Corporate social responsibility (CSR) carries different meanings to different audiences. Research has shown that many people are confused by the term. In a 2007 study in the United States by the public relations firm Fleishman Hillard and the National Consumers League, most respondents identified either “commitment to community” or “commitment to employees” as the principal mean ing of corporate social responsibility. Other meanings included “responsibility to the environment” and “providing quality products.” The study found that American consumers expected corporate commitment to encompass more than just charitable and philanthropic giving and that treating and paying employees well was of prime importance.
Corporate social responsibility is a broad term that includes many specific corporate practices. The European Commission defines it as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with stakeholders on a voluntary basis.” The broader meaning of the term is also captured by other expressions used by many corporations and individuals such as corporate citizenship, corporate philanthropy, or sustainability. Corporate citizenship refers to the fact that, historically, many companies have supported their local and national communities through a variety of roles, including support for nonprofit organizations vital to a community’s social development. These associations include board member ships, employee volunteer programs, and charitable donations. Another frequently used term, corporate philanthropy, has a narrower context specific to the philanthropic or charitable contributions of a firm. As this chapter will address in a later section under the specific subject of sustainability, CSR also includes a range of issues related to the environmental impact of the firm’s operations and products.
Corporate citizenship practices have been around for centuries. In Augsburg, Germany, the Fuggerei is a Roman Catholic housing settlement for the poor that Jakob Fugger “the Rich” founded in 1520 and that still exists today through the support of the original charitable trust. The 145 residents of the Fuggerei, many of them elderly widows, pay an annual rent of less than 1 euro to live in the quaint community on the condition that they pray for the Fugger family. (Was he hedging his bets?) Fuger was an international marketer and financier who even financed a trade mission to India.
Fugger may be a good example today for international marketers to follow -in combining successful business practices with social responsibility. The International Chamber of Commerce (ICC) defines corporate social responsibility as “the voluntary commitment by business to manage its activities in a responsible way.” The ICC encourages its membership to take initiatives on their own volition that make good sense for their company’s overall strategy. Corporate social responsibility practices are now encouraged by governments and business associations worldwide as The International Marketplace 17.3 describes for the United States. European CSR efforts are also leading examples of the practice. To provide such leadership, CSR Europe was founded in 1998 by business leaders across Europe in cooperation with the European Commission in response to an earlier appeal by commission president Jacques Delors to take a more active role in addressing broader social needs. It now includes 80 multinational companies and 35 national partner organizations with outreach to 4,000 companies across Europe. CSR Europe has launched the Enterprise 2020 initiative to help companies collaborate to develop profitable, innovative businesses practices that lead “the transformation towards a smart, sustainable and inclusive society.” The initiative envisions that the “enterprise of the future “will have societal issues at the heart of its strategy.
The Chambers Ireland present CSR awards annually since 2004 to “recognize the work being carried out by Irish and multinational companies to improve the lives of their employees and to enhance the civic environment in which they operate.” The Council of British Chambers of Commerce in Europe, in the spirit of William Wilberforce, who convinced the British Parliament to abolish slavery in the nineteenth century, has created a specific CSR initiative to stop human trafficking through educational programs and other efforts.
There have been efforts by governments to more specifically codify what they expect of companies regarding CSR practices. The ICC warns against this kind of “one-size-fits-all” approach and defends the voluntary nature of CSR: Government’s role is to provide the basic national and international framework of laws and regulations for business operations and that essential role will continue to evolve.
Beyond this, good corporate practice is usually spread most effectively by strong corporate principles and example, rather than by codes of conduct. A commitment to responsible business conduct requires consensus and conviction within a company. Voluntary business principles have the advantage of bridging cultural diversity within enterprises and offering the flexibility to tailor solutions to particular condition s. Voluntary approaches minimize competitive distortions, transaction costs associated with regulatory compliance, and inspire many companies to go beyond the regulatory baseline, thus often eliminating the need for further legislation.