What are the 4 Types of CSR – Corporate Social Responsibility?

The 4 types of CSR – Corporate Social Responsibility are: economic, legal, ethical, and philanthropic.

Corporate Social Responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. It represents a commitment by a company to manage the social, environmental, and economic effects of its operations responsibly and in line with public expectations. The term Corporate social responsibility (CSR) is known as a business model that helps a company be socially accountable to itself, its stakeholders, and the public.

It means that a company considers the impact of its actions and decisions on society, the environment, and its own well-being. It also means that a company strives to operate in ways that enhance rather than harm society and the environment.

CSR can take many forms depending on the company and industry. Some common examples of CSR include: supporting social causes, donating to charities, volunteering for community service, implementing green practices, ensuring ethical labor standards, complying with legal regulations, and creating value for shareholders and customers.

CSR can benefit a company in various ways, such as: improving its reputation, trustworthiness, and competitiveness; attracting and retaining ethical employees, customers, investors, and partners; reducing costs and risks; increasing innovation and productivity; and creating a positive social impact.

CSR is not a fixed or universal concept, but rather a dynamic and evolving one. Different companies may have different interpretations and approaches to CSR based on their values, goals, culture, and context. CSR is also influenced by the expectations and demands of various stakeholders, such as customers, employees, investors, regulators, communities, and society at large.

Therefore, CSR requires a company to be responsive and adaptable to the changing needs and preferences of its stakeholders.

4 Types of CSR

CSR also requires a company to balance its economic, legal, ethical, and philanthropic responsibilities, which are the four main types of CSR according to Carroll’s pyramid mode. There are generally four types of CSR, often described as the four pillars of CSR:

1. Economic Responsibility
2. Legal Responsibility
3. Ethical Responsibility
4. Philanthropic Responsibility

Economic Responsibility

• This is the fundamental responsibility of a business.
• It means running the business profitably, which provides jobs, products, services, and taxes that fuel the economy.
• It’s about creating wealth in a responsible and sustainable manner.

The economic responsibility of business is one of the types of corporate social responsibility (CSR), which is the idea that a business has a responsibility to the society that exists around it. Economic responsibility means ensuring an economic advantage both to the region from where the purchase arrived and to the region where it is marketed.

It also means that a business should provide goods and services that meet the needs and wants of consumers, create jobs and compensation for employees, and generate profits for shareholders and investors. The end goal is not to simply maximize profits, but to make sure the business operations positively impact the environment, people, and society.

Economic responsibility is the most basic social responsibility of a business, as it reflects the primary purpose of a business: to create value for society by producing goods and services that satisfy customer needs.

Without economic responsibility, a business cannot survive or grow in the long run. However, economic responsibility alone is not enough to ensure a business’s social legitimacy and right to operate. A business also needs to consider its environmental, ethical, and philanthropic responsibilities, which are the other types of CSR.

These responsibilities reflect the expectations of various stakeholders, such as customers, employees, investors, regulators, communities, and society at large. By fulfilling these responsibilities, a business can enhance its reputation, trustworthiness, and competitiveness in the market. Therefore, economic responsibility is not only a duty but also an opportunity for a business to create shared value for itself and society.

Legal Responsibility

• This means obeying the law and playing by the rules.
• Businesses are expected to comply with all relevant legislation and regulations.

The legal responsibility of business is another type of corporate social responsibility (CSR), which is the idea that a business has a responsibility to the society that exists around it. Legal responsibility means that a business should comply with the law and follow any applicable regulations, court orders, and ethical standards. A business should not engage in any illegal or fraudulent activity that may harm its customers, employees, investors, competitors, or society at large. A business may be held liable for damages if it fails to meet its legal responsibilities1.

Legal responsibility is an essential social responsibility of business, as it reflects the minimum expectation of society from a business: to obey the law and respect the rights of others. Without legal responsibility, a business may lose its social legitimacy and right to operate, and may face legal sanctions or penalties. Legal responsibility also helps a business to protect its reputation, trustworthiness, and competitiveness in the market. However, legal responsibility alone is not enough to ensure a business’s social contribution and value creation.

A business also needs to consider its environmental, ethical, and philanthropic responsibilities, which are the other types of CSR. These responsibilities reflect the higher expectations of various stakeholders, such as customers, employees, investors, regulators, communities, and society at large. By fulfilling these responsibilities, a business can enhance its social impact and shared value for itself and society.

Ethical Responsibility

• This goes beyond the obligations set by law.
• It involves doing what’s right, fair, and just, even when there’s no legal requirement.
• Ethical responsibilities can cover a range of areas, from fair treatment of employees to sourcing practices, to transparency with consumers.

Ethical responsibility in business is another type of corporate social responsibility (CSR). It is the idea that a business has a responsibility to the society that exists around it. Ethical responsibility means that a business should behave in ways that are expected by society but not necessarily required by law. It involves following moral standards and principles that guide the decisions and actions of a business. A business should not only avoid causing harm, suffering, waste, or destruction, but also be expected to do good for the environment, people, and society.

Ethical responsibility is a higher social responsibility of business than a legal responsibility. It reflects the voluntary choice of a business to go beyond the minimum expectations of society and law. By fulfilling its ethical responsibility, a business can enhance its reputation, trustworthiness, and competitiveness in the market. It can also attract and retain ethical employees, customers, investors, and partners who share the same values and principles.

However, ethical responsibility is not the highest social responsibility of a business. A business also needs to consider its philanthropic responsibility, which is the idea that a business should contribute to the well-being and development of society through charitable donations or actions2. This responsibility reflects the generosity and goodwill of a business towards society.

Philanthropic Responsibility

• This involves voluntarily or mandatory contributing to the community and improving quality of life.
• Businesses can do this through donations, supporting local organizations, or employee volunteer programs, for example.

The philanthropic responsibility of a business is the highest type of corporate social responsibility (CSR). It is the idea that a business has a responsibility to the society that exists around it. Philanthropic responsibility means that a business should voluntarily contribute to the well-being and development of society through charitable donations or actions. It involves going above and beyond what is expected by society or law and showing generosity and goodwill towards society.

Philanthropic responsibility is a discretionary social responsibility of a business. It reflects the choice of a business to give back to society without any obligation or expectation of return. By fulfilling its philanthropic responsibility, a business can demonstrate its values and compassion, and create a positive social impact.

It can also enhance its reputation, trustworthiness, and competitiveness in the market. It can also attract and retain ethical employees, customers, investors, and partners who share the same social vision.

However, philanthropic responsibility is not a substitute for other social responsibilities of business. A business also needs to consider its environmental, ethical, and legal responsibilities, which are the other types of CSR. These responsibilities reflect the basic expectations of society and law from a business. By fulfilling these responsibilities, a business can ensure its social legitimacy and right to operate.

• Disclaimer: These categories are not mutually exclusive, and many CSR initiatives can address more than one type of responsibility at the same time. For example, a company might create a product that both generates profit (economic responsibility) and has environmental benefits (ethical responsibility). It’s also important to note that different stakeholders may prioritize different types of CSR, so businesses often need to balance various interests and expectations.