Which of the following is not an element in the pyramid of corporate social responsibility?

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The idea of corporate social responsibility (CSR) was first introduced in the 1950s. However, it wasn’t until the early 1990s that CSR became universally accepted and approved. Most of what is considered to be modern CSR is rooted in a concept known as the Pyramid of Corporate Social Responsibility. 

What is the Pyramid of Corporate Social Responsibility?

In his 1991 article The Pyramid of Corporate Social Responsibility, Dr. Archie B. Carroll, a business management author and professor at the University of Georgia, outlined the four areas he believed were essential in a company’s corporate social responsibility. These elements were organized in order of importance and presented visually in what is now known as the Pyramid of Corporate Social Responsibility.

The pyramid is a simple framework that helps organizations argue how and why they could and should meet their social responsibilities. It attempts to balance the self-interests of businesses (profit) with its wider, more virtuous goal of being socially responsible.

Elements of the Pyramid of Corporate Social Responsibility 

While there have been several variations and reproductions of the pyramidal model, the main elements remain the same. Carroll highlights four main responsibilities of an organization’s CSR program: Economic, Legal, Ethical, and Philanthropic.

• Economic: The first and most vital level of the pyramid is a company’s economic responsibilities. As a fundamental condition for its existence, a company must be profitable. If this requirement is not met, the business cannot survive, and as a result, the company will not be able to move on to the other levels of the pyramid. 
• Legal: After satisfying its economic responsibilities, companies must ensure that their business operations are within the confines of the law. At this level, organizations must fulfill their legal requirements. Like the economic requirements, if legal requirements are not met the company’s survival may be at stake, preventing them from moving on to other levels of the pyramid. These legal requirements include, but are not limited to, employment, competition, and health and safety laws. 
• Ethical: The next level of the pyramid is the company’s ethical responsibilities. In this stage, the company goes beyond legal requirements by acting morally and ethically. In other words, the company makes a conscious decision to “do the right thing.” For example, in an attempt to reduce waste, some coffee shops have started offering discounts to customers who bring their own reusable cups. 
• Philanthropic: Once the economic, legal, and ethical foundations of the pyramid have been built, the company can move on to the final level of the pyramid — philanthropic responsibilities. At this level, the company goes beyond its ethic responsibilities by actively giving back and making a positive impact on society. For example, financial giant Wells Fargo donates 1.5% of their revenue to various housing, disaster relief, and military-focused charities. 

After almost three decades since its introduction, the Pyramid of Corporate Social Responsibility remains highly relevant. It continues to be cited, debated, modified, and criticized by academics, professionals, and politicians. The pyramid’s importance and longevity are attributed mainly to its simplistic yet fundamental framework which can be adopted by almost any company. 

Other CSR Articles

• Examples of Corporate Social Responsibility in the Industrial Space
• A Brief History of Corporate Social Responsibility (CSR)
• Looking Past Profit: How Corporate Social Responsibility Can Boost Your Brand

Image Credit: NDAB Creativity / Shutterstock.com

More from Business & Industry

Until fairly recently, most large businesses were driven almost exclusively with a single goal in mind: profit. Maximizing profits was at the heart of every action taken or initiative pursued.

In the past few decades, however, more business leaders have recognized that they have a responsibility to do more than simply maximize profits for shareholders and executives. Rather, they have a social responsibility to do what’s best not just for their companies, but people, the planet, and society at large.

This realization has led to the emergence of companies that identify as socially responsible. Some even carry designations or seals, such as B Corporations (B Corps), social purpose corporations (SPCs), and low-profit limited liability companies (L3Cs).

But what is corporate social responsibility, and what are the different forms it can take?

What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is the idea that a business has a responsibility to the society that exists around it, according to the online course Sustainable Business Strategy.

Firms that embrace corporate social responsibility are typically organized in a manner that empowers them to be and act in a socially responsible way. It’s a form of self-regulation that can be expressed in initiatives or strategies, depending on an organization’s goals.

Exactly what “socially responsible” means varies from organization to organization. Firms are often guided by a concept known as the triple bottom line, which dictates that a business should be committed to measuring its social and environmental impact, along with its profits. The adage “profit, people, planet” is often used to summarize the driving force behind the triple bottom line.

Check out our video on corporate social responsibility below, and subscribe to our YouTube channel for more explainer content!

Types of Corporate Social Responsibility

Corporate social responsibility is traditionally broken into four categories: environmental, philanthropic, ethical, and economic responsibility.

1. Environmental Responsibility

Environmental responsibility refers to the belief that organizations should behave in as environmentally friendly a way as possible. It’s one of the most common forms of corporate social responsibility. Some companies use the term “environmental stewardship” to refer to such initiatives.

Companies that seek to embrace environmental responsibility can do so in several ways:

• Reducing pollution, greenhouse gas emissions, the use of single-use plastics, water consumption, and general waste
• Increasing reliance on renewable energy, sustainable resources, and recycled or partially recycled materials
• Offsetting negative environmental impact; for example, by planting trees, funding research, and donating to related causes

2. Ethical Responsibility

Ethical responsibility is concerned with ensuring an organization is operating in a fair and ethical manner. Organizations that embrace ethical responsibility aim to achieve fair treatment of all stakeholders, including leadership, investors, employees, suppliers, and customers.

Firms can embrace ethical responsibility in different ways. For example, a business might set its own, higher minimum wage if the one mandated by the state or federal government doesn’t constitute a “livable wage.” Likewise, a business might require that products, ingredients, materials, or components be sourced according to free trade standards. In this regard, many firms have processes to ensure they’re not purchasing products resulting from slavery or child labor.

3. Philanthropic Responsibility

Philanthropic responsibility refers to a business’s aim to actively make the world and society a better place.

In addition to acting as ethically and environmentally friendly as possible, organizations driven by philanthropic responsibility often dedicate a portion of their earnings. While many firms donate to charities and nonprofits that align with their guiding missions, others donate to worthy causes that don’t directly relate to their business. Others go so far as to create their own charitable trust or organization to give back.

4. Economic Responsibility

Economic responsibility is the practice of a firm backing all of its financial decisions in its commitment to do good in the areas listed above. The end goal is not to simply maximize profits, but positively impact the environment, people, and society.

Benefits of Corporate Social Responsibility

Most firms are driven to embrace corporate social responsibility due to moral convictions, and doing so can bring several benefits.

Corporate social responsibility initiatives can, for example, be a powerful marketing tool, helping a company position itself favorably in the eyes of consumers, investors, and regulators. CSR initiatives can also improve employee engagement and satisfaction—key measures that drive retention. Such initiatives can even attract potential employees who carry strong personal convictions that match those of the organization.

Finally, corporate social responsibility initiatives, by their nature, force business leaders to examine practices related to how they hire and manage employees, source products or components, and deliver value to customers.

This reflection can often lead to innovative and groundbreaking solutions that help a company act in a more socially responsible way and increase profits. Reconceptualizing the manufacturing process so that a company consumes less energy and produces less waste, for example, allows it to become more environmentally friendly while reducing its energy and materials costs—value that can be reclaimed and shared with both suppliers and customers.

Are you interested in learning how to lead your organization toward positive change? Explore Sustainable Business Strategy—one of our online courses related to business in society—and discover how you can become a purpose-driven leader. Not sure which course is the right fit? Download our free course flowchart to determine which best aligns with your goals.

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