Corporate social responsibility (CSR)

Corporate Social Responsibility (CSR)

Corporate social responsibility (CSR) is the commitment of a business to operate ethically, contribute to economic development and improve the quality of life of its employees, the local community and society at large — beyond what is required by law. CSR represents a deliberate choice to go further than legal minimums: to consider the impact of business decisions on stakeholders who have no formal power over the company but who are nonetheless affected by its actions.

Carroll's CSR Pyramid

Economist Archie Carroll (1991) proposed a four-level pyramid of corporate responsibilities, moving from the most fundamental to the most aspirational:

The pyramid indicates that economic responsibility (profitability) is the foundation — without profit, a business cannot sustain any other responsibility. Legal responsibility sits above it: businesses must obey the law. Ethical responsibility extends beyond law to what is right and fair in the eyes of society. Philanthropic responsibility — charity, community investment, volunteering — sits at the top as the most aspirational level.

The Case For CSR

Advocates argue that CSR is not a cost but an investment. Businesses with strong CSR credentials attract and retain better talent — particularly amongst younger workers who prioritise purpose alongside pay. They build stronger customer loyalty in markets where consumers increasingly factor ethics into purchasing decisions. They reduce regulatory risk by building goodwill with governments and communities. Supply chain CSR programmes can reduce disruption by building supplier resilience. Harlow & Finch Ltd, after implementing a supplier welfare programme, reported a 34% reduction in supply chain disruptions over three years — a direct operational and financial benefit from what had initially been framed as an ethical commitment.

The Case Against (or the Sceptical View)

Critics challenge both the motivation and the effectiveness of CSR. Milton Friedman famously argued that the social responsibility of a business is simply to generate profit for its shareholders within legal rules — and that diverting resources to CSR is, in effect, an unauthorised tax on shareholders imposed by managers pursuing their own reputation. More practically, critics note that much corporate CSR is performative: glossy sustainability reports while environmental damage continues; community grants while workers in the supply chain are underpaid; diversity campaigns while internal pay gaps persist. This gap between stated CSR and actual behaviour — called "greenwashing" or "ethics-washing" — may damage trust more than the absence of CSR claims at all.