CSR concerns affect the world outside the office in both local and global communities. For example, employment standards—how a company respects and cares for its employees—are reflected locally in the policies a company sets and the impact a company has on the community. As a business interacts more with the global marketplace, a company will have to make decisions about ethical standards on tough issues, such as child labor, pollution, fair wages, and human rights. Consider the case of cobalt, a mineral used in battery production. Many electronics manufacturers like Apple, Sony, Samsung all use cobalt from mining operations exploiting children, some working 12 or more hours a day in the mines. Companies like Apple must first identify that their suppliers are violating child labor laws and take action. They also work to evaluate other materials that would bring fewer labor and environmental risks.10

Finding a source for raw materials and making agreements with suppliers is an aspect of many businesses. In today’s global marketplace, many companies find themselves working with international suppliers. Once a business considers purchasing materials from a supplier in a different country or even a different region of their home country, the company is tied to environmental and social concerns in that area. Consider a company that has an assembly plant in a different country. That company is now tied to the social conditions there. To keep its supplier operating or keep an assembly plant running smoothly, the company has a vested interest in the quality of the schools in that area so that the local workforce is educated.

The banana supplier Chiquita, for example, has a vested interest in the parts of the world where it gets its produce. Chiquita had a decades-long reputation of allowing its farmworkers to toil in dangerous conditions, contaminating water and clear-cutting tropical forests. Because workers’ rights and environmental issues were endangering its brand name, Chiquita began to improve conditions. It constructed housing for its workers and schools for their children. Now the environmental group Rainforest Alliance certifies all of Chiquita’s farms, ensuring they meet specific standards regarding the use of pesticides, workers’ health issues, and related topics.11 A commitment to CSR means that companies must be aware of the ethical impact of their actions—both at home and in communities far from their shores.

Marketing can often present ethical challenges. In addition to issues regarding truth in advertising, marketers must consider messages that may be manipulative even if they contain no outright lies. For example, several major fashion labels, such as Prada, Versace, and Armani, have agreed to ban size-zero models from their fashion shows. As more medical authorities have linked the viewing of these images with an increase in eating disorders among women, the fashion industry is faced with a decision. There are many marketing and consumer issues that companies must consider if they are to behave in a socially responsible way. What do you think? Is the use of size-zero professional models socially irresponsible? What about retouching photos for advertisements so that the models look perfect? Is that okay? How do we judge when responsible behavior turns into irresponsible behavior?

Many industries, even small companies, make decisions every day that affect the environment and the safety of their workers or neighbors. From multinational manufacturing giants to local auto body shops, any industry involved with processes that produce toxic waste must make decisions that directly affect the environment. Meanwhile, the production of toxic materials is moving at a far faster pace than the growth of proper storage and disposal facilities and techniques, so disposing of the materials becomes more and more expensive.

One of the most infamous cases was documented in the award-winning book A Civil Action (Vintage, 1996). A high incidence leukemia among the children in a small Massachusetts town led to the case. Ultimately, it was discovered that the town’s water supply had been poisoned by trichloroethylene dumped by two local businesses. What are the short- and long-term costs of ignoring these concerns? Companies that have a CSR focus work to recognize the social impact of their decisions.

Finally, CSR relates to how a company affects the communities in which it does business, particularly the surrounding neighborhoods. This issue has been a challenge for Walmart for years. In the documentary Wal-Mart: The High Cost of Low Price, film director Robert Greenwald argues that Walmart pays its associates so little that the arrival of a Walmart outlet in a community actually costs the community.12 Some stores have held holiday food drives for their own employees. Because workers are paid poorly and are not offered medical benefits to cover their children, Medicaid expenditures for the communities increase, which the public must pay with their taxes. In addition, Greenwald argues that many local and smaller businesses cannot compete with the giant and are forced to close. Adding insult to injury, often a community has given Walmart subsidies to attract the company to the area. Finding a way to be a good corporate neighbor is important to avoid the tensions and bad publicity that Walmart has struggled against.

A social audit is a study of how well a company is meeting its social responsibilities. It is an internal and systematic examination that measures and monitors what goals a company has set, what progress it has made, and how resources, such as funding and labor, have been applied to the CSR goals.

In addition to social audits, organizations like the Boston College Center for Corporate Citizenship assess corporate responsibility and publish their findings. And companies like the Calvert Investment Company provide corporate responsibility ratings and reports to consumers. The Calvert Investment Company assigns companies a score based on their performance in the categories of environment, workplace, business practices, human rights, and community relations. Investors can use the “Know What You Own^®” tool to investigate a fund and check the environmental and social performance of the companies in the fund.

