Strategic

Context of CSR
UNIT 5:
 Learning objectives
Strategic CSR Firms’ environmental context,
The five driving forces of CSR- growing affluence, sustainability,
globalization, free flow of information, development of corporate
conscience and
Morale principle of CSR.
 • Strategic Corporate Social Responsibility (CSR)
refers to the integration of social and
Strategic CSR environmental considerations into a company's
Firms’ business operations and strategies.
• This approach goes beyond philanthropy or
environmental compliance with regulations, aiming to create
context long-term value for both the company and
society.
In the context of environmental issues,
Strategic CSR involves a proactive approach to
managing a firm's impact on the environment.
The environmental context for firms engaging
in Strategic CSR is shaped by various factors:
1. Regulatory Environment: This encompasses laws and regulations governing
environmental practices. Companies must comply with these standards, and in some
cases, they may choose to go beyond compliance to demonstrate environmental
leadership.

2. Stakeholder Expectations: Customers, investors, employees, and communities

increasingly expect businesses to be environmentally responsible. Meeting or
exceeding these expectations can lead to enhanced reputation and customer loyalty.

3. Resource Scarcity and Sustainability: As natural resources become scarcer, firms are
recognizing the need to adopt sustainable practices. This involves minimizing waste,
conserving energy, and using resources efficiently.
4. Climate Change and Carbon Footprint: Climate change poses a significant challenge,
and companies are under increasing pressure to reduce their carbon emissions. This may
involve transitioning to renewable energy sources, adopting energy-efficient technologies,
and implementing carbon offset programs.

5. Supply Chain Considerations: Companies are being held accountable not only for their
own operations but also for the environmental impact of their supply chains. This includes
assessing and mitigating the environmental risks associated with suppliers and partners.

6. Innovation and Technology Advancements: Advances in technology provide new

opportunities for firms to develop and implement environmentally-friendly practices. This
may involve adopting green technologies, such as renewable energy systems or
sustainable production processes.
7. Competitive Advantage and Market Differentiation: Firms that lead in
environmental performance can gain a competitive edge. Consumers are
increasingly making purchasing decisions based on a company's environmental
record, and investors are considering sustainability factors in their decisions.

8. Reputation and Brand Value: A strong environmental record can enhance a

company's reputation and brand value. Conversely, environmental incidents or
controversies can lead to reputational damage and financial losses.
 Strategic CSR in the
environmental context is not
only a response to societal
demands, but also a forward-
looking strategy for sustainable
and resilient business operations.
The Five driving forces of CSR

The driving force of Corporate Social Responsibility (CSR) refers

to the factors or influences that push or motivate businesses to
adopt and implement socially and environmentally responsible
practices in their operations and strategies.
These driving forces are instrumental in shaping a company's
approach towards ethical, sustainable, and community-
oriented behavior. The Five driving forces of CSR are:
1. Growing affluence
• Increased Consumer Expectations: As societies become more affluent, consumers tend
to become more conscious of the social and environmental impacts of their
purchasing decisions.
• Enhanced Awareness and Education: Affluence often correlates with higher levels of
education and awareness.
• Pressure from Shareholders and Investors: Wealthier individuals and institutional
investors are increasingly recognizing the importance of CSR in evaluating the long-
term sustainability and performance of companies.
• Regulatory and Policy Influences: Affluent societies often have the resources to
develop and enforce more stringent regulations and policies related to social and
environmental issues.
• Innovation and Technological Advancements: Affluent societies tend to invest more in
research and development, leading to technological advancements.
2. Sustainability
• Environmental Stewardship: This involves minimizing negative environmental
impacts, conserving natural resources, and promoting practices that protect
ecosystems.
• Climate Action: Addressing climate change by implementing strategies to
reduce greenhouse gas emissions, transition to renewable energy sources, and
adapt to a changing climate.
• Social Equity and Responsibility: Recognizing that social issues are
interconnected with environmental concerns.
• Supply Chain Responsibility: Holding suppliers and partners accountable for
ethical and sustainable practices.
• Product and Service Responsibility: Developing and offering products and
services that meet high ethical, quality, and safety standards.
3. Globalization
• Global Stakeholders: Companies deal with people from different cultures and backgrounds.

• Complex Supply Chains: Globalization can make supply chains longer and more complicated,
raising issues about ethics and sustainability.

• Market and Reputation: Being global gives access to larger markets and customers who prefer
companies that care about CSR.

• Different Rules: Different countries have various rules about social and environmental issues.

• Cultural Sensitivity: Companies need to respect and understand different cultures and their
views on CSR.
4. The free flow of information
• Transparency: When information is easily available, it allows people to check if companies
are being responsible with their social and environmental practices.

• Awareness: Information makes people more aware of social and environmental issues and
how businesses affect them.

• Learning: Companies can learn from each other by sharing information and best practices.

• Innovation: Sharing information can lead to new and better CSR ideas.

• Risk Management: Good information helps companies spot and manage risks related to
social and environmental issues.
5. Development of corporate conscience
• Ethical Leadership: Leaders set a good example by making moral decisions.

• Happy Employees: Employees feel better and more motivated when their
company is involved in CSR activities.

• Attracting Talent: Ethical companies attract and keep employees who care about
doing the right thing.

• Better Reputation: Companies with strong ethics gain a good reputation with
customers, investors, and the public.

• Customer Trust: Customers are more likely to trust and stay loyal to companies
that act responsibly and ethically.
Morale principle of CSR
Ethical Conduct: Emphasizing honesty, integrity, and fairness in business operations. This involves conducting
business in a way that respects human rights, labor laws, and environmental standards.

Social Responsibility: Acknowledging the impact of business activities on society and taking proactive steps to
contribute positively. This can involve initiatives related to philanthropy, community development, environmental
sustainability, and employee welfare.
Stakeholder Engagement: Recognizing the interests of various stakeholders such as employees, customers,
suppliers, communities, and investors, and actively engaging with them to understand their needs and concerns.

Long-term Perspective: Focusing on sustainable practices that benefit society in the long run rather than
prioritizing short-term profits at the expense of social or environmental well-being.

Accountability and Transparency: Being accountable for the impacts of business activities and maintaining
transparency by openly communicating CSR efforts, goals, and outcomes.
The end …