Lesson 8: Corporate Social Responsibility
Learning Objectives
Discuss how emotional intelligence (EI) contributes to corporate social responsibility.
Lesson Introduction
The famous quote, “The chief business of the American people is business” (credited to the 30th president of the United States, Calvin Coolidge), was a popular observation in a time of economic prosperity in the 1920s.
Socially responsible companies take steps to ensure that they do as little harm to our Earth as possible. The expectation is that businesses will do what is necessary to repair any damage they have caused, including reforestation.
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It was during this era that issues such as energy security and climate change were practically nonexistent. Fast forward to a century later. Now, more than ever, private enterprise is being called upon to exercise social responsibility, especially when it comes to the environment. This trend reflects the view that companies ought to do more than simply meet the letter of the law and the bare minimum of ethical business behavior. Although regulations have decreased, the demand for social responsibility has increased. It is not a luxury but a necessity for conducting a profitable business.
Corporate Social Responsibility Is on the Rise
Corporate social responsibility (CSR) can be simply and broadly defined as the ethical role of the corporation in society. The aim of CSR is to increase long-term profits and shareholder trust through positive public relations and high ethical standards to reduce business and legal risk by taking responsibility for corporate actions. It is not enough for companies to generate a profit and merely meet the letter of the law in their business operations. Today, many U.S. citizens expect them to generate a profit and conduct themselves in an ethical and socially responsible manner.
CSR strategies encourage the company to make a positive impact on the environment and stakeholders—that is, all of the parties who have a stake in the performance and output of the corporation. Stakeholders include the company’s employees, unions, investors, suppliers, consumers, local and national governments, and communities that may be affected by corporate activities such as construction, manufacturing, and pollution. For some companies, CSR means manufacturing their products in a way that does not harm the environment and protects the consumer from potentially hazardous materials.
A sense of social responsibility reflects emotional intelligence. It is not uncommon for an individual to bring an organization’s attention to a cause that has personal meaning. For example, an employee may feel a deep sense of responsibility for cleaning up the environment for the sake of future generations. Despite some hurdles, this employee finds a few people who champion the idea of reducing the use of plastic in the office, including the cafeteria. This is the beginning of raising the consciousness of the company’s workers to the ways they can have an impact on the environment and well-being of others.
Consider how many times a company brings in food for employees, whether it is a working lunch or a team or department meeting. The odds are that more than enough food is ordered, and there is a lot of food either left in the break room or eventually tossed into the trash. A group of employees at a particular downtown company acted: They volunteered to take the leftovers to the churches and homeless shelters that fed people who live on the street. They felt empathy for those who did not have the means to eat a good meal on a regular basis, and they felt a duty to share with the larger social community.1
The drivers for companies to be more socially responsible include the following:
Pressure from consumers
Pressure from stakeholders
Pressure from investors
Pressure from supply chain
Pressure from employees, particularly with younger workers just starting their careers
No two companies will approach social responsibility in the exact same way. Several common approaches follow:
Corporate social responsibility
Microfinance
Venture philanthropy
Sustainable business practices
Community development
Social enterprise
Learning Check
A manager has chosen to use recycled materials in the company’s production line.
How does this expression of emotional intelligence (EI) contribute to corporate social responsibility (CSR)?
Facilitates customer discounts for the modified products
Increases likelihood that vendors will begin to use CSR practices
Generates long-term profits as a result of CSR practices
Ensures that company employees will adopt similar attitudes
Nextquestion
Lesson Summary
Take a moment to think about what you have learned in this lesson:
There is increasing pressure for businesses to behave in socially responsible ways. The pressure is coming from various fronts including consumers and investors.
Today, consumers expect businesses to operate for a profit while simultaneously performing actions that assist society at large, local communities, employees, and the environment.
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