What is Corporate Social Responsibility?

Corporate Social Responsibility (CSR) is the proactive management by businesses of the social and environmental dimensions of their operations, products and services, and of their relationships with stakeholders such as employees, communities, and governments.

Other terms for CSR include Corporate Citizenship, Corporate Responsibility, Sustainability, and the role of Business in Society. CSR provides a lense through which companies gain a greater understanding of the impacts and risks as well as the business opportunities related to social and environmental sustainability.

The benefits of CSR are wide ranging:

• increased productivity, competitiveness, and employee retention through improved labor standards
• better relationships with communities benefiting from company initiatives
• improved corporate reputation through better communication with stakeholders
• access to markets and increased brand value through high standards in the supply chain
• cost savings from energy and other resource efficiency improvements in operations
• greater ability to anticipate risks and opportunities and navigate times of market uncertainty

Commitment to CSR activities is largely driven by market expectations. Initiatives are generally voluntary in nature. While the case for CSR is most clearly demonstrated in developed economies, the private sector in emerging markets is increasingly affected by changing expectations about environmental and social performance. These expectations affects markets, market access, and business profitability.

Driving factors include:

• external pressures:concerns about globalization, consumer and shareholder action, the "right to know" movement, assessment of risk by foreign investors, and access to markets and capital
• internal business responses: brand and reputational risk assurance strategies, higher cost efficiencies through resource efficient production
• availability and use of information about company activities, particularly via the internet

With its Social Responsibility Program, IFC plays a growing role in helping its clients and the wider private sector in emerging markets understand and respond to these business issues.

When IFC clients see a business case for moving beyond compliance with IFC's environmental and social performance standards, the Program may be available to work with them to explore and develop Social Responsibility strategies and management systems.