Sustainability Blog

Corporate What? From Confusion to Clarity

By Apurva Gosalia - Jul 15, 2021

The worldwide spread of the coronavirus has had a massive impact not only on our personal lives. Companies have also been, and are being, forced to react and adapt to these ever-changing conditions. In this context, the pandemic is also putting corporate responsibility to the test. Many companies talk about their values or about how much they care for their employees and society. The corona crisis is the time for them to make good on that commitment.

So, what is the corporate responsibility to employees and society on the one hand, but also to shareholders, business partners, customers and the supply chain on the other?

Let us clearly define some familiar yet confusing terms around the overall corporate responsibility of companies in these days and bring some clarity into the picture.

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Corporate responsibility (CR) is an umbrella term that encompasses a number of overlapping disciplines that describe a company’s responsibility for the impacts it has on the economy, society and environment. CR includes the concepts of:

  • Corporate social responsibility (CSR)
  • Corporate citizenship (CC)
  • Corporate sustainability (CS)
  • Corporate governance (CG)

We are seeing more and more often that CSR is beginning to be synonymous with CR in the overarching sense. But this is not the case. Things like cultural events, sporting activities, projects in the local environment, donations to causes, sponsorships and the establishment of foundations are undoubtedly good deeds but they are CC, not CR nor CSR.

CSR is also not an additional activity but a way of doing the core business. It is not about what is done with the profits, but how the profits are to be made in the first place – by being environmentally sound, socially responsible and at the same time economically successful. CSR explicitly addresses social and environmental dimensions and considers profitability as secondary or even marginal condition.

On the other hand, CS sees all three dimensions of sustainability integrated as a single unit. All products and services deliver a sustainable way of doing business and living. Sometimes, the terms CSR and CS are also used synonymously in business and finance, while academia is far from having agreed on clearly delineated definitions. In the concepts of CS and sustainable business models however, the focus on the core business, the so-called “business case,” was and is much more significant than originally in the CSR approach.

But there is a need to link corporate environmental and social activities more closely to the core business, and companies have started to recognize this. More recently, the flow of this need into the discussion is rising, even at higher management levels. Here, CSR increasingly means creating a business case in line with the ambitious and broader concept of CS. Only individual companies are consistently embarking on this path, but when doing so, then I would recommend calling this approach CS and not CSR, to avoid confusion and to demonstrate that all three dimensions of sustainability are attempted to be integrated as a single unit. Instead, CG is understood to mean transparent and good corporate management over all.

There are no universal recipes for sustainable management and each company must find its own solutions, ideally in collaboration with others. The pandemic has also generated unimagined creativity in individual companies and given a boost to transformation processes (for example, toward digitalization). Many activities are not derived from engagement strategies, but motivated by corporate culture. And companies with sustainability experience have advantages, in terms of employees and their social commitment, but also when business models are modified and supply chains are taken into account. The ways of dealing with the crisis are as diverse as the companies themselves.

STAY SuSTAYnable!

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