Corporate social responsibility

Abstract

Corporate Social Responsibility (CSR) is essential for businesses to ensure long-term sustainability and positive stakeholder impact. It aims to balance financial gains with ethical responsibility towards non-shareholders. While profit maximization remains a primary objective, companies must address environmental concerns, human rights, and community well-being because businesses have broader implications for non-shareholders, and biblical principles emphasize selflessness, justice, and responsible stewardship of resources. By recognizing their moral duty to give back to the communities and environments that sustain them, businesses can foster long-term success in more than financial ways. Companies can integrate CSR into corporate governance, promote sustainability initiatives, or adopt a hybrid ethical-strategic approach. Case studies, such as Nike’s transformation from labor rights violations to CSR leadership, illustrate how businesses can turn ethical dilemmas into fruitful outcomes. Ultimately, CSR is a moral obligation, a biblical duty, and a strategic tool that benefits society while driving long-term business success.

Introduction

The capitalistic idea that corporations exist only to create a profit has increasingly been criticized as companies face growing pressure to implement ethical and sustainable practices. While financial success remains a core goal, the role of businesses in addressing societal and environmental concerns has become an important factor in long-term sustainability, one reason being increased visibility into a business’s doings. According to the article Christian Theology Perspective on Corporate Social Responsibility Practices by Temy Setiawan et al. (2021), corporate actions are more transparent than ever due to the rapid digitization of society, making ethical and responsible business practices necessary rather than an option. In a nutshell, businesses must meet profit expectations and contribute positively to their communities and the environment. (p. 162).

Legitimacy theories also support this notion (Freeman, 2004, p. 229; Setiawan et al., 2021, p. 163). The United Nations Global Compact (UNGC) aims to close the gaps that legitimacy theory points out–whether it’s addressing human rights, labor conditions, or environmental concerns (Setiawan et al., p. 164). Corporations prioritize profit over ethical governance, leading to exploitation and harm. Samuel Mansell’s Shareholder Theory and Kant’s ‘Duty of Beneficence’ (2012, p. 194) critique Friedman’s shareholder theory for overlooking broader societal impacts that the UNGC aims to correct. Jorge Roberto Volpentesta, in Trend and Prospect of Corporate Social Responsibility, advocates for a stakeholder-centered approach that considers all affected entities (2016, p. 231).

Despite CSR’s ethical necessity, challenges persist, including the lack of quantitative data on its financial impact and applicability to certain industries, as evidenced by Setiawan et al. and Marcela Mišura et al. in the article, Relationship Between Corporate Social Responsibility and Business Sucess: Case of the Global Tobacco Industry (2018, p. 157). Additionally, while CSR aligns with various religious perspectives, businesses operating in secular contexts require non-religious ethical frameworks. Companies must integrate CSR into governance structures to address these challenges, prioritize sustainability, and balance ethical-normative and strategic-instrumental CSR (Volpentesta, 2021). As exemplified by Patagonia’s sustainability model and other well-known brands, a hybrid approach allows businesses to align profitability with social impact, fostering long-term success (Semuels, 2019).

CSR is more than a moral obligation—it is fundamental to business success. Companies must recognize that ethical decision-making, stakeholder engagement, and environmental stewardship are essential for long-term profitability and societal well-being. By adopting a balanced approach that integrates ethical responsibility and strategic business objectives, companies can foster sustainable growth while positively impacting society.

Analysis of the Main Issues and Problems

Ethical Problems

According to Setiawan et al., companies must fulfill their profit expectations and positively impact the environment and surrounding communities. Digitization in the modern world has made exposing a company’s direct and indirect impacts on stakeholders easier, so economic, social, and environmental performance matters now more than ever (p. 162). Stakeholder theory suggests that companies have ethical obligations to their shareholders and a broader range of stakeholders, not just those with financial stakes (Freeman, 1984).

According to the legitimacy theory, a social bond and contract between the company and the community includes nature. For example, taking advantage of the natural environment seems problematic because it will reduce the value of nature itself. Therefore, businesses are expected to take greater responsibility for reducing their environmental impact. The social environment is also important, as businesses sometimes exploit communities, employers, and customers. This may happen by taking advantage of people’s health, creating poorer health outcomes. CSR attempts to bridge the gap businesses create between nature and people (Setiawan et al., p. 163). Deontology or Kantian ethics would examine this as an offense to nature and people. Under deontology, businesses must act responsibly and treat stakeholders (including nature) respectfully, regardless of profit motive (Mansell, p. 584).

