You will encounter a forest of confusing terms as you attempt to navigate the dense greenery of acronyms and definitions that surround corporate social responsibility (CSR). Let’s start with where it began…
The concept of social responsibility holds that any entity, be it an organization or individual, has an obligation to act for the benefit of society at large. To be socially responsible requires that you maintain a balance between the economy and the ecosystems that sustain society.
The people who believed in social responsibility and who either started companies with that in mind or reinvented their organizations to embrace that philosophy were called social entrepreneurs.
Corporate social responsibility
Corporate social responsibility (CSR) is what happened when the concepts of social responsibility went mainstream, and began to be adopted by businesses large and small. It is generally defined as a business’ commitment to creating a positive impact on society while making money.
Triple bottom line
Triple bottom line is business accounting based on three criteria: social, environmental, and financial. Social entrepreneurs like Gary Hirshberg, of Stonyfield Farm, and Ben Cohen, of Ben & Jerry’s, were among the first to talk about the triple bottom line. They looked past the traditional bottom line of profit vs. loss, and added social and environmental impact into the concept of success.
A social enterprise is a business that combines mission and profit to help solve important problems in its community and/or the world. A social enterprise’s main purpose is to promote, encourage, and make social change. Famous examples include the microfinance of Nobel Peace Prize winner Muhammad Yunus, and Greyston Bakery, the folks that provide the brownies for Ben & Jerry’s. We profile Greyston in our article “CSR Pays Off: 5 Well-Measured Case Studies.”
Social Venture Network
Social Venture Network (SVN) began in 1987. It is the original organization that brought together social entrepreneurs to share ideas, get funding, and find answers to the problems they faced as they worked to run a socially responsible business.
Business for Social Responsibility
Business for Social Responsibility (BSR) grew out of SVN as a “socially responsible version of the Chamber of Commerce.” Back in 1991 the idea was proposed to a group of about 30 SVN attendees and within five minutes they had raised over $100K to get it started. Today, BSR is a global nonprofit that works with more than 250 member companies and partners. Their mission is, “a world in which everyone can lead a prosperous and dignified life within the boundaries of the Earth’s natural resources.”
A B Corp is a for-profit company that has been certified by the global non-profit B Lab to meet certain standards for environment performance, accountability, and transparency. B Lab’s trademarked motto is, “people using business as a force for good.” Certified B corporations can use the designation in their marketing and promotional campaigns as an indicator that their definition of “success” is more than just profit, but rather an improvement in their community and/or society as a whole. As the folks behind the certification like to say: “B-Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk.” There are more than 2,100 Certified B Corps in 50 countries and over 130 industries.
Sustainability is a be-green-and-socially-responsible catch-all term that began in 1987 with the Brundtland Commission of the United Nations: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” In recent years “sustainability” has been co-opted by anyone wishing to appear environmentally or socially responsible. It now refers to any effort in the general direction of an unattainable ideal: “the process of change, in which the exploitation of resources, the direction of investments, the orientation of technological development and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations.” In practical terms, it generally means reducing carbon footprint and changing your manufacturing to use more earth-friendly products and processes.
Ceres is a non-profit sustainability advocacy organization that mobilizes investor and business leadership with the goal of building a thriving, sustainable global economy. Ceres brings together disparate stakeholders—investors, companies and public interest groups—to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy.
ESG refers to Environmental, Social, and Governance, three criteria used to rate and compare public companies. Read our introduction to the topic at “An ESG Primer… Plus: 4 Tips for Adding ESG to Your Dashboard.”
For years, Wall Street embraced free market champion Milton Friedman’s belief that social responsibility adversely affects a firm’s financial performance. But in the 90s, socially responsible businesses like The Body Shop, Tom’s of Maine, and Aveda proved that social responsibility could be good for investors. Economists began to see that good corporate governance did not damage financial performance. On the contrary, it maximized productivity, ensured corporate efficiency, and led to the sourcing and utilizing of superior management talents. Out of that came ESG ratings and indexes, indicators of how vulnerable a public company was to environmental crises, discrimination cases, and ethical lapses. Today, a good ESG rating means a company is likely to be a good investment. ∞
(Thanks to MonicaP on Pixabay for the image.)