What is CSR and why is it important?

What is CSR?

From the day we are born, we learn that our actions have an impact on the world around us. Even by simply existing, we create countless reactions and consequences in our surroundings, on people and places. 

The same can be said for companies. The way they invest money and do business can have huge impacts on communities, the economy, and the environment. 

Throughout recent years, companies have become more accountable and begun to look beyond profit, recognizing their responsibility towards their communities and important role in society. Corporate Social Responsibility (often referred to as CSR) is a business concept that integrates social and environmental concerns into corporate strategy. The company self-regulates to be more accountable and conscious about its impact on society. 

Types of CSR 

Corporate Social Responsibility is generally divided into four categories, which many companies use to help plan and structure their approach to incorporating CSR into their business model. 

1. 1. Environmental Responsibility: aware of its impact on the planet, the company makes deliberate choices to reduce negative effects on the environment. Different companies can take different actions, from reducing greenhouse gas emissions to funding research and supporting related causes. 

1. 2. Ethical Responsibility: the business acts fairly and ethically all-around, starting with the way it treats its employees, customers, and stakeholders. A company that is concerned with acting ethically will, for example, make sure its employees are granted fair working conditions and benefits, or that the products and materials it uses are ethically sourced. 

1. 3. Philanthropic Responsibility: given its important role in society, the company uses its position and means to drive positive change. This can mean donating money to nonprofits, participating in fundraisers, or even creating a foundation to give back to the community. 

1. 4. Economic Responsibility: the company is committed to doing good; it won’t simply focus on maximizing profits but also on positively contributing to the world and its inhabitants. This last type of CSR shares significant overlap with all of the categories mentioned above. A company that focuses on economic responsibility may, for example, work with an NGO to achieve its mission or increase its use of renewable resources. 

Why is CSR important for businesses? 

Investors, employees, customers, public leaders: everybody seems to like a socially committed and accountable company.  

A recent survey indicates that 81% of consumers strongly favor companies that practice social responsibility, and 70% want to know how the brands they purchase are addressing social and environmental issues. CSR seems especially important for the youngest generations, considering that 94% of millennials would buy from a company with an excellent CSR program and 47% of Gen-Z believe that brands should speak out on social issues, “because it’s the right thing to do.” 

With public support being so strong for the importance of socially committed corporations, investors are starting to take notice; 73% of them report that their investment decisions are affected by businesses’ efforts to improve the environment and society. 

As for employees, 88% say it is no longer enough for companies just to make money. Workers today expect their employer to positively impact society as well. If that wasn’t enough proof, even 81% of executives believe that purpose-driven firms deliver higher-quality products and services. 

With the amount of people raising their voices about social issues and sustainability, a well-built CSR strategy can be a gamechanger in terms of a company’s success. The public approval and brand recognition stemming from this kind of commitment can result in a competitive advantage in the market and greater employee and customer engagement and loyalty. That’s not even counting how many sustainable practices, such as recycling and using less packaging, can reduce costs and generate consistent savings. But perhaps the biggest advantage Corporate Social Responsibility offers companies is the opportunity to make the world a better place.

ESG vs. CSR: what’s the difference? 

Many investors are putting sustainability at the top of their agenda, putting pressure on companies to make contributions to causes like the mitigation of global warming and climate change. Manufacturing companies might look into ways to cause less pollution, while financial firms might choose to avoid funding fossil fuel projects. Interested stakeholders can measure companies’ environmental, social, and governance impact with ESG.  

Environmental, Social, and Governance (ESG) is a set of criteria that helps investors assess how an organization manages the risks and opportunities of sustainability. The factors taken into consideration are quantifiable, standardized, and strictly based on business models and operations. Conversely, CSR mostly pertains to a company’s values and mission.  

While both share many features in common, the main goal of ESG is to provide stakeholders with information on the wider impact of a company’s policies and practices to help them make investment decisions, while CSR focuses on the way a company’s impact on society is viewed broadly by customers, partners, and current and potential employees. 

What Ria is doing in CSR 

For us at Ria, responsibility towards society and the world is at the core of our purpose; we exist to open ways for a better everyday life. We act with integrity, take responsibility for our actions, and work every day to empower our customers to build the life they dream of. 

To be true to our mission and to have an even bigger impact on people’s lives, in 2022 we started a partnership with Save the Children to sponsor their projects in Mexico and the Philippines. With these projects, we ensure children at risk have access to quality education and support them by establishing safe spaces to learn, providing learning materials, and funding educational initiatives for parents and educators. We have visited some of the educational centers involved in the program and saw with our own eyes the importance of these projects for kids. We are thankful to be in the position to offer our support. 

Learn more about our commitment to children’s quality education and development in our recent blog article.

For more info: comms@riamoneytransfer.com