As You Sow engages companies to build and adopt strong social and environmental policies. Click on our program areas in the top menu to see our current work and examples the positive, industry-wide change our advocacy has affected.
What is CSR?
Corporate Social Responsibility (CSR) refers to operating a business in a manner that accounts for the social and environmental impact created by the business. CSR means a commitment to developing policies that integrate responsible practices into daily business operations, and to reporting on progress made toward implementing these practices.
Early CSR reports often focused on philanthropy as a driver of CSR. That notion has been supplanted by a broad commitment to protecting and improving the lives of workers and the communities in which companies do business. CSR reports now typically address issues impacting virtually every area of operations: governance and ethics; worker hiring, opportunity and training; responsible purchasing and supply chain policies, and energy and environmental impact.
“Some see this work as charity, philanthropy, or an allocation of resources that could better be donated by shareowners themselves, ” writes Debra Dunn, Hewlett Packard Senior Vice President for Global Citizenship in the company’s 2005 global citizen report. “But to us, it is a vital investment in our future, essential to our top-line and bottom-line business success.”
Sustainability and CSR
Emphasis on social environmental and economic sustainability has become a focus of many CSR efforts. Sustainability was originally viewed in terms of preserving the earth’s resources. In 1987, the World Commission on Environment and Development published “Our Common Future”, a landmark action plan for environmental sustainability. The commission defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their needs.” Companies are now challenged by stakeholders including customers, employees, investors and activists to develop a blueprint for how they will sustain economic prosperity while taking care of their employees and the environment.
Socially Responsible Investors and CSR
Mainstream investors are being challenged to ensure that they review CSR issues when analyzing companies. The United Nations Environment Program Financial Initiative asked one of the world’s largest law firms to research whether institutional investors such as pension funds and insurance companies are legally permitted to integrate environmental, social and governance (ESG) issues into their investment decision-making and ownership practices. The resulting report, released in October 2005, concluded that investors were not only permitted to but also sometimes required to take such factors into account.
“Integrating environment, social and governance considerations into an investment analysis so as to more reliably predict financial performance is clearly permissible and is arguably required in all jurisdictions,” the report concluded.
Socially responsible investors have been a key catalyst asking companies to develop a CSR agenda for the past decade. In recent years, mainstream financial institutions have also come to value CSR. A January 2005 survey of mainstream investment managers found that 73% predicted that socially responsible investment indicators will become commonplace in mainstream investing within 10 years. In July 2013, a Spectrem Group survey found, “that 49% of Millennial investors with more than $1 million in net worth reported they used socially responsible criteria to fill out their portfolios. Such interest waned with age – 43% of Generation X millionaires held the same view, followed by 34% of Baby Boomers and 27% of the oldest cohort, which the survey tags as “seniors.”
Global Reporting Guidelines
One weakness of CSR and sustainability reports is lack of common measures of performance which can lead to hyperbole and greenwashing. The Global Reporting Initiative is a multi-stakeholder process which seeks to refine a set of common, globally applicable CSR/sustainability reporting guidelines. This process has incorporated the active participation of representatives from business, accountancy, investment, environmental, human rights, research, and labor organizations from around the world. More than 700 companies have published CSR or sustainability reports in accordance with GRI guidelines.
Despite progress made by many companies, adoption of CSR policies and reporting are still in its early stages at most corporations.