The United Nations Global Compact (UNGC) has outlined 10 business principles of concern: human rights, labor, the environment, and anti-corruption. Businesses may disregard or neglect human rights or compulsory labor practices internationally. Perhaps it’s discrimination in employment due to someone’s immutable traits, like gender, disabilities, and race. A company's technologies may also not be environmentally responsible, leading to pollution and global warming. All of these harmful practices the UNGC aims to protect (Setiawan et al., p. 164).

A key reason CSR tends not to be at the forefront of a business’s core values is the prioritization of profit above stakeholders (people and the environment). However, a Christian businessman or woman must view CSR as a means to achieve God’s Word because “God wants for humans to maintain a balanced relationship with society and the environment” as a means to achieve economic performance (p. 164). 

Possible Alternatives & Constraints

Setiawan et al. see a linkage between CSR and Christian theology. The Bible lays out general principles or truths that aim to propagate and harmonize the whole (p. 164). One could arguably follow the teachings of God and use that as a basis for acting according to God in their business practices. However, one drawback is that those who are not Christian businesspeople would disregard the bible altogether and follow the teachings of another religion or none at all. Therefore, it is important to have a non-religious framework to address business ethics even when the Word of God is our personal highest power.

Another drawback of the research is the lack of quantitative data to support how following CSR or Christian theology harms the people and environment that CSR aims to address. Their analysis technique is only a literature study interpreting how CSR and the 10 principles according to UNGC reflect a biblical worldview. However, the research methods do not cover quantitative results; they simply cover the phenomena within contextual theology. Therefore, the evidence to prove the extent to which operating under the principles of the Christian faith harms the people and environment is lacking in this study. 

The final drawback of this study is that it does not examine how CSR relates to businesses on a smaller scale. The UNGC is an international guide for conducting business at scale but fails to address small-to-medium enterprises, regional companies, and local businesses. What about family-owned businesses that involve children? Would that violate the fifth business principle outlined in the UNGC? Overall, the context is broad in nature. However, it still serves as a relevant guide to how practices ought to think through business decisions and how they affect their communities and environment.

Businesses are responsible for balancing profit with ethical obligations to stakeholders, including communities and the environment. While CSR aligns with Christian theology and global ethical standards, challenges remain in its universal application, lack of quantitative data, and relevance to smaller businesses. Despite these limitations, CSR remains a crucial framework for fostering sustainable and responsible business practices (p. 164).

Strategies and Solutions

CSR for Business Ethics Regardless of Religion

CSR helps businesses balance profit with ethical responsibility, ensuring they consider the well-being of employees, communities, and the environment. While ethical decision-making aligns with many religious teachings, including Christianity, one does not need to be religious to act ethically. This section explores key CSR concepts, including employee well-being, sustainability, stakeholder theory, and the balance between ethical and strategic CSR, showing how businesses can create a positive social impact while achieving long-term success.

Duties of Right vs. Duty of Benefice for Employees

Outside of Christianity, CSR aims to address ethical matters, which we can do by looking at ethical theories like Deontology or Kantian ethics. If a business were to operate through this ethical principle, it would be able to distinguish between the “duties of right” and the “duty of benefice,” which Kant defines as the moral obligation toward non-shareholding stakeholders. This ethical foundation encourages managers to consider the well-being of stakeholders while maintaining shareholder interests (Mansell, 2012, p. 583). Some practical ways to embody the “duty of benefice” for employees is to ensure they provide fair wages to support a decent standard of living, safe and inclusive workplaces free from discrimination and harassment, and work-life balance policies like flexible schedules and mental health support. Companies can also engage in community development projects, like funding education, healthcare, or housing initiatives, when sourcing laborers from a specific community. 

Sustainability as a Core Business Principle

One way we can address the well-being of stakeholders is through the lens of sustainability for future generations. According to Volpentesta, the 1987 Brundtland Report defines sustainability as meeting present needs without compromising the ability of future generations to meet their own. Some practical ways companies can become more environmentally sustainable are to adopt sustainable sourcing of materials, reduce the waste they produce, and invest in renewable energy. For example, IKEA’s green energy investment is defined as shifting to renewable energy. As a result, they are reducing environmental harm, which addresses ethical concerns, and lowering operations costs, which is a strategic benefit (Ogunbukola, 2024).In this way, sustainability as a core principle in CSR allows businesses to balance economic growth with social well-being and environmental stewardship. 

Shareholder vs. Stakeholder Theory

Another framework from Mansell is Milton Friedman's shareholder theory. This takes on a more constrained and frankly irresponsible perspective on a manager’s duty. He argues that a business's primary responsibility is to maximize shareholder value within legal and ethical rules. However, it often undermines the importance of stakeholders and merely prioritizes profit maximization at the cost of stakeholders (Mansell). Stakeholder theory, on the other hand, solves this issue by taking on a more holistic approach to whom a company is responsible. It holds that corporations have responsibilities to shareholders and stakeholders, including employees, the community, and the environment  (Volpenesta). 

