As you know, many organisations do not start as socially-responsible companies. With the 4 levels of CSR, it will help companies embrace CSR, and manage these responsibilities, with the most basic responsibility at the bottom of the pyramid. With the use of CSR, companies can gain public attention, build a positive brand image, stand out from their competition and nurture their relationship with stakeholders. These four levels can help businesses build their CSR initiatives to benefit society.
Who would set up a business without thinking about making a profit? Well, this is the first level of the CSR pyramid. This is simple, without profit, the company would not be able to pay their workers, employees will lose their jobs even before the company starts CSR activities. Being profitable is the only way for a company (e.g. Tieto) to be able to survive long term, and benefit the society. Additionally, this also means that it is a company’s duty to product goods and services that are needed/wanted by the customers, at a reasonable price.
This responsibility is to ensure that a company obeys the law and regulations that are in place. This is the most important responsibility out of the four levels as this will show how companies conduct their business in the marketplace. Employment laws, competition with other companies, tax regulations and health and safety of employees are some examples of the legal responsibilities a company should adhere to. Failing to be legally responsible can be very bad for businesses.
A company should not only be only be obeying the law, it should also do their business ethically, which brings to the third level of CSR. This is something a company does because they know it is the right thing to do, and it is not their obligation to do it. Unlike the first two levels, this is something that a company is not obligated to do. They could conduct their business by obeying the law but not being fair in the market as well. However, it is best for a company to be ethical as this not only shows their stakeholders that they are moral and just, but people will feel more comfortable purchasing goods/services from the company as well. Being environmentally friendly, treating suppliers/employees properly are a few examples of being ethically responsible. An example of an ethically responsible company is Amazon.
Last but not least, Philanthropic Responsibility is the responsibility to give back to society. This will not be possible if the other three levels are not in order. Giving donations and giving employees time to do volunteer work are some examples of philanthropic responsibility. Even though this is the highest level of CSR, it should not be taken lightly as many people would want to do business with companies that are giving back to society. Philanthropic Responsibility is more than just doing what is right, but it is something that holds true to the company’s values, to give back to society.
A company should aim to apply all four levels of CSR , also known as Carroll’s CSR Pyramid when running their business.