In addition to social audits and the Calvert ratings, various magazines, such as Fortune, publish lists of admired companies each year. Other organizations award businesses for superior CSR. For example, Chroma Technology Corp., a manufacturer of optical filters, has many innovative practices.14 In this global company, employees hold all the seats on the board of directors. In addition, the company’s salary structure heavily rewards loyalty. Each employee makes a base salary that depends on his or her specialty in the organization and that then increases on the basis of seniority.15

Another often-cited CSR award winner is Clif Bar, Inc., a manufacturer of organic energy bars. Gary Erickson started the company in his kitchen with $1,000. After 10 years of consistent growth, Erickson was about to accept an offer of $120 million for the company. At the last minute, he learned that the purchasers were planning to move Clif Bar out of state and lay off all the firm’s current employees. He felt his integrity and his vision for the company were at stake, so he canceled the deal and took over the company again.

The practice of companies self-reporting their own efforts when it comes to addressing ethically complex issues and issues of social responsibility is also becoming more prevalent. Every year, the entertainment company Time Warner presents to its stockholders a CSR report that discusses its advances in corporate citizenship, including its focus on journalistic integrity, socially responsible programming (including issues such as the depiction of smoking in films), content accessibility, consumer privacy, content diversity, and child protection.16

Many companies participate in corporate philanthropy, which is the practice of donating some of their profits or resources to charitable organizations. Often, companies view philanthropic activities as a marketing investment designed to build stronger relationships with the communities in which they do business, their own employees, and consumers in general. Target, for example, donates 5 percent of its pretax profits to charity, which is about $3 million a week.17 This is more than twice the average of other U.S. corporations.

Another example is the Bill and Melinda Gates Foundation, started by Microsoft chairman Bill Gates. With an endowment of $40 billion, the Gates Foundation has tackled issues like global infant survival rates, began an initiative for a malaria vaccine, and is working to support innovation in education. Even though the foundation is not directly associated with Microsoft, it has had a positive impact on the public’s perception of the company.

Environmentally, how businesses operate has both local and global effects. For example, people living in the Silicon Valley area near San Francisco rely on groundwater for their main supply of water. This leaves the entire Silicon Valley area dependent on proper industry practices by the many semiconductor manufacturers in the area. If these companies allow chemical contaminants to enter the groundwater system, the entire region suffers.

Businesses raise troubling environmental questions on a global scale as well. Some say that allowing free trade—in which countries produce and sell products anywhere in the world—is exporting pollution to less developed countries. Are companies moving “dirty industries”—those that have a high risk of pollution, danger to workers, or toxic damage of the environment—to countries where environmental regulations are lacking? It is increasingly important for industry leaders to have some structured ethical system to make such complex, long-reaching decisions.

As an individual, CSR affects you as well. Financially, the long-term consequences of businesses implementing a strong CSR plan have an impact on the prices you pay for products, the products that are available to you, and the quality of those products. Industries that act in ways that jeopardize their own long-term sustainability can create economic ripples that affect the bottom line of individual consumers.

Think of your own career. Your potential for advancement, day-to-day work environment, and overall sense of purpose are affected by the degree to which the company you work for is socially responsible. The ethical culture of a company and its leadership has effects on its workers every day. Sometimes, this effect is a positive one. Consider the Publicis Kaplan Thaler advertising agency, the fastest-growing advertising firm in the country, started by Linda Kaplan Thaler and Robin Koval. The billion-dollar company, which began as a one-client startup, prides itself on creating unique ad campaigns, such as the Aflac duck campaign, that grab viewers’ attention.

Yet for all of its success, the core philosophy of the company, as Thaler and Koval describe in their book The Power of Nice, is that being nice pays. After spending years at high-powered, high-pressure firms where “those who eat their young get raises,” Thaler and Koval instead founded a firm dedicated to the principles of being empathetic.22 They assume that the people you work with are there to help you, and remember that emotionally, well-adjusted people earn higher incomes, live longer, and have more satisfying lives.23 The company founders’ beliefs affect the employees at the firm each and every day.

Even from the initial interview, aspects of a company’s CSR plan may be apparent. For example, it’s becoming increasingly common for companies that practice CSR to try to attract job candidates and hire employees who match their own corporate values. Doing so results in a workforce that’s more dedicated and performs better, firms are finding. Human resources management professionals refer to this practice as value-based recruiting and hiring.