Companies can uphold ethical responsibility even when sourcing from abroad by implementing fair labor practices and supporting local economies. For instance, corporations can ensure workers receive fair wages and humane working conditions worldwide while partnering with local businesses to stimulate regional growth. A notable example is Johnson & Johnson, which prioritizes global healthcare access by investing in vaccines and medicines for developing nations, demonstrating a commitment to ethical responsibility while expanding its market reach (Crain, 2022). Additionally, businesses can encourage employees to engage in community service by offering paid volunteer time. They can further their impact by donating a percentage of profits to charitable causes aligned with their mission.

Ethical Normative vs. Strategic-Instrumental CSR

Another contrast that Volpentesta outlines is the one between ethical-normative behavior, where companies act ethically because it is right, and strategic-instrumental, where CSR is pursued because it benefits the business financially (2021, p. 231). For example, he describes how companies may simply use CSR as a risk management tool to avoid reputational damage, while others will go beyond this and simultaneously seek to make a genuine social impact. A hybrid approach can be advantageous because it allows them to act sustainably while producing a profit. To align with strategic-instrumental CSR, a business can develop a corporate mission that integrates ethical principles and business strategies. Patagonia is a company that donates a portion of its profits to environmental causes, which strengthens brand loyalty and attracts eco-conscious consumers (Semuels, 2019). A hybrid approach to CSR can allow businesses to do good because it is “right” and leverage social good for a competitive advantage.

CSR for Measurable Business Success

While CSR is often seen as an ethical obligation, it also provides measurable business benefits. Beyond fostering positive social and environmental impact, CSR can drive financial success, improve brand reputation, and strengthen relationships with key stakeholders, including governments. The following section explores how CSR can enhance business performance, particularly for small-to-medium enterprises (SMEs), by securing government support and creating long-term economic advantages.

CSR with Governments for SME Success

CSR also solves the financial circumstances of a company, even if the upfront and maintenance costs for CSR programs can be expensive. For example, CSR can improve SMEs' profits. Government support is crucial, whether it is to secure better supply chain access, lower procurement costs, or something else. One example is the European furniture company Alpha, which gained government support due to its charitable acts in Lithuania, where it sourced its labor. Alpha joined a project launched by the School of Business Ethics of the Chamber of Commerce of Bassano del Grappa called ‘Globalizing Solidarity.’ “The project was aimed at encouraging training for young workers coming from the underdeveloped areas of Italy,” eventually leading to those participants opening up subsidiaries in the underdeveloped areas (Lamberti & Noci, 2012, p. 408). In this way, Alpha used a strategic CSR approach in which they demonstrated a commitment to Lithuana’s development versus prioritizing resource extraction from them. They fostered positive relationships with local governments, leading to business expansion and financial advantages. This proves how CSR can create tangible financial benefits while investing in their people. As a result, Alpha gained easier access to supply chains, lowered procurement costs, and gained government support. 

CSR for Brand Reputation and Long-Term Sustainability

Beyond financial benefits, CSR is critical in shaping a company's long-term reputation and sustainability. Businesses that proactively integrate ethical practices into their operations gain stakeholder trust and avoid reputational damage that can arise from neglecting social and environmental responsibilities. The following section explores how companies like Nike evolved from facing public backlash to becoming leaders in corporate responsibility, demonstrating how businesses can adapt to societal expectations and drive industry-wide change.

The Five Stages of Organizational Learning in Corporate Responsibility

Companies can use CSR to build respect within their communities. In the 1990s, Nike faced intense criticism for labor rights violations in its supply chain, becoming a symbol of corporate irresponsibility. Initially, the company responded defensively, denying accountability for poor working conditions in its suppliers' factories. Condemned for outsourcing labor to sweatshops, it sparked public and activist backlash. Over time, however, Nike implemented major reforms and emerged as a leader in corporate responsibility (Zadek, p. 125). According to Zadek’s “Five Stages of Organizational Learning in Corporate Responsibility,” Nike progressed from the “defensive stage” to the “managerial stage,” where it restructured procurement incentives to enforce labor code compliance rather than prioritizing cost reduction (p. 125-126).

