Corporate Social Responsibility – The Development of a Higher Commitment

The concept of corporate social responsibility—a model by which a business strives to make itself accountable not only to its stakeholders but to society, humanity, and future generations—first crystallized in the 1970s. But large companies were charting this path of corporate good citizenship starting at the end of the 19th century. Corporate social responsibility, or CSR, has produced tangible, positive effects that have been felt for generations.

CSR offers advantages to society and to each company that practices it, though what it looks like varies from one company and one industry to another. In purely bottom-line terms, a company that engages in thoughtful, well-placed philanthropic and volunteer work enhances its brand and positive name recognition, lifts employee morale, and creates closer ties between employees and their corporate leadership. 

CSR for businesses of all sizes

In this era of economic crisis and reconfiguration in which many small- and medium-sized businesses are struggling to maintain their equilibrium, they, like large corporations, can be successful practitioners of CSR. 

The most well-known types of CSR large companies engage in are those that build environmental sustainability into their logistics, ensure fair labor practices and ethical sourcing of materials, and direct investments into environmentally and socially responsible ventures. While smaller businesses can also achieve these macro-goals, their most accessible type of CSR typically involves sponsorship of charitable events and cash or in-kind contributions to local nonprofit organizations.

Learning to contribute to the common good

Contemporary CSR programs derive from the corporate philanthropy first practiced by Andrew Carnegie at the turn of the 20th century. Carnegie was the Scottish-American “robber baron” who made his fortune in the steel industry and donated over $90 million to fund public libraries, museums, hospitals, schools, and colleges all over North America. In “The Gospel of Wealth,” an article he wrote in 1889, he notes that anyone who “dies rich, dies disgraced.”

Among Carnegie’s contemporaries, oil titan John D. Rockefeller likewise gave large sums away to fund programs that would benefit all of humanity. One of his lesser-known but influential projects was the Rockefeller Sanitary Commission for the Elimination of the Hookworm Disease. In 1910 about 40 percent of people in the American South were infected with hookworm, an intestinal parasite that can cause severe disease. Rockefeller’s commission, established at a time when there were few large-scale government programs dedicated to health care, was not only responsible for a dramatic reduction in the prevalence of the disease, but it ushered in a new standard for public health practices.

Frederick Goff, a prominent Cleveland banker, created the Cleveland Foundation in 1914. The idea behind it was to pool contributions from many donors to respond more effectively to the collective needs of the community, rather than to serve as a monument to the philanthropy of a single individual. Goff’s idea became the first real community foundation in the country. 

In 1953, economist and college president Howard Bowen published the book Social Responsibilities for the Businessman. Bowen’s development of the concept of corporations’ inherent duties to the societies of which they are a part later earned him credit as the “father of CSR.” 

Bowen’s work laid the foundation for CSR as we know it today. In 1971 the Committee for Economic Development specifically named the concept of the “social contract” that exists between the corporate world and the greater humanitarian good. The committee was originally formed in 1942 as a nonprofit research and policy organization promoting the interests of both business and the American people. Today, it emphasizes the idea that business operates only through the consent of the public and is therefore obligated to serve the public interest.

The “three responsibilities” of business, as outlined by the committee, involve job creation and overall economic growth, fair and honest dealings with customers and employees, and an engagement with the life and welfare of the broader community that supports the business. Over the past 50 years, these basic concepts have been expounded by many scholars and thinkers. 

Today’s big picture

More recent examples of companies and founders with a strong sense of social responsibility include Johnson & Johnson, Starbucks, and Microsoft. 

Johnson & Johnson’s founder, Robert Wood Johnson, pushed his company to put the public’s needs first through the corporate motto he established in 1943. The company has gone on to become a leader in environmentally sound production and operational practices, as well as in supporting public health through initiatives such as facilitating safe drinking water supplies in under-resourced communities all over the world. Most recently, Johnson & Johnson eschewed typical rules of corporate rivalry by partnering with competitor Merck to produce a highly effective one-dose vaccine for COVID-19.

Meanwhile, Starbucks maintains a longstanding dedication to sustainable practices that support local communities. In one of its recent Global Social Impact Reports, the company notes that it has achieved its goals of sourcing 99 percent of its coffee from ethical sources, supporting a worldwide partnership that empowers local farmers, establishing green building standards across its locations, and providing staff with an innovative higher-education access program. 

As for Microsoft, founder Bill Gates and his wife, Melinda, have become industry role models for their philanthropy, specifically in the area of global public health. The Bill & Melinda Gates Foundation supports efforts to eradicate polio, control malaria, and treat HIV, as well as fund the research, development, and equitable distribution of vaccines to fight a spectrum of other diseases, including COVID-19.