive CSR — that is, CSR underpinned by the principles and theories of positive psychology — offers a unique opportunity to shift the dial on collective wellbeing through positive real-world actions.
These positive actions should be encouraged not only from organizations but also from policymakers and governments. Influential economists argue that businesses should enjoy a symbiotic relationship with societies, whereby environmental and social behaviors can align with economic goals (Elkington, 1998; Mazzucato, 2021).
This idea of purpose over profit is becoming increasingly popular. But to achieve this, all stakeholders (investors, governments, scientists/experts, organizations, etc.) must work together toward shared missions or goals that can make the world a better place, such as removing plastic from the ocean (Mazzucato, 2021).
The social responsibility of business - Alex Edmans
For an excellent summary of the purpose versus profit debate, check out this TEDx Talk by Alex Edmans.
How to Foster Corporate Social Responsibility in Companies
Fostering corporate social responsibility is no easy task. It takes committed individuals and buy-in from the whole organization to really make an impact. Below we outline three key steps to building a thoughtful CSR approach.
If leaders follow these three crucial steps, then they should be able to successfully roll out their CSR initiatives. But the work does not stop there. An organization’s CSR approach should be monitored and reviewed frequently. The organization should gather data on the impact of its CSR efforts, including employee outcomes, brand reputation, and initiative success.
1. Align strategy with organizational values
Businesses looking to make waves in this space should consider a systematic approach to corporate social responsibility.
Be methodical and start with the values of the organization. Take the example of LEGO™ mentioned earlier. LEGO™ has developed and employed a clear CSR strategy that maps neatly to its values.
The strategy makes use of a number of thematic pillars, such as children, environment, people, and governance, which drive CSR-based decisions and actions. Below we invite you to explore some values-based worksheets as a jumping-off point.
2. Tie CSR strategy to key business objectives
Once the values are clear, organizations will need to think strategically about how they can tie the social issues they care about to their own key business objectives. This will create maximum impact.
Often companies fail to do this. For example, companies may donate to charity every year, and while doing so is ostensibly a positive thing, these activities don’t necessarily engage employees of the organization because they are generic. Furthermore, approaching CSR as one-off initiatives can often lack meaning, as it’s not explicitly linked to an organization’s values and objectives.
3. Embed CSR into organizational culture
It is not enough to simply create a CSR strategy, no matter how strong the strategy is. Organizations must then embed it into the wider culture so that employees understand that CSR is part of the key functioning of the organization.
4 Value-Based Worksheets, Group Activities & Exercises
In the above section, we mentioned how important it is to be aware of an organization’s values as a first stepping stone on the way to building a comprehensive CSR strategy.
Yet it is also important that members of senior leadership teams are aware of their own values too.
Below we have provided four values-based worksheets to help with just that.
If you’re a leader or HR manager looking to build your organization’s CSR profile, writing a mission statement is the perfect place to start. In this exercise individuals are invited to define their mission statement by answering a series of probing questions.
The core values worksheet is a powerful tool to help any leader clarify their values. Individuals are provided with a list of values and invited to choose those that resonate with them.
Another particularly useful values worksheet is the Finding My Values exercise. This activity goes one step further than the core values worksheet by inviting individuals to reflect on the degree to which they use their values in day-to-day life. Leaders can use this worksheet to help build awareness of the interaction between their beliefs and actions.
Lastly, this values and goal-setting worksheet helps individuals set intentional and meaningful goals that align with their values. Individuals are asked to think of a goal they currently have and how it aligns with a given value before completing a sheet with potential barriers to goal completion and strategies to overcome barriers.
Armed with these worksheets, leaders can expect to gain a firm grasp of the things that are most important to them. From a CSR perspective, these worksheets are a crucial preparatory step, given the fact that positive leadership is instrumental in shaping the branding and external actions of any organization.
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Use these 17 Positive Leadership Exercises [PDF] to help others inspire, motivate, and guide employees in ways that enrich workplace performance and satisfaction. Created by Experts. 100% Science-based.
Before exploring the below resources, you may find the following article particularly helpful. In this article one of our experts outlines values-based worksheets that can help individuals identify and implement their values.
Given the importance of boundaries as protection against overwork in the face of CSR, this workplace boundaries exercise is a must-have. In this activity, individuals are given the opportunity to create needs, wants, and expectations across a number of different domains and issues. At the end, individuals are invited to reflect on this exercise and the boundaries created, and how these could be enforced or implemented in the workplace.
Progress is rarely linear, as we can see with CSR. From humble beginnings when organizations took social responsibility to heart, to the first half of the 1900s, when profit was prioritized above all else, CSR has waxed and waned in popularity.
Fortunately, with the turn of the 21st century, compounding global crises, and the influence of positive psychology in the workplace, the role organizations play in promoting or hindering a flourishing world is now a primary concern to us all.
Purpose over profit is no longer a pie-in-the-sky idea; it is expected. For leaders and organizations that care about doing the right thing for their local communities and the environment more broadly, now is the time to be bold and show your commitment to CSR and the future of this planet.
CSR is ultimately about social good. By addressing some of the most pressing social issues we currently face, CSR effectively can be used as a pathway toward collective wellbeing. It offers a way for society to hold organizations to account for their actions. In this sense, consumers can demand better from businesses and push them toward higher standards of operating.
What is the main purpose of CSR?
The main purpose of CSR is to ground businesses in their responsibility to the communities they operate in and to society more broadly. In doing so, CSR has the ability to help businesses create positive societal change by being more than just extractive entities.
What are CSR activities?
CSR activities are any action that an organization takes to create positive societal change. This might be creating an internship program for underrepresented talent, supporting refugees to find housing and work, or working with local communities to help regenerate land.
References
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Ahmad, N., Ullah, Z., Ryu, H. B., Ariza-Montes, A., & Han, H. (2023). From corporate social responsibility to employee well-being: Navigating the pathway to sustainable healthcare. Psychology Research and Behavior Management, 16, 1079–1095. https://doi.org/10.2147/prbm.s398586
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About the author
Kirsty Gardiner, Ph.D. is a Social Psychologist with a passion for using research to power social change. She holds a doctorate in Psychology, a masters in Applied Positive Psychology, and is a registered chartered Psychologist with the BPS. On completing her Ph.D. she taught on the MAPPCP programme for several years. Currently, she is based in the UK as the Research Director at Ardent - a DEI consultancy.
The days of businesses operating with impunity and prioritizing profit above all else are long gone. Increasingly, the public is asking more of big corporations and small businesses alike.
CSR is being thought of in a more expansive way than as the legal and economic obligations of organizations.
In the above section, we mentioned how important it is to be aware of an organization’s values as a first stepping stone on the way to building a comprehensive CSR strategy.