The Four Stages of Issue Maturity

Sometimes, businesses must adapt to issues in their culture that become public and respond or risk business failure. In other words, as societal concerns mature, they become mainstream business issues. What starts as an activist concern (e.g., climate change, diversity) eventually becomes a core business issue that companies must address. The “Four Stages of Issue Maturity” that Zadek outlines are latent, emerging, consolidating, and institutionalized. It defines a pathway where companies can hop onto issues strategically that may begin with activists calling them out on their practices. Still, slowly, they can experiment with solutions, adopt voluntary standards, and then transform into industry-wide initiatives to eventually become leaders in ethical best practices rather than reactors to social pressure (p. 128). Nike, alongside popular brands like Levi Strauss and the giant oil company BP, faced initial skepticism when adopting policies, but their initiatives ultimately influenced industry standards (p. 127). 

Personal Experience

In my personal journey, I recall multiple instances in which sustainable CSR, stakeholder theory, and strategic-instrumental CSR were present and helped contribute to the well-being of my communities.

When I used to attend a church in my hometown of Hawaii, I quickly learned the meaning of community and doing good for the majority of people. The church offered free babysitting for children of various ages for free. I helped babysit 0- to 2-year-old children as a volunteer because my mom and I believed in giving back to the community, which aligns with utilitarianism by helping all families who wanted to better themselves in the image of God. This experience wasn’t about gaining volunteer hours but about helping parents raise children who will one day be spreading the gospel through their own endeavors. We wanted to ensure that the children and future generations benefited from the same services we were given–the Word of God, community, and prayer. 

Another element of sustainable CSR was the environmental effort put forth by my university. I recall the university and state-led action to eliminate single-use plastics. Food and beverage containers would be modified to use recycled materials and paper goods instead of discarded plastic containers. The Word of God in Genesis 1:27-31 explains how God created everything good and prepared for man and man's duty to look after and preserve it (Setiawan et al., 2021, p. 166). In other words, ensuring that we reduce plastic waste and, therefore, slow the rate at which our landfills are growing will benefit future generations so that they have less of a burden to deal with waste due to our efforts.

Another experience I had was with my current company. They offered employees paid volunteer time off so we could leave work and contribute to our community. Having this as a part of corporate policy meant that my company understood stakeholder theory, where the business affects more than just those with a financial stake in the business; it also impacts the communities where employees are based. They also understood strategic-instrumental CSR, where representing my company would lead to positive brand perception and reflect positively on my company's contributions beyond the actual services they provide to customers. 

These experiences illustrate how sustainable CSR, stakeholder theory, and strategic-instrumental CSR can create meaningful change by fostering community well-being, environmental stewardship, and corporate responsibility. By embracing these principles, businesses and individuals can contribute to a more ethical, sustainable, and connected society, ensuring that future generations inherit strong values and a thriving world.

Biblical Integration

Businesses should engage in corporate social responsibility (CSR) because it reflects the biblical principle of considering the well-being of others. Philippians 2:4 states, “Let each of you look not only to his own interests but also to the interests of others.” This verse emphasizes the importance of selflessness and ethical responsibility, which aligns with the core values of CSR. By prioritizing not just profits but also the needs of employees, customers, and communities, businesses fulfill their moral duty to act with justice and compassion as guided by the Word of God.

A corporation must give back, especially when relying on those people, communities, or natural resources to profit. Legitimacy theory argues that businesses must maintain a moral contract with society, nature, and more without exploiting them. The UNGC also highlights this regarding human rights, labor conditions, environmental impact, and anti-corruption. Proverbs 3:27 says, “Do not withhold good from those to whom it is due when it is in your power to act.” In other words, when you conduct business and inevitably take from others or the environment, they are due to receive something. Whether that is fair and equitable wages, planting trees where they were cut down, or investing in the economy and education of a region where you are extracting labor or resources, it is in a corporation’s power to give back, especially when they are taking.

Corporations do not have to operate under the assumption that there is a limited amount of wealth to go around, nor that if they are not capitalizing on resources, they will be undermined by their competition. Proverbs of Work from the Theology of Work project asks, “Is there any evidence that a zero-sum approach to business improves shareholder return?” They assert that the answer is no, quite the opposite. The best businesses succeed because they find a sustainable way to produce that helps customers and society while providing great returns to workers, shareholders, and lenders. While there is a level of competition and capitalism at play in making a successful and profitable business, it is a myth to believe that helping others in the process is a competitive disadvantage. 

We are called by God to do business and accumulate wealth on earth, but we must go beyond this self-serving need. Setiawan et al. cite 2 Corinthians 9:8, which states, “Man must be sufficient himself to become an extension of God’s hand in blessing others” (p. 165). We are called by God to use our overflow to become an “extension of God’s hand” to ensure we raise the well-being of others in the process. By embracing a mindset of abundance rather than scarcity, businesses can achieve long-term success while uplifting communities, protecting the environment, and honoring God’s call to use our prosperity to bless others.

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