The Impact of Corporate Social Responsibility (Cambridge (CIE) A Level Business): Revision Note

The impact of corporate social responsibility on business

• Corporate social responsibility (CSR) refers to the concept that businesses have a responsibility to consider and positively impact society

• Companies voluntarily integrate social and environmental concerns into their business operations and interactions with stakeholders

Social responsibility goals

• CSR involves taking into account the impact of business activities on various stakeholders, including employees, customers, communities, the environment and society as a whole

Examples of socially responsible activities 

Ethics and CSR

• Ethics relates to the rights or wrongs of making a strategic decision that are beyond legal requirements

• Some businesses adopt an ethical code of practice which informs decision-making and may set out how they

  • Behave responsibly with regards to the environment and avoid negative impacts on animals

  • Adopt fair working practices

  • Implement equitable supply chains

  • Takes steps to eliminate corruption

  • Adopt ethical accounting practices

  • Avoid controversial products or take steps to minimise their impact or access to them

• Many large companies carry out and publish annual social audits which provide an review of the steps being taken to meet their commitments

The impact of implementing CSR

• Businesses experience a range of benefits as a result of implementing CSR

  • They attract long-term loyalty from employees and customers

  • Their approach provides a useful competitive advantage

  • They receive the support of the local community and local government, especially if they share their aims

  • Employees are likely to be motivated, loyal and productive, as they are proud of working for a responsible firm

• However, suppliers and competitors often change their approach to ensure that they do not lose sales to more ethical rivals

• In addition, taking an ethical approach costs more and may reduce the overall level of profits if prices cannot be raised to compensate

Community and pressure group needs

• A business's community is everyone touched by a its activities, including

  • Local residents

  • Employees and their families

  • Customers

  • Suppliers

  • Schools

  • Charities

  • Local government

• Winning community support gives a business a social licence to operate; without it, business projects can be delayed, boycotted or shut down

Why businesses should listen to their communities

Pressure groups

• A pressure group is an organisation that tries to influence the decisions of businesses or governments in favour of a particular cause, such as animal welfare, climate action, or workers' rights

• Common tactics used by pressure groups include

  • Public petitions and letter-writing campaigns

  • Social-media 'naming and shaming' or viral videos

  • Peaceful protests, strikes, or sit-ins

  • Lobbying politicians for new laws

  • Buying shares to speak at a company’s AGM

  • Legal action (e.g. climate lawsuits against oil firms)

• Consumers can act as a particularly powerful pressure group

  • Buying behavior, e.g., choosing Fairtrade coffee or USDA-organic fruit, rewards ethical producers

  • Social media, e.g., praising green firms and exposing polluters at low cost

  • Direct feedback, e.g., e-mails, online reviews, polls and focus groups, tells firms which practices are unacceptable

  • Boycotts, e.g., refusing to purchase from a harmful brand or deliberately supporting a responsible rival

Examples of pressure group influence